TL;DR: The Telegraph accused United Kingdom digital bank Revolut of running afoul of anti-money laundering laws through a series of sanfus and misjudgements. Around the same time, Wired dedicated thousands of words to documenting alleged worker mistreatment and dissatisfaction at the startup bank. Revolut also recently confirmed its Chief Financial Officer (CFO) Peter O’Higgins resigned. Legacy media could not be more eager to report the cryptocurrency-friendly company’s troubles.
Revolut in Storm of Bad Publicity
In only three years, nearly 4 million people have been onboarded to the startup bank Revolut. Seen as a new way to do banking, lowering costs and offering more choices for its tech-savvy base, such as cryptocurrencies, the company was something of a financial technology golden child. That appears to have changed, at least in the eyes of corporate and legacy media.
UK tabloid The Telegraph published reports of Revolut failing to block questionable transactions. For three months last year, they effectively deadened a system overly false flagging some 8,000 transactions as bad or illegal. Having done so, The Telegraph insists, left the company open to violations of anti-money laundering laws.
The paper also alleges Revolut didn’t take action until a whistleblower went to its board about the issue. The company’s own internal investigation found the decision to address the first problem by halting automatic constraints was an honest mistake.
Catching a Comet’s Tail
Revolut maintains it kept regulators aware at each juncture. Nevertheless, the Telegraph report questions the digital bank’s commitment to compliance procedures, citing in addition three investigations launched by the government of Lithuania after granting license to the company just last year. The most generous established media appraisals of the situation have chalked it up to growing pains, catching a comet’s tail, of succeeding much too fast.
The same day as the Telegraph investigation, Wired reported 80 percent of former employees at the fintech bank lasted less than a year, a link many outlets are reporting as a key reason for supposed security lapses. Tales of general worker woe, of laboring for free to earn a position, and the like paint an unflattering picture, to put it mildly.
The Financial Times also recently jumped onto the story, explaining the Financial Conduct Authority (FCA) “is now scrutinising whether Revolut failed in its duty to be fully transparent — one of the key principles regulated companies must abide by — over such a key issue, said people familiar with the situation.” A subheader in the article warned, “The time has come to pass the reins over to someone who has global retail banking experience at this level,” quoting O’Higgins.
Let Me Set the Record Straight
CEO and co-founder Nikolay Storonsky took to the company blog to address media reports under the title, “Let me set the record straight.” He described coverage as “misleading,” insisting regulatory compliance “is, and always has been, a key priority for the company, so I wanted to address these accusations head-on and set the record straight.”
He acknowledged last year the company was “looking to improve our systems,” and during “initial testing stage of these new systems, we decided that they were not calibrated to a standard that we would expect, so we therefore decided to temporarily revert to our existing controls, while we continued to enhance the new systems.”
Storonsky cited “too many false positive cases, which in turn resulted in an increase in customer dissatisfaction,” claiming that even so the “roll-out did not result in a money-laundering breach.” He further referred to O’Higgins’ departure as that of a friend who “has scaled our operations and expanded our team from 20 to over 800 people,” and how his leaving wasn’t nefarious or connected to possible illegalities but rather “that he feels that the business will require someone with global retail banking experience as we prepare to apply to become a licensed bank in multiple jurisdictions.”
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