Revolut, one of the most popular fintech ( financial technology ) startups in the world has been accused of breaching basic baking regulations and failed to block thousands of suspicious transactions on the platform.
The documents analyzed by journalists from The Telegraph show that during a time span of three months last year Revolut has stopped the blocking system of suspicious money transactions and now the company is facing a money laundering scandal.
As such, thousands of illegal transactions have made it through the Revolut system between July and September of 2018. Revolut launched an internal investigation at the end of last year after a company employee came forward with these irregularities.
The screening systems automatically checks transactions made by clients and identifies high risk money wires.
It appears that Revolut has contacted the FCA ( Financial Conduct Authority ) back in September of 2018 to inform the institution that the screening system has been disabled for three months.
Revolut told the FCA that some features of the screening system has been disabled after the system made over 8000 false positive errors, flagging legitimate transactions as suspicious and blocking money transfers.
Moreover, Revolut used another system to screen for suspicious activity but the transactions were not automatically blocked. The FCA was notified of these problems only after a Revolut employee complained to the board.
Revolut re-activated the screening system on September 16. The company says that they don’t believe the law was broken by switching to another system. “As far as we know we did nothing illegal” Revolut said in a statement.
This problem might suggest that Revolut lacks the ability to stop people or even companies from using the system for money laundering.
The FCA was also warned by the National Crime Agency last year that money laundering might happen through the Revolut system. One interesting fact is that in the last two years two chief risk officers, one chief compliance officer and two money laundering experts dedicated to leave Revolut.
In the summer of last year, Revolut announced that the company has detected multiple possible money laundering attempts but the sums of money involved were insignificant.