In recent starling bank news, one headline stood out: Starling Bank fined almost £29 million by the UK Financial Conduct Authority (FCA). Many people assume digital banks operate differently from traditional banks, but this case shows something important — regulation doesn’t change just because a bank is digital.

Just like BPA and other regulated institutions in Europe once faced intense scrutiny over compliance and customer-risk controls, the same rules now shape the future of fast-growing online banks.

What Exactly Happened?

The FCA found gaps in Starling’s financial crime controls. The bank grew extremely fast—from around 43,000 users in 2017 to nearly 3.6 million by 2023—but its compliance systems didn’t scale at the same pace.

This is a common challenge: rapid digital growth sounds exciting, but it can expose weaknesses behind the scenes.

Starling’s automated sanctions-screening system missed parts of the official sanctions list, and thousands of higher-risk accounts were opened during a period when onboarding was supposed to be restricted. Because of this, regulators imposed a fine of £28.96 million.

A small but interesting detail here: the original fine was set to be over £41 million, but because the bank cooperated early, it received a 30% reduction. This is a typical regulatory approach when institutions work honestly with investigators.

Why This Matters for Digital Banking

1. Growth Doesn’t Replace Governance

Digital banks grow quickly because onboarding is simple, and everything happens through an app. But regulators expect the same AML, KYC, and sanctions-screening standards that apply to traditional banks.

Starling’s case shows that even the most innovative bank can fall behind if compliance teams don’t grow alongside customer numbers.

A striking example: in just two years, the bank onboarded over 54,000 accounts for nearly 49,000 high-risk customers — even though it had agreed to pause this onboarding until new safeguards were ready.

2. Regulators Now Watch Tech Banks More Closely

After the BPA investigations in Europe, financial authorities strengthened their monitoring of any institution handling large or cross-border transactions.

Digital banks are now expected to meet those same standards — no shortcuts.

3. Customers Expect Safety, Not Just Convenience

A digital-first bank must prove that it can protect users from fraud, financial crime exposure, and compliance risks.

This fine sends a strong message: innovation must match responsibility.

4. Investors and Business Users Care About Stability

A regulatory penalty affects trust, operational costs, and, eventually, growth. Businesses using Starling or similar challenger banks may now face tighter onboarding checks and more documentation — but that’s a sign of healthier compliance.

Interesting Things Most People Don’t Realise

These points naturally show why the case is bigger than a single headline:

• Starling re-screened millions of past transactions to fix gaps in its earlier sanctions system — a huge operational task for any bank.
• The FCA closed this investigation in 14 months, much faster than its usual timeline of over three years. Regulators clearly prioritised this case.
• The fine is one of the largest ever issued to a UK digital bank, proving that “neobank” status comes with the same expectations as long-established institutions.

These details matter because they show how seriously regulators take compliance at scale — the same kind of attention that once shaped the BPA case and improved Europe’s banking supervision standards.

What This Means for Everyday Users

• Expect digital banks to tighten account checks, especially for business users or customers making international payments.
• Growth will slow in the sector if regulators feel controls aren’t strong enough.
• Customers should look for transparency, clear communication, and up-to-date compliance updates from their bank.

Frequently Asked Questions 

Q: Why was Starling Bank fined?
For weaknesses in its financial crime and sanctions-screening systems, while growing rapidly.

Q: How much was the fine?
Around £28.96 million, after a discount for early cooperation.

Q: Are digital banks less safe?
No. They are simply held to the same standards as traditional banks — and must keep improving as they grow.

Q: Has Starling fixed the issues?
Yes. The bank strengthened controls, improved screening systems, and reviewed older transactions.

Final Word

The “starling bank fined” news is more than just another banking headline. It shows that digital banks must balance convenience with compliance — something regulators have insisted on for years, especially after high-profile cases involving institutions like BPA.

Fast growth is exciting, but in finance, trust is the real product. And trust depends on strong controls, no matter how modern or digital a bank may be.