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

According to the FCA, Starling grew from approximately 43,000 customers in 2017, to 3.6 million in 2023, however, measures to tackle financial crime did not keep up with its growth.

After a 2021 review of financial crime controls at challenger banks in 2021, the regulator had identified serious concerns with the anti-money laundering and sanctions framework in place at Starling.

The bank agreed to a requirement which restricted 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, the bank 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.

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A subsequent internal review found systemic issues in its financial sanctions framework —  Starling has since reported multiple potential breaches of financial sanctions to the relevant authorities.

“Starling’s financial sanction screening controls were shockingly lax,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA.

“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.”

The case took 14 months from opening to outcome, compared to an average of 42 months for cases closed in 2023/24.

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