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Revolut reports suspected money laundering on its system

Critics question if UK fintech can maintain defences against crime amid rapid growth

 

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Revolut discovered a spate of suspected money laundering on its digital payments system a few months ago, prompting the UK’s fastest growing financial technology company to notify law enforcement authorities and the financial watchdog. The act of reporting the suspected criminal activity to the National Crime Agency and the Financial Conduct Authority underlines the significance of the potential wrongdoing that Revolut found. It also highlights how seriously the company takes its legal obligations.

 

Companies usually only file suspicious activity reports to the NCA, but the FCA expects to be informed when they are particularly material. The incident could be seized on by Revolut’s critics, who question whether it can maintain strong enough defences against financial crime while pursuing its super-charged growth strategy. It is advertising for its third compliance head in the past year. The company launched three years ago in a crowded field of British pre-paid card operators seeking to disrupt traditional banks by offering cheap cross-border payments.

 

But it quickly diversified into cryptocurrency and small business services, and recently more than doubled its customers to 2.25m in six months. The Financial Times has spoken to several current and former Revolut employees, as well as rivals and regulatory officials, about the company’s efforts to stay on top of its commitments to fight financial crime. The NCA and FCA declined to comment. Many of the people said that Revolut’s rapid growth and use of automated compliance checks, which make it popular with customers who can open an account in only a few seconds, could leave it vulnerable to abuse by increasingly sophisticated financial criminals.

 

Nikolay Storonsky, co-founder and chief executive of Revolut, declined to comment on the suspected money laundering issue. He defended the company’s compliance systems. He also pointed out that it had recently been re-authorised under the EU’s second payments services directive and came through an FCA review of industry-wide anti-money laundering controls.

Oliver Smith

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