UK Fintech Unicorn Revolut Hit By Fraud Investigation

UK Fintech Unicorn Revolut Hit By Fraud Investigation

Fintech giant Revolut is unarguably one of the UK’s biggest technology start-ups and success stories. But there were always going to be obstacles for a fast growth financial services company focused on remaining ‘lean’ while using the latest technology in the world to take on one of the richest establishments in the world. The $1.7 billion-valued Revolut is now the subject of an investigation by the National Fraud Intelligence Bureau.

The news was confirmed by the City of London Police earlier this week and relates to a complaint made by the husband of the intended recipient of a £70,000 transfer. The transfer was never received, having been mistakenly paid into another account. Revolut is then alleged to have informed the intended recipient that her account with the fintech was being shut down and that it could not be confirmed she would receive “a full and detailed explanation” why.

Revolut started life as an online only foreign exchange and transfer service offering better exchange rates and lower transaction costs than traditional services. It has since moved into consumer banking services, SME banking services and plans to launch personal loans and commission-free stock market trading facilities in the near future. The missing payment in question was made through Revolut’s ‘for Business’ service, which offers SMEs multi-currency accounts, free currency exchange and international transfers.

Financial Times reporters were given access to official emails that appeared to show the £70,000 transfer was erroneously paid into another account. The complainant, a Mr Calier and husband of the account owner, was informed by PrePay Technologies, Revolut’s banking infrastructure partner, that they had contacted the fintech and attempted to have the money redirected to its intended destination.

Mr Carlier’s complaint focuses on his perception that:

“Revolut went to extraordinary lengths to prevent acknowledging both a complaint made by [my wife’s] business and the authority given by the business for me to investigate and communicate on their behalf.

“Revolut ignored requests for information, forcing the business to turn to social media to request information. They were quickly blocked for daring to raise genuine concerns and questions.”

For its part Revolut responded:

“We are unable to comment on individual cases but we would like to apologise for any distress that may have been caused.”

Revolut has been widely praised for offering consumers a better deal for a range of financial services traditionally provided by banks. However, its aggressive growth and low cost model has previously raised concerns that it would fall foul of regulators sooner or later. Regulators in Lithuania, where it received its European banking license last year, are investigating the source of some of its’ shareholders’ wealth. The UK’s Financial Conduct Authority (FCA) is also investigating the fintech on the grounds it may have breached its responsibility to be ‘open and frank’ with the regulator. That investigation relates to a suspected lapse in its anti-money laundering controls at some point over 2018.

Revolut denies such a lapse took place. Another recent set-back has been the resignation of the company’s CFO Peter O’Higgins on the grounds that wanted to make way for someone with greater retail banking experience. The suspicion was the resignation may have been connected to recent compliance issues though that is rejected by Revolut.

How the fintech responds to these and future challenges will go a long way to defining its short to medium term growth trajectory and will also act as a warning to other major UK fintechs in a similar space, such as Monzo, TransferWise and Starling.

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