The Telegraph reports : “One of Britain’s most promising technology startups has been accused of violating basic banking rules by failing to block thousands of potentially suspicious transactions on its platform.
The Telegraph reports that show that for three months last year Revolut switched off an automated system designed to stop dubious money transfers.
As a result, thousands of illegal transactions may have passed through the London-based startup’s digital banking system between July and September of 2018.
Revolut launched an internal investigation in late 2018 after a whistleblower contacted Revolut’s board over serious issues with its sanctions screening system.
In a letter to the FCA in September 2018, Revolut’s head of legal Tom Hambrett wrote: “The investigation concluded that the original decision to turn off the transaction-halting mechanism was erroneous and implied a remediable systems and controls failing.” The digital bank has since introduced a new system following the incident last year, it said in the letter.
Sanctions screening systems automatically check customer records against an official list to identify high-risk transactions and customers who are flagged as “politically exposed persons”.
Revolut, which has grown to over 3m customers around the world since its launch in 2015, contacted the Financial Conduct Authority (FCA) in September to inform the watchdog of a three-month “failing”, The Telegraph can reveal.
It told the FCA that it had disabled part of its sanctions screening system after it made 8,000 “false positive” flags, incorrectly identifying legitimate transactions as being suspicious and blocking the transfers. The company then moved to a compliance system that flagged transactions but did not automatically disable them, Revolut said.