The issue appears to have been over a year ago. But for new British bank Revolut, which has been waiting for a UK banking license for more than two years, reputational loss is likely to be more serious than material damage.
A flaw in the US-based Revolut payments system enabled criminals to steal more than $20 million over several months last year. The bank itself was hit financially, and customer deposits were not affected as they were “Financial Times” reported with reference to circles.
The system error was based on differences between European and American payment systems. As a result, Revolut incorrectly reimbursed when certain transactions were canceled and transferred its own funds.
A total of about $23 million was stolen. Part has been recovered by tracing some fraudulent transactions. So the net loss is about $20 million. Sources said this accounted for nearly two-thirds of the net profit in 2021.
The problem was only identified after notification from the partner bank
The problem first arose at the end of 2021 and then was exploited by criminals on an increasingly large scale. Revolut systems would not have recognized mass fraud. The problem only arose when one of the partner banks in the US informed the fintech company that it had less cash than expected.
Revolut has not publicly reported the incident. But this should not calm the case of the bank, which has been waiting for a banking license in Great Britain for two years. There have been a number of senior management departures recently. For example, the head of the British Bank James Radford and financial director Miko Salovara gold.
The UK’s Financial Conduct Authority has ordered an independent review of Revolut’s financial crime prevention and detection strategies in 2020.
Doubts about the balance sheet
In addition, the auditing firm BDO is currently conducting a detailed audit of the balance sheet. The auditors warned that Revolut’s earnings could be “materially misrepresented.” One could not bring himself to complete about two-thirds of the reported income for 2021.
Revolut, which is also active as a new bank in Switzerland, was incorporated in the UK in 2015 and obtained a “specialty banking license” in Lithuania in 2018.
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