ECB Urges Revolut to Enhance Financial Crime Controls Following EU Operations Review

The European Central Bank (ECB) is pressing Revolut to bolster its financial crime controls following a comprehensive review of the fintech company’s European operations. Revolut Holdings Europe UAB, which coordinates the firm's operations across the EU, came under direct EU supervision on January 1.

According to Bloomberg, the ECB identified several shortcomings in Revolut’s control environment after a “thorough” assessment of the company’s EU arm. Although this assessment is a standard procedure for any lender coming under ECB supervision, “its intensity and thoroughness have been a bigger adjustment than usual for Revolut,” the publication noted, citing anonymous sources familiar with the matter. The ECB declined to comment on the findings.

Enhancing financial crime and Anti-Money Laundering (AML) controls is expensive, requiring significant investment in personnel and technology. Revolut has announced plans to hire additional staff to strengthen its financial crime and fraud controls. Francesca Carlesi, Revolut's UK CEO, stated earlier this year, “We’re working very, very well with regulators,” referring to the company's UK license application. “Things are moving forward, we are working well and we have no concerns at this point.”

In a statement, Revolut emphasized its commitment to regulatory compliance, saying it works “closely with regulators around the world, ensuring that we maintain strong governance and compliance practices across our business.”

Revolut’s EU operations account for approximately 40% of the company’s sales. Last year, the UK-based company reported gross sales of €2 billion, with a pre-tax profit of £438 million (€520 million). Holding a banking license in Lithuania, Revolut is able to provide banking services throughout the EU. It is now the third-largest bank in Lithuania, with over €12 billion in assets, making it one of the largest pan-European lenders. These factors contributed to the ECB taking over direct supervision of Revolut from the Bank of Lithuania.

The increased scrutiny from the EU comes as Revolut seeks to secure a UK banking license. While UK banking licenses are typically granted within 12 months of application, Revolut’s application, submitted in 2021, has faced delays due to various regulatory concerns. Issues included the company’s ownership structure, particularly its issuance of preference shares, which was later resolved through a deal with Japanese investor SoftBank. Additional concerns arose from the late filing of Revolut’s 2022 accounts.

Approximately seven million of Revolut’s 40 million users are based in the UK. Securing a UK banking license is seen as a crucial step for Revolut to accelerate growth in its home market and to provide reassurance to regulators internationally.

By fLEXI tEAM