Revolut faces further regulatory scrutiny in UK

Its never a good look for a company hoping to be granted a UK banking licence to be hauled up by two of the most prominent regulatory bodies for separate infringements over a 2 week period.

Revolut faces further regulatory scrutiny in UK

Nonetheless, this is precisely the situation that Revolut finds itself in.

Firstly, the firm caught the eye of the FCA and was subsequently granted an extension for its annual results for the second year in a row, which was more bruising news for a company that has been hit this year by senior executive departures, investors cutting valuations and revelations of multimillion-dollar losses to fraudsters in the US.

Revolut’s results had been due by the end of September, nine months after the end of its financial year. However, the company has received an extension until the end of December from the government agency Companies House, just as it did for its 2021 results last year.

“We have received an extension for the filing of our 2022 accounts,” Revolut said. “We look forward to announcing our 2022 audit and annual report in due course. We continue to be pleased with the growth of the business, new products, higher user numbers and volumes, and increased financial metrics that result.”

In its last annual report, which missed the extended deadline and was only released in March, auditor BDO said there was a risk that £477 million of its £636 million in revenues could have been “materially misstated”.

The company said at the time that its 2022 revenues had risen to more than £850 million.

Secondly, the company was called into talks with the National Crime Agency about failures that allegedly allowed money to be released from accounts flagged by the NCA as suspicious.

The Financial Conduct Authority, which oversees Revolut’s payments business, is engaging with the fintech, with the support of the NCA, over the alleged failures that occurred between July and August.

As much as £1.7 million was released from the flagged accounts. Revolut notified the FCA of the latest problem in recent weeks but claims only £500,000 was released.

The NCA can restrict accounts over suspicions of money laundering or illicit finance, in order to allow law enforcement to investigate before further funds can be withdrawn.

Revolut’s controls against financial crime and money laundering have been a longstanding focus of regulators overseeing the fintech’s global business.

These concerns also relate to a flaw in its payments system that allowed US criminals to steal more than $20 million.

The latest UK issue comes as negotiations continue on Revolut’s almost two-and-a-half-year-old bid for the banking licence it needs to boost growth in its home market.

After predicting the UK licence was coming “any day now” back in March, Revolut this week said it would “not comment on licence applications”.

“As a global financial institution, we work closely with regulators around the world, ensuring that we maintain strong governance and compliance practices across our business,” the fintech said.

“Since our founding in 2015, Revolut has obtained over 70 licences across a range of financial services and we are constantly building on this to ensure our 30 million+ customers can continue to use our industry-leading products with trust and confidence.”

At 30 million retail customers worldwide Revolut has comparable reach to Lloyds Banking Group, which boasts more than 30 million customers, and far outstripping NatWest’s 18 million.