The Financial Conduct Authority (FCA) of the UK has found in a review that challenger banks need to improve their financial crime risk assessment. In the review conducted in 2021, the FCA found that some challenger banks failed to properly verify client income and occupation. Moreover, some challenger banks did not have any financial crime risk assessments in place for their clients.
Challenger banks use smarter information technology to compete with regular banks, with some even offering online-only services. The FCA reviewed relatively new challenger banks that offered rapid application procedures.
As per the FCA’s review, the number of Suspicious Activity Reports filed by challenger banks increased, suggesting that the client verification measures adopted by these banks were inadequate. On the positive side, the review revealed a novel use of technology for speedy client identification and verification. Source: Financial Conduct Authority, UK; Full Review Report