Goldman-Backed Starling Bank Fined $38.5M for Lax Crime Controls

October 3, 2024: Starling Bank, a prominent digital bank backed by Goldman Sachs, has been fined £29 million ($38.5 million) by the Financial Conduct Authority (FCA) for failing to maintain adequate financial crime prevention controls. The FCA criticized the bank’s “shockingly lax” approach to financial sanctions screening and its repeated breaches of rules prohibiting accounts for high-risk customers.

The FCA’s investigation revealed that Starling Bank had opened accounts for over 54,000 high-risk customers between September 2021 and November 2023 despite being aware of the risks associated with these customers. Additionally, the bank’s financial sanctions screening controls were inadequate, leaving the financial system vulnerable to criminal exploitation.

The fine imposed on Starling Bank is a significant blow to the bank’s reputation and could have broader implications for the digital banking industry. The FCA’s action highlights the importance of rigorous financial crime prevention measures for all financial institutions, regardless of their size or business model.

In response to the fine, Starling Bank has acknowledged its failings and apologized to its customers and regulators. The bank has also stated that it has taken steps to strengthen its financial crime prevention controls and ensure full compliance with regulatory requirements.

The FCA’s action against Starling Bank warns other financial institutions that they must maintain robust financial crime controls. Failure to do so could result in significant fines and reputational damage.

Also Read, Charles Schwab CEO Walt Bettinger to Retire, Rick Wurster Named Successor