Stenn collapses over AML concerns

Are Compliance teams sufficiently resourced within UK Fintechs?

Alex Speedie

December 16, 2024

The recent collapse of Stenn, a prominent invoice financing provider, raises critical concerns about the need for regulators to enhance compliance oversight for UK fintech firms. In Stenn’s case, the unsealing of court documents related to the conviction of Feliks Medvedev revealed that the UK entity had received $1.7 million from a company linked to him. This discovery prompted HSBC Innovation to investigate Stenn’s broader activities, uncovering further questionable transactions, including a suggestion of fake clients. These findings ultimately led HSBC to push Stenn into administration.

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While this is an extreme scenario, it highlights a significant issue: this incident only came to light due to HSBC’s intervention. For London to maintain its status as a leading fintech hub, regulators like the FCA must be proactive in combating financial crime. This incident may well push the FCA toward stronger enforcement measures. The FCA’s recent consultation on financial crime has culminated in a policy statement, advising firms to assess and enhance their financial crime systems and controls. This includes potential updates to internal policies, monitoring systems, training programs, governance structures, and overall compliance frameworks. However, the responsibility remains on firms to implement these measures effectively, which only succeeds when “good actors” adhere to the guidance.

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However, with trillions of transactions occurring, enforcement agencies remain under-resourced and ill-equipped to investigate every case. Meanwhile approximately 40% of the world’s illicit funds are estimated to flow through the UK financial system annually. Moving forward, the FCA is likely to target the most severe offenders with heavy fines, aiming to incentivize broader compliance improvements. This would then be combined with faster investigations as regulators look to tackle the more sophisticated sanctions evasions networks. The fines imposed on institutions like Starling Bank are indicative of this approach. Effective compliance is essential for the UK to strengthen its AML (Anti-Money Laundering) defences. Similarly, in the USA, Klarna is the latest fintech to face penalties for failing to meet AML standards, indicating a tougher regulatory approach internationally as well.

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Hence 2025 should see a surge in compliance-related hiring. Our latest Talent Insights Study already shows an 80% increase in compliance vacancies within fintechs this year, with forecasts indicating further growth in the coming year. Another key finding from our study highlights the urgent need for senior-level compliance executives. Vacancies for these roles have risen by 120% compared to last year. As regulatory scrutiny intensifies, fintechs must prioritize building robust compliance teams to ensure operational resilience, support business growth, and mitigate risks from illicit transactions. Similarly, AI is likely to have a part to play here given the volume of transactions, so compliance professionals increasingly are likely to need to become tech savvy in a way not seen before.

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If you are considering scaling your compliance team, we encourage you to connect with us. At Rex Machina, we specialize in fintech recruitment and understand the critical importance of securing the right talent for your business.

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To explore further insights, you can download our latest Talent Insights Report here.

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Stenn collapses over AML concerns

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