- The Financial Conduct Authority has fined anti-crypto bank Starling Bank $38 million for serious failings in its financial crime controls
- Starling Bank has admitted to opening accounts for high-risk customers, breaching FCA rules between 2019 and 2023
- The bank has since taken steps to rectify its shortcomings, including enhancing its governance and risk management frameworks
Starling Bank, which publicly banned cryptocurrency usage on its platform, has been fined £29 million ($38 million) by the UK’s financial regulator for significant deficiencies in its financial crime prevention systems. The Financial Conduct Authority’s (FCA) investigation revealed that the bank’s controls were insufficient to protect against criminals and sanctioned individuals after the bank aired these exact concerns with its crypto stance. The FCA found that Starling failed to comply with key regulations designed to curb financial crime between 2019 and 2023, issuing it with the fine as a result.
Starling Banned Crypto Activities
Starling made headlines in May 2021 when it prevented customers from withdrawing funds from crypto exchanges and buying cryptocurrency through its services, calling it “a temporary measure” taken to “protect customers.”
The bank toughened its stance the following year, banning customers from any kind of cryptocurrency transactions, citing the “high risk” of fraud, money laundering, and criminal activity within the crypto sector as the key reasons behind these measures. According to the bank, these restrictions were necessary to protect customers from scams and prevent the misuse of its services for illegal activities.
However, it seems that perhaps crypto wasn’t the problem after all. The bank, which grew rapidly from 43,000 customers in 2017 to 3.6 million in 2023, was unable to keep pace with regulatory demands, with the FCA’s investigation highlighting several concerns, particularly around its anti-money laundering (AML) and financial sanctions screening processes.
Poor AML Procedures Led to Fine
According to the FCA, Starling had agreed not to open accounts for high-risk individuals but proceeded to do so for over 49,000 customers between 2021 and 2023, with the regulator describing the bank’s financial crime controls as “shockingly lax,” exposing the financial system to potential misuse
Starling’s chairman, David Sproul, expressed regret over the failings, stating, “We have invested heavily to put things right.” Despite these efforts, the fine has cast a shadow over the bank’s reputation and its plans to list on the stock market.
Crypto users will no doubt offer a wry smile at the fine imposed on Starling, which has perpetrated much worse customer protection than many of the crypto exchanges it refuses to serve.
