Revolut’s full UK banking license has been suspended due to concerns over global risk controls

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Revolut’s full banking license in the UK is on hold due to regulators’ concerns about whether its risk controls can keep up with the rapid growth of its offshore operations.

Bank of England officials sought commitments from the fintech group, which has 65 million customers in about 40 countries, that it will build out its risk management infrastructure to match its ambitious international expansion plans, according to three people familiar with the matter.

Revolut, Europe’s most valuable startup, has been approved for a UK banking license in July 2024 after a three-year row with regulators, but remains subject to restrictions during the “mobilization phase”.

A full banking license would allow Revolut to enter the lucrative UK lending market and operate its clients’ large deposits.

The Bank of England’s Prudential Regulation Authority, the main regulator for London-based Revolut, is responsible for monitoring how banks manage risks related to money laundering controls, their IT systems and their capital volume.

The PRA is examining the strength of Revolut’s controls both in Britain and internationally before granting it a license to operate as a full bank in the UK, which is why the process has dragged on for more than a year, according to people familiar with the matter.

Until it exits the mobilization stage and is fully licensed by the PRA and the Financial Conduct Authority, the fintech’s banking division is only allowed to hold £50,000 of total deposits.

As Revolut’s main regulator, it was aware that approval of a full banking license in the UK would likely trigger a wave of similar approvals in other countries that would follow suit, two of the people added.

When unveiling its new headquarters in Canary Wharf last month, Revolut announced plans to enter 30 new countries by the end of the decade, as part of its drive to reach 100 million customers.

At the same event, co-founder Nick Storonsky said obtaining a full UK banking license was Revolut’s “number one priority” and that it was a mistake for the company to prioritize growth over becoming properly licensed in its early stages.

“When we started international expansion many years ago, we tried to shorten our banking licenses and apply for lighter licences, electronic money licences, foreign exchange licences, payment licences,” said Storonsky, who still owns 25 percent of the company, according to insiders. “The product was worse.”

The PRA says the mobilization phase typically takes 12 months, but Revolut has been involved in the licensing process for more than 14 months.

Revolut and PRA have said that mobilization is not a fixed period, and that it can take longer, especially for larger, more complex companies.

Despite waiting for full adoption in its home market, Revolut has obtained banking licenses in the European Union, through the Central Bank of Lithuania, and in Mexico. Authorities in Colombia this month gave Revolut the green light to set up a bank, but more approvals will be needed before it can start lending there.

Revolut also has its features Set on USas it is exploring buying a bank to reach a national charter that would allow it to lend in all 50 states, the Financial Times previously reported.

Revolut declined to comment but pointed to a statement it issued in July in which it said it was “progressing through the final stages of mobilization” and was working “constructively with the People’s Liberation Army.”

“Given the global scale of Revolut, this is the largest and most complex mobilization operation ever undertaken in the UK. A thorough review is an expected part of the process and getting this right is more important than rushing to meet a deadline,” she said.

Revolut said in its annual report, published in July, that it hopes to achieve full accreditation in the UK before the end of 2025.

The PRA declined to comment.