Friday 22 March 2019

Finance chief steps down from troubled digital bank Revolut

No fees: Revolut offers a bank account with a debit card
No fees: Revolut offers a bank account with a debit card

Charlie Weston and Ellie Donnelly

Fast-growing digital challenger bank Revolut has seen its Irish-born finance officer resign, as it grapples with claims of money laundering.

The bank was also hit by an IT outage for a period yesterday.

Headquartered in London, Revolut has 200,000 Irish customers, with its accounts proving particularly popular with millennials. Its user-friendly mobile phone app is considered to be superior to those offered by traditional banks here.

It has a banking licence from Lithuania which allows it to operate throughout the European Union.

It offers a bank account with a debit card, with no fees on its basic product. The fintech disrupter plans to offer overdrafts and personal loans in this country, in a move to take on the pillar banks here.

But the online bank has now had to defend itself over the possibility that thousands of illegal transactions were allowed to pass through the app over the course of three months.

It admitted that it has had a systems "failing" but denied that this led to suspicious transactions going through its system.

The "failing" involved an automated system, which was used to block suspicious transactions, being turned off for months.

This comes as users of its banking app experienced difficulty for a while yesterday topping up on the banking app.

A report in the 'Daily Telegraph' found that Revolut's board had launched an internal investigation in 2018 into problems with the bank's sanction screening system.

The newspaper added that it had seen documents suggesting that thousands of illegal transactions may have flowed through the bank's systems between last July and September following a decision to disable the system.

CEO Nikolay Storonsky said in a statement: "The ['Daily Telegraph'] article refers to a systems enhancement project that we were rolling out in parallel with our existing systems and controls. The more technologically advanced sanctions screening system was just one part of the overall enhancement project.

"Like any technology company, we always seek to improve our systems. The new systems were not calibrated to a standard that we would expect, so we reverted to our existing process until calibration was complete.

"At no point during this time do we believe that we failed to meet our legal or regulatory sanction requirements," he added.

But the company admitted: "At no point did Revolut formally notify the UK's Financial Conduct Authority of the issue."

The digital bank also revealed that its Irish-born chief financial officer Peter O'Higgins has resigned.

The bank insisted his resignation had nothing to do with the compliance concerns.

Former JP Morgan employee Mr O'Higgins, who joined the digital bank in 2016, left the company at the start of the year. He was educated at University College Cork and left Ireland in 1999.

In a statement Mr O'Higgins said: "As Revolut begins to scale globally and applies to become a bank in multiple jurisdictions, the time has come to pass the reigns over to someone who has global retail banking experience at this level."

Meanwhile, Bank of Ireland has announced changes that will affect its ATM network.

From May 11 the bank will cancel any ATM-only cards in issue, and it will no longer allow customers to request statements, pay bills or top up mobile phones at cash machines.

The bank said there had been a decline in the number of customers availing of certain services, while new regulations also required it to make changes. Visa debit cards are being issued to those who have ATM-only cards.

Irish Independent

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