Starling Bank Fined £29 Million for Lax Anti Money Laundering Controls

Money laundering and sanctions breaches were exposed by failing to prevent them at Starling Bank, which was fined £29 million.

Starling Bank has been fined £29 million ($38.5 million) in Britain by its financial regulator after it found the bank had 'serious' AML and sanctions screening procedures. It further stated: The shortcomings in the wares allowed for criminal activity in the financial system.'

The regulator that investigated said Starling had not lived up to its promise not to serve high risk customers after opening about 54,000 accounts for about 49,000 customers in a period running from September 2021 to November 2023.  However, in a 2021 review of the ‘challenger bank’ sector, Starling’s financial crime controls were previously flagged as a potential concern.

The bank found in January 2023 that its automated sanctions system screen had not screened a small subset of individuals subject to financial sanctions since 2017. It later emerged that its financial sanctions framework was riddled with systemic problems, according to an internal audit. With these findings Starling reported several possible breaches of sanctions to the respective authorities.

FCA's joint executive director of enforcement Therese Chambers said Starling's lax controls left the financial system wide open to criminals. She noted that the bank had not satisfied previous agreed provisions to limit the risk of financial crime.

Starling Bank responded by confirming that the FCA’s findings were accepted and that corrective action has been taken — including through an in depth review of customer accounts. Former Chairman David Sproul had some regrets, but said that the investment the bank has made to remedy the failings has been significant.

The original fine was set at £41 million, but Starling would receive a 30 per cent discount for cooperating with the FCA. This case makes clear the regulator's rigorous sanctions screening and accountability for compliance failures, legal experts said.