Revolut the digital fintech giant has faced a week of controversy and departures due to oversights in regulatory rules. UK financial watchdogs are looking into the rapid growth of the company and issues which have emerged regarding the reporting of potential money laundering through the company.  

The Irish Times reported that the FCA was looking into the transparency of the company something must abide by to /fulfil its obligations to the FCA. Along with this CFO Peter O’Higgins has resigned from his position and the company has also faced an IT crisis and potentail links to the Kremlin.

What is Revolute

Revolut was launched in 2015 by former investment bankers Nikolay Storonsky and Vladyslav Yatsenko. Its headquarters are based in London while it holds a banking license from Lituania allowing it to operate throughout the EU.

It is popular among millennials due to its user-friendly app and low and/or non-existent bank fees. It also allows users to track spending through various currencies and provides fairer exchange rates than most traditional banks.

Finance chief departure

In the wake of money laundering safeguard scandal its finance chief Peter O’Higgins announced his departure from the firm. Although he and the company maintain that they are not linked.

In a statement Mr O’Higgins said: “As Revolut begins to scale globally and applies to become a bank in multiple jurisdictions, the time has come to pass the reigns over to someone who has global retail banking experience at this level.”

The scandal revolves around the turning off of safeguards which would notify the company of suspicious transactions. Something the FCA says is a breach of transparency guidelines.

A spokesperson said of the issue “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.”

According to …. The fintech company has grown raidly especially under the tenure of Mr O’Higgins. It has recently raised series A funding and has grown to over 3 million customers including 200,000 in Ireland.

Expansion plans

Despite issues, this week spokespeople for the company said that the company plans to go ahead with planned expansion. This includes the hiring of staff to oversee the companies move into new territory, throughout the US and other regions reported the Independent.

The expansion plans may include the acquisition of exisint companies although not definite plans have been announced just yet.

The company is set to launch in the US, Canada, Australia, New Zealand, Singapore and Japan this year.

Security scrutiny

The biggest concern for the company at the moment though are issues regarding the FCA and the failing of safeguards against money laundering. Accusations which may affect there launch into other territories.

The automatic system was turned off for a number of months in 2018 leading to thousands of suspected transactions taking place. This news was broken by the Telegraph.

CEO Nikolay Storonsky said in a statement: “The [‘Daily Telegraph’] article refers to a systems enhancement project that we were rolling out in parallel with our existing systems and controls. The more technologically advanced sanctions screening system was just one part of the overall enhancement project.

“Like any technology company, we always seek to improve our systems. The new systems were not calibrated to a standard that we would expect, so we reverted to our existing process until calibration was complete.

“At no point during this time do we believe that we failed to meet our legal or regulatory sanction requirements,” he added.

But the company admitted: “At no point did Revolut formally notify the UK’s Financial Conduct Authority of the issue.” these statements reported from the Indepnedent.

Tech Issues

Finally on the early hours of Friday morning users complained of issues with their accounts.

This included accounts being frozen and users being unable to top-up their accounts.

As cards are prepaid and many people use them when travelling this definitely stirred up some issues.

After a week of negative reports it was the last thing the company needed. Fortunately these issues seemed to have been short lived and the tech issues were rectified by late in the evening.

So in a week of scandal and uncertainity, the company will definitely be under increased scrutiny as it ventures into new ground.

With both an internal and external investigation into the companies transparency and protocols it will be intetesting to see the results.