Goldman-backed Starling Bank fined $38.5 million for 'shockingly lax' financial crime controls

U.K. financial regulators hit British digital lender Starling Bank with a £29 million ($38.5 million) fine over failings related to its financial crime prevention systems.

In a statement on Wednesday, London's Financial Conduct Authority said it had fined Starling "for financial crime failings related to its financial sanctions screening." Starling also repeatedly breached a requirement not to open accounts for high-risk customers, the FCA said.

"Starling's financial sanction screening controls were shockingly lax," It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.'

In response to the FCA penalty, Starling said it was sorry for the failings outlined by the regulator and that it had completed detailed screening and an in-depth back book review of customer accounts.

"I would like to apologise for the failings outlined by the FCA and to provide reassurance that we have invested heavily to put things right, including strengthening our board governance and capabilities," David Sproul, chairman of Starling Bank, said in a statement Wednesday.

"We want to assure our customers and employees that these are historic issues. We have learned the lessons of this investigation and are confident that these changes and the strength of our franchise put us in a strong position to continue executing our strategy of safe, sustainable growth, supported by a robust risk management and control framework," he added.

Starling, one of the U.K.'s most popular online-only challenger banks, has been widely viewed as a potential IPO candidate in the