# FCA fines Starling £29m after its automated sanctions screening checked only part of the list

Source: https://www.bankingnewsai.com/ai-incidents/starling-2024-fca-automated-sanctions-screening
Last updated: Oct 21, 2026

Starling Bank · Governance finding · severity 4 of 5

On 2 October 2024 the FCA fined Starling Bank £28,959,426 for financial-crime failings. Per the FCA, Starling found in January 2023 that its automated sanctions-screening system had, since 2017, screened customers against only a fraction of the UK sanctions list: a misconfiguration meant only people with UK citizenship or residency, 39 of 3,088 designated persons, were checked, and at least one designated person opened an account. The fine also covers Starling opening 54,359 accounts for 49,183 high-risk customers in breach of a voluntary FCA restriction, so not all of it relates to the screening system. Starling accepted the findings, apologised and said it had re-screened transactions. The screening system was automated and not described as AI.

## Key facts

|  |  |
| --- | --- |
| Date | Oct 2, 2024 |
| Institution | Starling Bank |
| Country | United Kingdom |
| AI system | Automated customer sanctions-screening system (name matching against the OFSI Consolidated List); not described as AI |
| AI? | Automated system not described as AI — The system was automated, but neither the institution nor a regulator described it as AI; it is listed because it is routinely discussed as an AI failure. |
| Category | Regulatory finding (Governance finding) |
| Status | Regulator finding |
| Severity | 4 of 5 — A regulatory finding with a £28,959,426 fine (about $37m), covering a screening gap that lasted from 2017 to 2023 and more than 54,000 accounts opened in breach of an FCA requirement. |

## What happened?

Starling grew from about 43,000 customers in 2017 to 3.6 million in 2023. The FCA said its financial-crime controls did not keep pace: a 2021 review of challenger banks found serious concerns with its anti-money-laundering and sanctions framework, and in September 2021 Starling accepted a voluntary requirement (VREQ) not to open accounts for high-risk customers until its controls improved. [1][2]

In January 2023 a second-line review found that Starling's automated customer screening system had produced no sanctions alerts for individual customers between 1 July 2022 and 30 January 2023. Per the Final Notice, the cause was a system misconfiguration in place since 20 July 2017 that meant customers were screened only against people on the Consolidated List with UK citizenship or UK residency, 39 of the 3,088 designated persons. The FCA said there was a material risk that designated persons could open or keep accounts, and Starling identified that at least one had opened an account. [2][4]

Starling reported the gap to the FCA on 16 February 2023, having reconfigured and tested the screening system on 10 February and re-screened its 3.5 million active customers by 24 February. Its wider review also found it screened customers only once every 14 days and only after onboarding, did not screen all cross-border payments, and used a customer-screening tool to screen payments. Starling has since reported multiple potential sanctions breaches to the relevant authorities, the FCA said. [1][2]

Separately, the FCA found that between September 2021 and November 2023 Starling opened 54,359 accounts for 49,183 high-risk or higher-risk customers in breach of the VREQ, including 294 customers it had previously exited for financial-crime reasons after a separate control failed to update correctly. The fine covers both the VREQ breaches and the sanctions-screening failings under Principle 3. [2][4]

## Timeline

- Jul 20, 2017 — A misconfiguration in Starling's automated customer sanctions screening begins; from now on customers are checked only against designated persons with UK citizenship or residency. [2]
- Sep 17, 2021 — The FCA imposes a voluntary requirement (VREQ) barring Starling from opening accounts for high-risk customers. [2]
- Jan 30, 2023 — Starling's sanctions screening review finds the automated system produced no alerts for individual customers since 1 July 2022 and traces the misconfiguration back to 2017. [2]
- Feb 16, 2023 — Starling notifies the FCA, having reconfigured the screening system on 10 February and begun re-screening its active customer base. [2]
- Oct 2, 2024 — The FCA publishes its Final Notice and fines Starling £28,959,426 after a 30% settlement discount; Starling accepts the findings and apologises. [1][3]

