The Compliance Trap: Why Rapid Growth Can Lead to Regulatory Failures

In financial services, growth is often seen as the ultimate success metric. Challenger banks, FinTech's, payments firms and crypto platforms race to scale—onboarding millions of customers, expanding into new markets and handling exponentially increasing transaction volumes. But growth at speed brings risks. When compliance fails to keep pace, companies become vulnerable to financial crime, regulatory penalties and reputational damage.

Some of the world’s most ambitious financial firms have learned this the hard way. In the last year alone, we’ve seen record-breaking fines imposed on companies that expanded too fast without strengthening their financial crime controls. The consequences are clear: the firms that fail to evolve their compliance frameworks alongside their business models will ultimately be forced to stop and answer to regulators.

The Hidden Risks of Scaling Too Fast

For many financial firms, compliance begins as a box-ticking exercise—an operational necessity rather than a core function. But as customer bases grow and transaction volumes surge, small compliance gaps can quickly turn into systemic failures. There are several key ways in which rapid growth increases financial crime risk:

• Increased Transaction Volume, But No Enhanced Monitoring

When a firm handles a few thousand transactions a month, manual oversight may be possible. But when that number rises into the millions, legacy monitoring systems often fail to detect suspicious activity. Transaction monitoring rules that worked at a smaller scale suddenly allow illicit transactions to pass through unnoticed.

• Aggressive Customer Onboarding, Weak KYC Controls

Startups and challenger banks often focus on seamless customer acquisition. But in the rush to onboard users, know-your-customer (KYC) and identity verification processes may not be rigorous enough. Fraudsters and money launderers take advantage, slipping through the cracks and using these platforms to move illicit funds.

• A Compliance Team That Doesn’t Scale With the Business

Many fast-growing firms maintain compliance teams that were built for a much smaller operation. This leads to compliance teams being overwhelmed—unable to conduct effective due diligence, risk assessments, or investigations on the scale required.

• Expansion Into New Markets Without Understanding Local Regulations

As firms enter new jurisdictions, they face different financial crime risks and regulatory requirements. Many fail to adjust their compliance programs accordingly, leaving gaps that lead to cross-border regulatory action.

Case Studies: When Compliance Fails to Scale

Several firms that prioritised growth over governance have found themselves at the center of major enforcement actions. Their experiences serve as a warning to any company that believes compliance can be handled as an afterthought.

Starling Bank – £29M Fine (FCA, 2024)

Starling Bank grew from 43,000 customers to 3.6 million between 2017 and 2023. Yet its financial crime controls did not evolve at the same pace. The FCA found that Starling:

• Opened 54,000+ accounts for high-risk customers without adequate due diligence.

• Failed to implement sufficient anti-money laundering (AML) controls, increasing its exposure to financial crime.

Metro Bank – £16.7M Fine (FCA, 2024)

Metro Bank’s failure highlights how technical flaws in compliance systems can lead to major regulatory breaches. Due to weaknesses in its transaction monitoring system, the bank:

• Allowed over £51B in transactions to go unchecked for financial crime risks.

• Failed to monitor 60M+ transactions, leaving it exposed to potential money laundering.

Block, Inc. (Cash App) – $80M Settlement (2025)

As Cash App’s user base skyrocketed, regulators found that its AML framework was inadequate for its size. The company:

• Did not sufficiently monitor millions of transactions, allowing illicit financial activity.

• Lacked robust financial crime controls, despite being a high-growth digital payments platform.

OKX (Aux Cayes FinTech Co.) – $505M Fine (2025)

OKX’s compliance failures underscore a common risk in the crypto sector—growth-first expansion without proper financial crime controls. Regulators found that OKX:

• Processed $5B+ in suspicious transactions between 2018 and 2024.

• Continued servicing users despite policies barring U.S. transactions.

Binance – $4.3B Settlement (DOJ, 2023)

Binance, the world’s largest crypto exchange, failed to implement sufficient AML and KYC controls. This led to:

• A high volume of illicit transactions, with criminals exploiting the platform’s weak oversight.

• Violations of U.S. sanctions laws, resulting in one of the biggest corporate penalties in history.

Why Companies Get Caught Out

Many financial firms don’t deliberately ignore compliance. Instead, they get caught out because they:

1. Focus on expansion first and assume compliance can be fixed later.

→ This approach works until regulators step in and demand answers for years of poor controls.

2. Underestimate the complexity of financial crime risks.

→ As companies grow, they become more attractive to criminals who exploit weak compliance frameworks.

3. Fail to invest in scalable compliance technology.

→ Many firms stick with outdated monitoring systems that cannot handle increasing transaction volumes.

4. Assume regulators won’t intervene.

→ Recent fines prove that regulators actively investigate compliance failures—especially in high-growth sectors.

The Future of Compliance: Building a Scalable Approach

If compliance is not built into the DNA of a company’s growth strategy, it will eventually become a crisis. The most successful firms today are not just reacting to regulatory enforcement—they are proactively investing in:

• AI-driven fraud detection and real-time transaction monitoring.

• Automated risk assessments and KYC verification tools.

• Robust governance frameworks that evolve with the company’s growth.

The key question for every financial firm is: Is your compliance program designed to scale?

Scaling your business should not mean scaling your compliance risks.

If your firm is experiencing rapid growth, now is the time to future-proof your compliance framework—before regulators force you to.

Let’s start the conversation.