On September 27, 2024, the Financial Conduct Authority (“FCA”), which is a financial regulatory body in the UK that regulates firms providing financial services to consumers, fined a UK Challenger Bank (the “Bank”) £29 million due to significant failings in its financial sanctions compliance and anti-money laundering systems and controls.
The FCA’s Summary of Reasons found that, while the Bank had undergone “exponential growth” between 2016 and 2023, growing its customer base more than 8,000 percent from approximately 43,000 customers to approximately 3.6 million customers and its revenue more than 3 million percent from approximately £13,000 to approximately £453 million, “its financial crime controls [had] failed to keep pace”. Of note, the penalty would have been £41 million, 30% more, but for the Bank’s agreement to reach an early resolution with the FCA.
Our client alert covers the FCA’s findings in more detail and discusses the steps that all regulated firms, not least disruptive companies that are leveraging pioneering financial technology to grow as fast as possible, should be taking to help ensure compliance. It is key that firms reconsider their financial crime risk assessments and controls on a regular basis, to confirm that they remain appropriate for the nature and size of their business and the risks identified. Businesses that are fast-growing, introducing innovative products, entering new markets, or otherwise susceptible to abuse by sanctioned persons, money launderers, or other malicious actors, should undertake this reconsideration urgently.
Please do not hesitate to reach out if you would like to discuss how we can help you to assess the adequacy of your existing sanctions and anti-money laundering compliance programs, which in turn will help to mitigate exposure to government investigations, prosecutions and penalties, derivative litigation, and reputational loss and brand devaluation.