Security & Fraud

Revolut Flagged Money Laundering Evidence A Few Months Back

Due diligence

Revolut, the U.K. digital bank, identified evidence of money laundering on its digital payment system, which prompted it to alert authorities including the National Crime Agency and Financial Conduct Authority.

According to a report in the Financial Times, the U.K. FinTech discovered the evidence of money laundering a few months back, and the fact that it reported the activity shows how bad the potential money laundering was. What’s more, the Financial Times said reporting it shows how serious Revolut is when it comes to meeting legal obligations. After all, the report noted companies typically file suspicious activity reports to the NCA, but when they are significant, the FCA expects to learn about them as well.

While Revoult followed the rules in reporting the suspected money laundering, the paper noted critics could use the incident to bolster their argument that Revolut can’t protect against financial crimes and at the same time follow a fast growth strategy. Revolut, noted the report, is looking for a head of compliance for the third time during the past year.  Critics argue the fast growth at Revolut and its use of automation for compliance puts it at risk of being used by financial criminals. Revolut’s chief xxecutive and co-founder Nikolay Storonsky defended the compliance at the company in an interview with the Financial Times but didn’t comment on the money laundering activity. He implied Revolut has stronger compliance checks than big banks and showed off a new transaction monitoring system that ranks payments based on how risky they are. “Depending on who you send money to it is weighted by risk and that accumulates,” he said.

Revolut is currently in expansion mode, but Storonsky said the company isn’t gearing up to launch in his home country of Russia. Instead, Revolut is focused on expanding to the U.S., Canada, Australia, New Zealand, Singapore, Hong Kong and Japan. “We are not launching in any jurisdictions until we are completely ready,” he said. “At Revolut, we have an open culture, junior people can challenge you, and people we have hired from banks don’t like it.” A person familiar with Revolut told the Financial Times that certain managers at the company have at times tried to get around compliance requirements, something Revolut has denied. What’s more, an executive at a company that was planning on teaming with Revolut opted not to because there were limited customer checks when someone signed up. “It is basically piggybacking on the banks and relying on its transaction monitoring system to catch any suspicious activity,” said the person. Revolut said it did checks of new customers that were more than what was required by regulators, but that automation and facial recognition speeds up the process.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.