FCA says challenger banks need more financial crime controls

Wednesday 27 April 2022 12:13 CET | News

The Financial Conduct Authority (FCA) has published the findings of a review into financial crime controls at several UK challenger banks.

The FCA didn’t name any firms but said its review focused on six challenger banks, half of which were digital banks. Starling Bank said it was one of the lenders scrutinised by the regulator.

The regulator said it found weaknesses in challenger banks’ due diligence checks on customers, with some firms failing to adequately assess the risk of financial crime when onboarding new clients. In some cases, challenger banks did not have customer risk assessments in place to begin with.

Collectively, the companies reviewed by the FCA covered over 8 million customers, the watchdog said. The review excluded e-money issuers and payment services providers, like Revolut and Wise.

There’s been growing concern from regulators that some of these newer entrants may have more lax controls than those of established banks, given their platforms are designed to make applying for an account or loan faster and easier.

Going forward, the FCA said it expects challenger banks to develop their defences against financial crime to reflect their user growth, and adapt their due diligence measures to take the heightened risk of sanctions evasion into account.

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Keywords: financial crime, challenger bank, banks, regulation, digital banking
Categories: Fraud & Financial Crime
Companies: FCA
Countries: United Kingdom
This article is part of category

Fraud & Financial Crime


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