The Financial Conduct Authority (FCA) has handed a £29m fine to Starling Bank for financial crime failings related to its financial sanctions screening.

The regulator also found that the firm repeatedly breached a requirement not to open accounts for high-risk customers.

When the FCA reviewed financial crime controls at challenger banks in 2021, it identified serious concerns with the anti-money laundering and sanctions framework in place at Starling.

The bank had grown its customer numbers from approximately 43,000 in 2017 to 3.6 million in 2023, but the FCA believes that measures to tackle financial crime did not keep pace with this growth.

Starling had agreed to a requirement restricting it from opening new accounts for high-risk customers until this improved. However, the bank failed to comply and opened over 54,000 accounts for 49,000 high-risk customers between September 2021 and November 2023.

In January 2023, Starling then became aware that its automated screening system had, since 2017, only been screening customers against a fraction of the full list of those subject to financial sanctions.

Joint executive director of enforcement and market oversight, Therese Chambers, said that Starling’s financial sanction screening controls were “shockingly lax”.

“[Starling] left the financial system wide open to criminals and those subject to sanctions,” Chambers said. “It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.”

Starling has issued a response to the FCA’s notice and said that the bank “fully accepts the findings”.

In response to the investigation and as a result of its own review process, Starling also said it has introduced “extensive additional safeguards” to ensure the bank complies with regulatory requirements in future.

Starling chairman, David Sproul, said: “I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities.

“We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy of safe, sustainable growth, supported by a robust risk management and control framework.”

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