Goldman-backed Starling Bank hit with $38.5 million fine for financial crime prevention failures

Starling Bank, the British digital lender backed by Goldman Sachs, has been fined £29 million ($38.5 million) by the U.K.’s Financial Conduct Authority (FCA) for failing to adequately address financial crime risks. The penalty was imposed due to weaknesses in Starling’s financial sanctions screening system and for repeatedly breaching rules related to opening accounts for high-risk customers.

Between 2017 and 2023, Starling grew from 43,000 to 3.6 million customers, but its internal controls to combat financial crimes did not keep pace with this rapid expansion. Despite agreeing to stop opening accounts for high-risk customers during the investigation, Starling still opened 54,000 accounts for 49,000 high-risk individuals between September 2021 and November 2023, violating FCA guidelines.

In response, Starling Bank acknowledged the failings and emphasized steps taken to strengthen its risk management systems. David Sproul, chairman of Starling Bank, apologized and assured that the bank had learned from its past mistakes. He noted the company’s efforts to improve governance and controls, which he believes will support the bank’s ongoing growth.

The FCA concluded its investigation in 14 months, significantly faster than its typical 42-month average for similar cases.