FCA probes Revolut for facilitating sanctions-breaching transactions
Britain’s Financial Conduct Authority (FCA) is reportedly investigating whether Revolut allowed money to be withdrawn from accounts flagged as suspicious by the National Crime Agency.
The alleged failure occurred between July and August, with as much as £1.7 million being released from such accounts. Revolut stated that it informed the FCA about the issue recently, but it claims that only £500,000 was released from the suspicious accounts.
The FCA is reportedly concerned that Revolut deactivated its transaction halting mechanism, designed to prevent sanctions-breaching transactions, and switched to a system that only flagged transactions for further review after they had taken place. Although a letter detailing this change was drafted by Revolut’s head of legal in September, it was not sent to the FCA at that time.
The UK regulator now believes it should have been informed of this change earlier and is seeking answers from Revolut. Any evidence of wrongdoing could result in hefty fines and the withdrawal of Revolut’s e-money license in the UK.
A spokesman for 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.”
Britain’s most valuable start-up faced delays in securing a UK banking license, partly due to concerns raised during the publication of its long-delayed 2021 accounts in March 2023. At that time, BDO LLP, the UK’s fifth largest accounting firm, said it had been unable to fully verify nearly £500 million of revenues, adding that “the risk of an undetected material misstatement was unacceptably high” due to the configuration of Revolut’s internal IT systems.
The incident is expected to increase the challenges faced by the fintech company, which is already under significant pressure.
Revolut also fell victim to organized criminal gangs who exploited a flaw in its US and European payment systems, resulting in the theft of over $20 million. The incident, which stemmed from differences between the app’s US and European subsidiaries, allowed some declined transactions to be erroneously refunded. This allowed the criminals to withdraw the refunded amount from receiving accounts via ATMs for several months last year.