Report: UK challenger banks at risk of financial crime

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April 30, 2022

UK watchdog warns challenger banks to be more vigilant over financial crime defenses

The UK's Financial Conduct Authority (FCA) warned challenger banks that their inadequate financial crime defenses could be exposing them to "money mule networks" laundering cash.

The regulator reported that its review of six unnamed challenger banks led it to conclude that monitoring of transaction alerts is "ineffective," insufficient checks are performed on new customers, and most banks failed to identify high-risk customers during onboarding.

The FCA has long been a supporter of fintech-friendly oversight in the UK to level the playing field between incumbents and neobanks, and to help maintain the UK's status as a global financial services headquarters. However, as British challenger banks have flourished, financial controls of some have not kept pace with their rapid growth.

Challenger banks must strike a balance between reducing barriers to entry for customers while minimizing the risk of crime through robust controls. Those that fail to do this risk harsh punishment.

Insider Intelligence's Will Paige has the full story.

BRIEFING HIGHLIGHTS

US senators take a closer look at Zelle's fraud procedures, potentially shaping future P2P payment regulation

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CFPB looks into the financial challenges of rural communities in the US

The Consumer Financial Protection Bureau (CFPB) is looking into the financial challenges faced by rural communities in the US living in banking deserts.

PayPal plans digital wallet engagement booster as growth slows

PayPal's total payment volume (TPV) for Q1 rose 15% year over year (YoY) to hit $323.0 billion, decelerating from Q4's 23% jump, per an earnings release. TPV growth was also down from Q1 2021's 46% YoY jump.

Fintechs in the firing line as US watchdog plans to level regulatory playing field with banks

The Consumer Financial Protection Bureau (CFPB) has signaled that it plans to exercise greater oversight of fintechs under a dormant legal provision that lets it examine nonbank financial companies which "pose risks to consumers," per a press release.

Visa's earnings reflect resilience despite Russia exit

Visa's payments volume increased 17% year over year (YoY) in its fiscal Q2 (ended March 31, 2022), per its earnings presentation. Growth decelerated from the previous quarter (+20% YoY) but outpaced the same period last year (+11% YoY).

Banking sector suffers 'deal fatigue' as Q1 M&A activity dries up

The volume and total value of global M&A deals in banking declined sharply for Q1, according to a KPMG report.

Apple sharpens payments suite with security and acceptance enhancements

Apple made two changes to its payments solutions to improve security measures and expand acceptance.

Amex earnings buoyed by customers' return to spending

Amex posted a stellar Q1 2022, according to its earnings report. Overall billed business increased by 35% annually, up over both Q3 2021 and Q4 2021 as spending normalizes in the later stages of the pandemic.

Investors say wealth managers are missing the mark on advice

Investors are struggling to find the advice and services they need, regardless of how they access wealth management services, per two new surveys by J.D. Power.

RESEARCH IN FOCUS

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Get the full report →

Payment Channels and Transaction Types

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US Mobile Payments Forecast 2021

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