I live at Buckingham Palace but am secretly a Russian launderer

Building on yesterday's blog about onboarding me as a client based in Buckingham Palace – or was that 10 Downing Street? – there is some interesting reporting about Revolut.

Why haven’t they got their UK credit license sorted?

After several years of discussion with the regulators, they finally got the green light to launch a UK bank one year ago and yet they have not delivered the required documents to the regulators to launch credit services.

According to The Financial Times https://www.ft.com/content/f07b6f5e-f5dd-4fe8-9174-7f13b3662a8e , Revolut has yet to receive the green light from UK financial regulators to provide consumer credit services because they are still awaiting authorisation from the Bank of England’s Prudential Regulation Authority and the Financial Conduct Authority.

Revolut applied for a consumer credit licence last year. The consumer credit licence is separate from Revolut’s UK banking licence, which it secured last year from the PRA with restrictions to accepting deposits to a maximum of £50,000 total. The credit application highlights that Revolut is still awaiting several regulatory permissions to become a fully fledged lender in the UK.

But what interests me is that, in a parallel discussion, Revolut seem to be allowing Russians to transact globally when Russian banks are restricted under sanctions to trade outside of the country.

As many of you will know, especially since the friction between Russia and Ukraine began, Russian banks and citizens have been thrown off the SWIFT network and sanctioned by most Western nations.

Those sanctions should mean that EU licensed payments institutions do not allow Russian payments … but the rumour is that Revolut and N26 do allow them if they are from Russia’s biggest bank, Sberbank.

According to The Bell, and as reported in The Moscow Times, Russia’s largest lender Sberbank appears to have found a workaround to Western sanctions and SWIFT bans by enabling wire transfers to European banks through third-party intermediaries, such as Revolut and N26. The original report, in Russian, was posted by the independent news outlet The Bell reported last Friday.

According to The Bell, which tested the workaround itself and spoke to others who have also successfully transferred money, Sberbank customers can send rubles via its mobile app to European cardholders at Revolut or N26. The money is routed through a non-sanctioned intermediary, converted into cryptocurrency and transferred to a second intermediary who deposits euros into the recipient’s Revolut or N26 account.

This is why Revolut, N26 and other challenger fintechs have been regularly hauled over the coals for their lack of regulatory compliance rules.

N26 fined €9.2m by BaFin over late submission of suspected money laundering reports in 2022

Revolut’s €3.5M Fine: 5 Things Every Fintech Should Learn About AML Risk in 2025

Monzo suffer a stumble after opening fake accounts for 10 Downing Street and more - Chris Skinner's blog

All of the start-ups say that they are responding of course, but do they really understand regulatory risk and compliance? The Bell – bearing in mind that they processed transactions with both Revolut and N26 through crypto conversions to euros – report:

Revolut told The Bell that as a globally regulated financial institution, Revolut is required to comply with sanctions laws and regulations of the UN, EU, UK, US and all other applicable sanctions regimes in the jurisdictions where it operates. The method we described is a clear breach of the terms of service, the company said: “Such transactions are prohibited by payment processors and any questions regarding their routing should be directed to the relevant payment processors.” However, the transactions themselves can pose risks for users who accept them: “Such transfers may be blocked and the account frozen or closed. In addition, individuals who knowingly participate in circumvention of international sanctions may incur serious personal legal and financial liability,” the company warned.

N26 responded to The Bell's request that the bank has robust sanctions compliance procedures in place (you can read about them here ): "We constantly monitor potential schemes that could be used to circumvent current sanctions controls. In this context, we also work closely with our card servicing partner, who also applies strict standards in accordance with current regulations." If the bank detects sanctions-violating activity during routine or targeted inspections, it stops it, N26 reported. Sberbank itself had not responded to The Bell's requests at the time of publication.

Meanwhile, going back to where I started, it does make me wonder whether the delays to Revolut’s banking and credit licenses are due to the issues discussed above?

Finally, I don’t know why any of the discussion above about avoiding sanctions is surprising as I told the Russians ten years ago to deal in cryptocurrency to avoid all sanctions anyway (ed: do you really want to blog this?).