UK virtual banks want to give a boost to monetary crime controls, FCA warns


Icons for the Monzo and Starling banking apps on a smartphone.

Adrian Dennis | AFP by the use of Getty Photographs

Britain’s online-only challenger banks want to do extra to forestall the abuse in their platforms by way of criminals, regulators have warned.

The Monetary Behavior Authority on Friday printed the findings of a assessment into monetary crime controls at a number of U.Ok. challenger banks — more youthful banks arrange with the purpose of taking up incumbent lenders.

The FCA did not title any corporations however mentioned its assessment eager about six challenger banks, part of that have been virtual banks. Jointly, those corporations lined greater than eight million consumers, the watchdog mentioned. The assessment excluded e-money issuers and fee products and services suppliers, like Revolut and Smart.

The regulator mentioned it discovered weaknesses in challenger banks’ due diligence tests on consumers, with some corporations failing to adequately assess the danger of monetary crime when onboarding new shoppers. In some circumstances, challenger banks didn’t have buyer possibility tests in position initially, it added.

“Challenger banks are the most important a part of the United Kingdom’s retail banking providing,” Sarah Pritchard, govt director of markets on the FCA, mentioned in a remark Friday.

“Alternatively, there can’t be a trade-off between fast and simple account opening and strong monetary crime controls. Challenger banks must believe the findings of this assessment and proceed bettering their very own monetary crime programs to forestall hurt.”

Fintech corporations are beneath power to give a boost to their monetary crime controls, specifically within the wake of monetary sanctions imposed on Russia over its unprovoked invasion of Ukraine.

Fintech-friendly rules within the U.Ok. have allowed a lot of upstart lenders together with Monzo and Starling to flourish. However there may be been rising worry from regulators that a few of these more recent entrants can have extra lax controls than the ones of established banks, given their platforms are designed to make making use of for an account or mortgage sooner and more straightforward.

Going ahead, the FCA mentioned it expects challenger banks to increase their defenses towards monetary crime to mirror their person expansion, and adapt their due diligence measures to take the heightened possibility of sanctions evasion under consideration.

Closing yr, the preferred app-based financial institution Monzo disclosed an investigation by way of the FCA into possible breaches of anti-money laundering regulations. On the time, the company mentioned the probe was once “at an early degree,” and that it is cooperating with the regulator.

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