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ARTICLE · 07 NOVEMBER 2024

Lessons On Effective Financial Crime Controls: The Starling Bank Example

K&L Gates
K&L Gates
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K&L Gates

K&L Gates

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The recent £29 million fine imposed by the Financial Conduct Authority (FCA) on Starling Bank highlights the critical need for financial institutions, including fintech and neobanks, to implement rigorous sanctions compliance controls. Starling's lapse—only partially screening sanctioned individuals and entities—prompted a severe penalty and underscores the FCA's commitment to enforcing financial crime standards. Key steps for maintaining compliance include aligning controls with business risk p

United KingdomFinance and Banking
Jordan Hawthorne
Jordan Hawthorne
Michael E. Ruck
Michael E. Ruck
Rosie Naylor
Rosie Naylor

The Financial Conduct Authority (FCA) recently levied a jaw-dropping £29 million fine against Starling Bank (Starling). The fine follows an investigation by the regulator, which exposed the bank's "shockingly lax" sanctions screening controls, and a financial system "wide open to criminals" (see the FCA report here).

Comparatively, the fine dwarves the recent first financial penalty imposed by the Office of Financial Sanctions Implementation (OFSI)—the primary United Kingdom (UK) agency responsible for monitoring compliance with financial sanctions—in relation to a breach of the UK sanctions regime regarding Russia, which amounted to only £15,000.1 As such, the Starling example serves as a stark warning, not only to neobanks and fintechs but to all financial services businesses, about the need to ensure the implementation of adequate sanctions controls and the risk of FCA enforcement action where firms get this wrong.

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