UK digital banks need to improve financial crime controls, FCA warns

Regulators warn that the UK’s online-only challenge banks need to do more to prevent criminals from misusing the platform.

Friday’s Financial Conduct Authority Published survey results Results of a Review of Financial Crime Management at Several UK Challenging Banks — Young Banks were founded with the goal of undertaking current lenders.

The FCA did not nominate any company, but said its review focused on six challenging banks, half of which were digital banks. Sterling Bank said it was one of the lenders scrutinized by regulatory agencies.

“Sterling is very active in raising awareness about these issues and in January of this year we No longer advertising upon Meta “Platform”.

Regulators said Challenger Bank’s due diligence checks on its clients were weak and some companies were not able to adequately assess the risk of financial crime when hiring new clients. In some cases, Challenger Bank did not perform a customer risk assessment in the first place, he added.

In summary, the companies reviewed by the FCA “covered more than 8 million customers,” Watchdog said. This review excluded e-commerce issuers and payment service providers such as Revolut and Wise.

“Challenger Bank is an important part of UK retail banking services,” FCA’s executive director of markets, Sarah Pritchard, said in a statement Friday.

“But there can be no trade-off between quick and easy account opening and strong financial crime management. Challenger banks will review the results of this review and have their own financial crime system to prevent harm. Need to continue to strengthen. “

Fintech companies Pressure to improve financial crime managementEspecially following the economic sanctions imposed on Russia over the provocative invasion of Ukraine.

UK fintech-friendly regulations have allowed many start-ups, including Monzo and Starling, to thrive. However, regulators may have looser control than existing banks, as some of these new entrants are designed to make applying for accounts and loans faster and easier. There is growing concern.

Going forward, the FCA expects challenger banks to develop defenses against financial crimes to reflect user growth and adapt due diligence measures to account for the increased risk of avoiding sanctions. Said.

Last year, the popular app-based bank Monzo disclosed an FCA investigation into possible violations of the Money Laundering Prevention Act. At the time, the company said the investigation was “early stage” and was working with regulatory agencies.