Revolut attracts UK watchdog scrutiny over red-flag accounts

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Revolut is in talks with the UK’s financial regulator about failures that allegedly allowed money to be released from accounts flagged by the National Crime Agency as suspicious, in the latest in a series of issues to hit the fintech as it awaits its UK banking licence.

The Financial Conduct Authority, which oversees Revolut’s payments business, is engaging with the fintech, with the support of the NCA, over the alleged failures that occurred between July and August, according to two people familiar with the situation.

As much as £1.7mn was released from the flagged accounts, said two people familiar with the situation. Revolut notified the FCA of the latest problem in recent weeks but claims only £500,000 was released, one of the people said. Revolut declined to comment, as did the NCA and FCA.

The NCA can restrict accounts over suspicions of money laundering or illicit finance, in order to allow law enforcement to investigate before further funds can be withdrawn.

Revolut’s controls against financial crime and money laundering have been a longstanding focus of regulators overseeing the fintech’s global business. These concerns also relate to a flaw in its payments system that allowed US criminals to steal more than $20mn, the FT previously reported.

The latest UK issue comes as negotiations continue on Revolut’s almost two-and-a-half-year-old bid for the banking licence it needs to boost growth in its home market.

After predicting the UK licence was coming “any day now” back in March, Revolut this week said it would “not comment on licence applications”.

“As a global financial institution, we work closely with regulators around the world, ensuring that we maintain strong governance and compliance practices across our business,” the fintech said.

“Since our founding in 2015, Revolut has obtained over 70 licences across a range of financial services and we are constantly building on this to ensure our 30m+ customers can continue to use our industry-leading products with trust and confidence.”

Founded by Nik Storonsky and Vlad Yatsenko to shake up the cross-border payments market, Revolut has since expanded its services from crypto trading to savings, wealth management and banking small and medium-sized businesses.

It has held a full banking licence in Lithuania since 2021, enabling it to offer banking services across the European Economic Area. It was anointed the UK’s most valuable private tech company after a 2021 fundraising that put a $33bn price tag on the company.

The fintech has been hit with a series of setbacks in 2023, including releasing 2021 accounts that were late alongside a warning that revenues “may be materially misstated” because of issues with its IT systems.

Revolut said earlier this month that its 2022 accounts would also be delayed, this time until the end of December.

Still, the fintech has continued its breakneck growth, climbing to 30 million retail customers worldwide by June and giving it comparable reach to Lloyds Banking Group, which boasts more than 30 million customers, and far outstripping NatWest’s 18 million.