## What was the impact?

- Financial: £28,959,426 FCA fine (£40,959,426 before the settlement discount)
- Customers: Customers were screened against 39 of 3,088 designated persons from July 2017 to January 2023; at least one designated person opened an account. Separately, 54,359 accounts were opened for 49,183 high-risk customers in breach of the VREQ.
- Other: The Guardian reported that Starling earned £900,000 in interest and fees from the accounts opened in breach of the VREQ. [1][2][4]

## How did Starling Bank respond?

Starling said it "fully accepts the findings" of the Final Notice and "regrets and apologises for the events and shortcomings". It said it had paid the fine "as full and final settlement", completed a detailed re-screening of transactions and a back-book review of customer accounts, and that enhanced controls over its VREQ compliance and its "financial sanctions screening systems and controls are now in place." Chair David Sproul apologised for the failings and said the bank had "invested heavily to put things right". [3][4]

## What was the outcome?

The FCA found a breach of Principle 3 and a contravention of the VREQ and fined Starling £28,959,426; Starling settled and received a 30% discount. The FCA said Starling had established programmes to remediate the breaches and that third-party testing had found its customer and payment sanctions screening systems operating effectively by the end of the relevant period. The VREQ remained in place at the time of the notice. [1][2]

## FAQ

### Why was Starling Bank fined £29m?

The FCA fined Starling £28,959,426 in October 2024 for two sets of failings: its automated sanctions screening checked customers against only 39 of 3,088 designated persons from 2017 to January 2023, and it opened 54,359 accounts for 49,183 high-risk customers in breach of a voluntary FCA restriction.

### Was Starling's sanctions screening system AI?

No. The FCA describes an automated screening system that matched customer names against the OFSI Consolidated List and was misconfigured to check only designated persons with UK citizenship or residency. Neither the FCA nor Starling described it as artificial intelligence; it is recorded here as an automated-system failure.

### Did any sanctioned person open a Starling account?

Yes. The FCA's Final Notice says Starling identified that during the relevant period at least one designated person had opened an account. Starling has reported multiple potential financial-sanctions breaches to the relevant authorities. The notice does not give a figure for any money moved by sanctioned customers.

### What did Starling change after the FCA findings?

Starling reconfigured its screening system in February 2023, re-screened its customer base, carried out historic sanctions reviews of customers and payments back to 2017, introduced automated daily VREQ controls and increased its financial-crime staff. It said enhanced sanctions screening controls are now in place.

## Sources

1. [FCA fines Starling Bank £29m for failings in their financial crime systems and controls](https://www.fca.org.uk/news/press-releases/fca-fines-starling-bank-failings-financial-crime-systems-and-controls) — Financial Conduct Authority, Oct 2, 2024 (official): "In January 2023, Starling 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."
2. [Final Notice: Starling Bank Limited](https://www.fca.org.uk/publication/final-notices/starling-bank-limited-2024.pdf) — Financial Conduct Authority (Final Notice), Sep 27, 2024 (official): "This misconfiguration had existed since 20 July 2017 and resulted in customers or prospective customers only being screened against individuals on the Consolidated List with UK citizenship or UK residency during this period (i.e. 39 of the 3088 Designated Persons)."
3. [Starling Bank response to FCA Final Notice](https://www.starlingbank.com/news/starling-bank-response-to-fca-final-notice/) — Starling Bank, Oct 2, 2024 (official): "Starling regrets and apologises for the events and shortcomings that led to the FCA's Final Notice."
4. [Starling Bank fined £29m for 'shockingly lax' financial crime controls](https://www.theguardian.com/business/2024/oct/02/starling-bank-fined-29m-for-shockingly-lax-financial-controls) — The Guardian, Oct 2, 2024 (news): "Starling's customers or prospective clients were only screened against sanctions records for individuals with UK citizenship or residency – accounting for 39 of the 3,088 people on the UK sanctions list."

## Related incidents

- [FCA fines Metro Bank £16.7m after its automated transaction monitoring missed 60m transactions](https://www.bankingnewsai.com/ai-incidents/metro-bank-2024-fca-automated-transaction-monitoring)

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