Revolut money-laundering: latest controversy to hit the app after single-shaming and data fakery

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Revolut money-laundering: latest controversy to hit the app after single-shaming and data fakery

Karl McDonald

It’s worth a billion pounds – but it continually finds itself in the headlines for the wrong reasons

In brief

  • Revolut switched off its flagging system for suspicious transactions
  • Interview subjects have been asked to recruit 200 users
  • One ad used fake data to ‘single shame’ its own users

By some measures, Revolut has been a sensation since its foundation in 2015. First an app, now a challenger bank, the company has recruited millions of customers for its services, including allowing people to keep multiple currencies on one card simultaneously and convert between them seamlessly on their phones.

But the unicorn – a tech startup worth more than a billion dollars – has picked up its fair share of controversy along the way.

It hit the headlines after falsifying data in an ad campaign, while its workers work more and quit sooner than most others in the sector.

Now, it’s been revealed that the company switched off its flagging system for suspicious transactions for months last year.

Here’s a rundown of its biggest, most recent controversies.

Money-laundering risk

Revolut was accused of breaking bank rules after disabling a system that automatically flags suspicious transactions, The Telegraph reported.

The company reported itself to the Financial Conduct authority after turning off the system when it threw up a number of inconvenient false positives.

The screening system is used to combat money laundering and transactions that try to circumvent international sanctions. It was off from July to September 2018.

It has since updated its process for dealing with suspicious money moving through its app, but continues to suffer from staff turnover, and regulatory issues have been a general problem for challenger banks that do not have large, established compliance teams.

CFO steps down

In the immediate wake of the screening system revelations, the company’s chief financial officer, Peter O’Higgins, stood down.

His statement hinted at lack of readiness to deal with the level of scale the challenger bank now operates at.

“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,” he said.

Employee issues

The company has also come under fire for its hiring practices and the so-called “human cost” of its rise to becoming a billion-pound start-up.

One prospective employee told Wired she was expected to recruit 200 new Revolut clients to get through an interview round. Work of this sort, which takes more than a day, could be eligible for at least minimum wage pay even if it’s part of a screening process – and in this case, the job in question was in PR, not sales.

Worker retention is low at the company, below even the rates at other startups. Wired’s LinkedIn analysis revealed more than half of former Revolut employees on the networking and hiring site had left within a year.

A company spokesperson told the magazine: “Our culture is evolving as rapidly as our business”.

Lithuanian intervention?

Nikolas Stonornsky, the founder of Revolut, holds a British passport and has long lived in the UK, but the fact that he is Russian-born has led to accusations of “political interference”.

Lithuanian MP Stasys Jakeliunas, who heads the parliament’s budget and finance committee, accused the challenger bank of interfering in Lithuanian affairs after it was issued an EU banking licence in the country.

It’s not clear exactly what he was alleging, and Revolut denied any impropriety.

“I would interpret that as an attempt to intervene into the political process here,” he said of the Lithuanian licence, which allows Revolut to operate throughout the EU.

Mr Storonsky’s father is an official at Gazprom, the Russian fuel giant which is subject to US sanctions, although he has no connections to Revolut itself.

Single-shaming

The Revolut ad which drew condemnation (Photo: Twitter)

On Valentine’s Day, the company was accused of “single-shaming” after running a series of ads that appeared to poke fun at certain purchasing decisions.

One read: “To the 12,750 who ordered a single takeaway on Valentine’s Day – you ok, hun?”

The campaign was accused of being tone deaf towards singles – as well as being an “intrusive” use of data.

“It just says they will spy on your spending, so people can laugh at your poor unfortunate single status later on,” financial commentator Iona Bain told the BBC.

The company promised to be “more careful” with tone in the future.

The ad mirrored a campaign by Spotify that highlighted users’ habits on certain days. One read: “Dear person who played “Sorry” 42 times on Valentine’s Day – what did you do?”

However, Revolut was forced to admit it had fabricated the data after a referral to the Financial Conduct Authority.

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