Revolut Ltd.,
the fast-growing financial technology startup, is facing regulatory
scrutiny following an alleged compliance lapse that could have allowed
illegal transactions on its app.
The U.K.’s Financial Conduct Authority said it reached out to London-based Revolut following a story in The Telegraph newspaper
about the compliance issue. “We have been in contact with the firm to
understand and
assess the issues the article raises,” the regulator said
in a statement Friday. “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 Telegraph, citing documents it has seen, reported that
Revolut had for three months in 2018 switched off an automated system
designed to prevent people from using its money transfer platform to
violate international sanctions.
Whistleblower claims
Revolut
spokesman Chad West said this system was part of a “systems enhancement
project” being tested in parallel with other compliance controls that
the company had long had in place. “At no point did we fail to meet our
legal and regulatory sanctions requirements,” he said. “We conducted a
thorough review and that showed that all of the transactions that took
place during that time period were compliant.”
West said the company investigated after a whistleblower went
to Revolut’s board with concerns that the sanctions compliance system
had been turned off.
The Telegraph also said Revolut’s chief
financial officer, Peter O’Higgins, had left the company last month.
West said O’Higgins had left the company but that “there is no relation
whatsoever to the compliance issue suggested by The Telegraph.”
Branching out
Founded
in 2015, Revolut has created a suite of retail financial service
products available through its app. It started off with a pre-paid debit
card that did not charge transaction fees while traveling, and quickly
branched out into services such as foreign currency transfers, budgeting
tools and cryptocurrency trading.
The company recently obtained
its European banking license from the Bank of Lithuania and plans to
begin offering checking and savings accounts as well as retail and
business lending. It also plans to offer commission-free equity trading
in the U.K. and Europe this year.
Revolut has raised about $340
million in venture capital funding from firms that include Index
Ventures, Ribbit Capital, Balderton Capital and DST Global. It was last
valued at $1.7 billion when it raised $250 million in April 2018.
- Bloomberg
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