UK financial watchdogs are questioning whether Revolut failed to abide by rules requiring it to be open and frank with its regulator, piling further pressure on the British digital bank after mis-steps and high-profile departures.
Revolut is facing growing doubts over its ability to effectively manage its rapid growth after it emerged that the company had “erroneous[ly]” switched off an automated system for flagging potential money-laundering for several months last year.
The report quoted a draft letter to the Financial Conduct Authority from Revolut’s head of legal explaining the situation. But the letter was never sent.
The FCA is now scrutinising whether Revolut failed in its duty to be fully transparent – one of the key principles regulated companies must abide by – over such a key issue, said people familiar with the situation.
Regulatory requirements
Revolut said it did not comment on matters pertaining to the regulator. However, in a blog post earlier on Friday, before news of the regulatory probe, Revolut said “at no point . . . did we fail to meet our legal or regulatory requirements”.
The FCA said: “We are aware of the article but had not received the letter that was referred to in it. We have been in contact with the firm to understand and assess the issues the article raises.
“The FCA expects all firms to have appropriate systems and controls in place at all times to monitor and counter the risk their services are abused for financial crime.”
The concerns follow the discovery of a spate of suspected money laundering on Revolut’s network last year, which was reported to the FCA and National Crime Agency at the time.
They also come the same day it emerged that the chief financial officer had stepped down in order for the company to find a replacement with more retail banking experience.
Peter O’Higgins, who joined Revolut in 2016 after more than a decade as an investment banker at JPMorgan, resigned last month.
Revolut has expanded exponentially during Mr O’Higgins’s tenure, from a start-up that had only recently raised its series A funding round, to a licensed bank with more than three million customers, including some 200,000 in the Republic.
However, recent setbacks have raised concern about the company’s internal culture and the quality of compliance controls. – Copyright The Financial Times Limited 2019
