Red Flags at Revolut: FCA investigates suspicious account activity π©π©; Coinbase keeps delivering: gains full license in Singapore πΈπ¬; Looking back at the Legacy of FTX π
FinTech is Eating the World, 2 October
Hey Everyone,
Happy Monday! I hope you recharged your batteries over the weekend because the new week is starting strong π₯ Today weβre analyzing red flags at Revolut (what FCA investigation of suspicious account activity is all about + more bonus reads), Coinbase that keeps delivering (full license in Singapore is a solid step for global growth + some bonus deeper dives into Coinbase), and looking back at the legacy of FTX (how big of an impact it had + some bonus dives into FTX and all of the craziness). Letβs jump straight into the intriguing stuff πΆ
Red Flags at Revolut: FCA investigates suspicious account activity π©π©
The news ποΈ Revolut is in the news again. This time the UK's Financial Conduct Authority (FCA) is investigating digital challenger bank and Super App wannabe over allegations that it allowed funds to be released from accounts flagged as suspicious by the National Crime Agency (NCA) between July and August 2023.
Letβs unpack this and see what itβs all about.
More on this π According to sources cited by the Financial Times, around Β£1.7 million was released from the flagged accounts before Revolut notified the FCA. Thatβs quite some moneyβ¦
However, Revolut claims only Β£500,000 was released. So how much is it really? π
We must remember that the FCA oversees Revolut's payments business as it continues its long and less and less certain quest for a full UK banking license.
ICYMI: UK banking license unlikely? Revolut's latest 2022 accounts delayed π€·ββοΈ
Why it matters? π€ First and foremost, this investigation casts some serious doubts on Revolut's anti-money laundering controls (AML), which have already faced scrutiny from regulators worldwide.
On top of that, it also further delays Revolut's UK license application, which it first submitted back in 2021.
Given the FCA has cited concerns around Revolut's auditing, compliance, and corporate culture, one has to seriously question whether that bank license is reasonable in the first placeβ¦
And without it, thereβs no way Revolut is getting the US banking license.
ICYMI: Revolut is yet to file a formal US banking license application π¬πΊπΈ [+4 more bonus reads]
βοΈ THE TAKEAWAY
Looking ahead π Although seemingly simple, this piece of news tells us quite a lot about how things are running at one of the biggest European FinTechs. With ambitions to expand globally across wealth management, crypto & stock trading, business banking, and other fields (aka to become a Super App), Revolut needs to assure regulators it can manage compliance and prevent financial crime. Effective anti-money laundering controls are therefore crucial. You can no longer focus on growth at all costs and expect that compliance will take care of itself. Itβs exactly the opposite as being a bank is all about being compliant. And this FCA investigation yet again suggests Revolut still has lots of work to do in this area, potentially hindering its growth plans. Zooming out, we must yet again note that trust with regulators is key to Revolut's future success. As of today, it needs to restore that trust even in its home market.
ICYMI: Tell me Revolut is in trouble without telling me Revolut is in trouble π¨