British fintech giant Revolut has been slapped with a record €3.5 million fine by Lithuania’s central bank for serious failures in its money-laundering prevention systems, while simultaneously fighting against proposed UK interchange fee caps that it claims could harm consumers.

At a Glance

• Lithuania’s central bank fined Revolut €3.5 million for deficiencies in money laundering prevention controls
• The fine is the largest ever issued by Lithuania’s monetary authority, reflecting the severity of violations
• No actual money laundering was confirmed, but Revolut failed to properly identify suspicious transactions
• Revolut and Visa are challenging UK regulators over proposed interchange fee caps, arguing they would harm competition and consumers
• The company, valued at $45 billion, reported a pretax profit of £438 million in 2023

Record Fine for Anti-Money Laundering Failures

The Bank of Lithuania imposed a €3.5 million ($3.83 million) fine on Revolut following a routine inspection that revealed significant shortcomings in the company’s financial crime prevention framework. This marks the largest financial penalty ever issued by Lithuania’s central bank and underscores growing regulatory scrutiny of digital banks and their compliance systems. The investigation determined that Revolut’s monitoring systems for business relationships and transactions were inadequately efficient, resulting in improper identification of suspicious activities.

While the penalty represents less than 0.5% of Revolut’s 2023 revenue—well below the maximum potential fine of 10% for anti-money laundering violations—it highlights the growing regulatory focus on financial technology companies. Lithuania serves as Revolut’s European banking hub, where the company secured a full European banking license in 2021, making compliance with local regulations particularly important for its continental operations.

Revolut’s Response and Remediation Efforts

Revolut has acknowledged the violations identified by the Bank of Lithuania and has developed a comprehensive plan to address them. The company emphasized that no actual money laundering was confirmed during the investigation, and the findings were primarily related to procedural deficiencies rather than criminal activity. This marks the second time Revolut has faced regulatory penalties in Lithuania, following a smaller €70,000 fine in 2022 for late submission of financial statements.

The central bank noted that Revolut has been cooperative throughout the process, stating that the company “acknowledged the identified violations and deficiencies, took action on its own initiative to eliminate them [and] prepared and agreed on a plan to eliminate the violations and deficiencies.” Despite this setback, Revolut continues to expand its banking operations, having received a restricted UK banking license in July last year, with plans to fully launch as a bank in the UK later this year.

Broader Regulatory Scrutiny of Digital Banks

The fine comes amid increased regulatory attention on digital banks and their internal controls. The UK Financial Conduct Authority has expressed concerns about neobanks’ customer verification processes and financial crime safeguards. This trend is evident in recent actions against other digital banks, with Starling Bank receiving a £29 million fine from the FCA for inadequate financial crime controls, and Monzo Bank currently facing a civil probe into its money-laundering prevention measures.

The intensified regulatory oversight reflects the rapid growth of fintech companies like Revolut, which was valued at $45 billion in 2023 and reported a record pretax profit of £438 million ($559.5 million) that same year. As these companies continue to expand their customer base and service offerings, regulators are demanding more robust compliance frameworks to prevent potential financial crimes.

Revolut Challenges UK Interchange Fee Caps

Beyond its compliance challenges, Revolut is also engaged in a regulatory battle over interchange fees in the UK. Together with Visa, the company is challenging the UK Payment Systems Regulator’s proposed caps on interchange fees, arguing that these restrictions would harm competition, hinder innovation, and negatively impact both consumers and businesses within the fintech ecosystem. According to Revolut, the proposed caps could force financial institutions to cut rewards programs or introduce new fees to maintain profitability.

Visa has echoed these concerns, warning that limiting interchange fee revenue could stifle competition and impede the growth of fintech companies, ultimately reducing choices for consumers. This dispute highlights the complex regulatory environment facing digital financial services companies as they navigate both compliance requirements and business model challenges in multiple jurisdictions.