It also said Starling repeatedly breached a requirement not to open accounts for high-risk customers.

The regulator notes the bank grew quickly, from approximately 43,000 customers in 2017 to 3.6 million in 2023. However, measures to tackle financial crime did not keep pace with its growth.

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.

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, FCA joint executive director of enforcement and market oversight, said: “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.”

This case took 14 months from opening to achieving an outcome – compared to an average of 42 months for cases closed in 2023/24. This is an example of how the FCA is improving the pace of its enforcement investigations.

Starling has established programmes to remediate these breaches and to enhance its wider financial crime control framework.

The bank confirmed that it fully accepts the findings set out in the FCA’s final notice, saying it regrets and apologises for the events and shortcomings that led to the FCA’s action.

Starling has cooperated fully with the FCA in its investigation and accepts its finding that the bank’s financial crime controls failed to keep pace with the growth of the business. It has paid the £29m fine as full and final settlement.

The bank has completed both a detailed re-screening of transactions and an in-depth back book review of customer accounts in respect of the contraventions detailed in the Notice.

Through extensive investment into its financial crime resource and expertise, Starling is satisfied that it now has the required compliance and risk management controls, procedures and policies in place.

David Sproul, chairman of Starling Bank, said: “I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities.

“We want to assure our customers and employees that these are historic issues. We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy of safe, sustainable growth, supported by a robust risk management and control framework.”