FCA takes strong action against challenger bank for failed AML controls

Last week, the Financial Conduct Authority (FCA) issued a fine of £28,959,426 to challenger bank Starling Bank Limited for failings in its processes on Anti-Money Laundering (AML) and financial sanctions screening.

Background information

The FCA conducted a review of financial crime controls at challenger banks in 2021. As a result, it identified serious concerns with the AML and sanctions framework that Starling Bank Limited had in place.

The bank agreed to have restrictions implemented that prevented it from opening new accounts for high-risk customers until the procedures improved, which they then failed to do, opening over 54,000 accounts for 49,000 high-risk customers over a two-year period. Starling Bank Limited also became aware in January 2023, that its automated screen system had only been screening customers against a fraction of the full list of those subject to financial sanctions, since 2017.

This is one of the most substantial fines FCA has issued and sends a clear message that organisations need to make sure they have strong AML controls and procedures in place, that can keep up with the growth they are experiencing.

Next steps

The FCA have signalled previously that they will start to act on firms who have weak AML procedures, so it is important to review your procedures. Here are our top areas for you to review, before engaging with a specialist.

• Review the current controls and procedures you have in place.
• Check your sanctions procedures and whether they are fit for purpose.
• Check your people training programme.

Crowe can help you with the three above areas as part of their AML Audit service and will work with you to identify robust solutions. Please contact Julie James for more information.