Digital banking application Revolut is battling yet another scandal after it emerged that the company had switched off an automated system for flagging potential money laundering for several months last year, according to documents seen by The Telegraph.
The company is being questioned by UK financial watchdogs after evidence emerged that it switched off its system to identify suspicious money transfers for three months between July and September 2018, resulting in a situation where potentially illegal transactions could have passed through the digital banking app’s system without the necessary checks.
Revolut’s Chief Financial Officer, Peter O’Higgins, quit last January. He had joined the company in 2016 after over a decade at JP Morgan. Revolut has maintained that his departure from the company was completely unrelated to the concerns raised over compliance.
Prime Minister Joseph Muscat endorsed Revolut last year, welcoming its presence in Malta even after its CEO Nikolay Storonsky threatened Maltese banks. “Revolut is here to end the party for the bankers and provide the Maltese people with an innovative, technology-first banking alternative,” Storonsky had said.
The Prime Minister followed with a tweet:
— Joseph Muscat (@JosephMuscat_JM) September 7, 2018
In December, Revolut was granted a European Banking License and announced: “We won’t stop until we are the most popular card in Malta”. Between 25,000 and 60,000 Maltese residents now use the app for their banking and debit card transactions.
An investigation into Revolut was launched late last year after a whistle blower contacted the board of Revolut, voicing serious concerns over its screening and compliance system. According to reports, the screening system had been blocking a number of valid transactions which then led to a decision to switch off the system completely.
While the Head of Legal for Revolut, Tom Hambrett, drafted a letter to the UK Financial Conduct Authority to notify them of the situation, it emerged that this letter was never sent.
Storonsky said he did not believe that Revolut had failed to meet their legal or regulatory requirements at any time, adding that a thorough review had been undertaken of the transactions that took place and that no sanctioned transactions had gone through.
Revolut has also come under fire from ex-employees who have spoken of a poor company culture with complaints of unpaid work, high staff turnover and unachievable targets.