Starling Bank Limited has been fined £28,959,426 by the Financial Conduct Authority for financial crime failings related to its financial sanctions screening.

The British bank also repeatedly breached a requirement not to open accounts for high-risk customers, according to the watchdog.

The challenger bank has grown fast – from around 43,000 customers in 2017 to 3.6 million in 2023 – but its measures to tackle financial crime have not kept pace.

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

The FCA said that in January 2023, Starling 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. A subsequent internal review identified systemic issues in its financial sanctions framework. Starling has since reported multiple potential breaches of financial sanctions to the relevant authorities.

Therese Chambers, joint executive director of enforcement and market oversight, commented: “Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions. 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.”

The Starling case took 14 months from opening to achieving an outcome – compared to an average of 42 months for cases closed in 2023/24 – reflecting the renewed pace with which the City watchdog is carrying out its enforcement investigations.

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