>Revolut's CFO recently 'resigned' from the company in light of claims that Revolut switched off an anti-money laundering system that flags suspect transactions.

Revolut's CEO[1] is the son of the top bureaucrat of Russian Gazprom, which has been implicated as the main channel of - you guessed it[2], money laundering for Russian oligarchs [3].

[1] https://en.wikipedia.org/wiki/Nikolay_Storonsky

[2] https://panamapapers.sueddeutsche.de/articles/56fec05fa1bb8d...

[3] https://www.ft.com/content/2ebff9ee-38f6-11e9-b856-5404d3811...

As a Russian, I would like to point out that both degrees he has got (Moscow Institute of Physics and Technology and New Economic School) are from top-tier institutions. Money can't buy them and in general they are not attractive for rich kids.

Also, Gazprom Promgaz != Gazprom. It's "a research institute for Gazprom" [1].

[1] https://en.wikipedia.org/wiki/Gazprom_Promgaz

Money can definitely buy them

I would not be so sure abou that. But money can for sure buy you people who make your thesis.

It's always a possibility to "buy a degree" when enough money is involved. Look at what happened with the London School of Economics, which is a top 10 university worldwide.

Easy to draw conclusions, right? I wouldn't be so negative without any evidence.

I'm Ukrainian. Recent history has taught me to not trust any Russian citizen for any reason whatsoever.

[3] is paywalled. and there is no connection between [1] and [2] (i think putin's friends would crack up laughing at the prospect of laundering billions through a british startup).

but the premise is correct - a unicorn who raised 5m for an online bank startup is hardly a serious option.

> The company quite literally has the words "get sh*t done" in giant neon letters on their office wall.

That has become one of my red flag. I want to deal with people and companies focused on the quality of their products and businesses, not on doing "shit" (taking their motto literally).

Absolutely. "Move fast and break things" is barely acceptable for services where failure is mostly just annoying, like social media. If your product is banking, medicine, transport, or anything else that can seriously harm people, "move fast and break things" amounts to criminal negligence.

Amen.

Another example of a field that I'm personally aware of and in which this kind of attitude should not be acceptable is cybersecurity. If your job is to protect people, then EVERYTHING you release has to be bulletproof.

As someone in cybersecurity, I would offer an alternate perspective: That sometimes you have to lock things down despite not being absolutely certain of side effects, being willing to take some outages, if you ever expect to get something done.

Analysis Paralysis is a real thing. Sometimes you just have to do it.

Choosing to lock things down when you're not certain of the side effects... that's the sort of thing that will, at worst, cause outages due to protocol access or authentication (which are both easily fixable). It's a smart move... and helps initiate the "Canary in the coalmine" built-in feature.

The "move fast and break things" crowd are generally the same people that will choose to open things up in the name of "getting shit done". They'll drop firewalls, expose services publicly, and generally go out of their way to avoid security because they see it as a hurdle to achieving their primary goal. In my experience, this lack of foresight almost always causes cascading problems in the future that grow exponentially worse the longer they're left unchecked.

People try to replicate what worked elsewhere without asking themselves if there any differences between the businesses.

That's normally a red flag, for a banking business a mortal sin.

How many times do ex-Googler's blindly parrot, "well at Google...", without asking themselves about exactly that?

Even worst, when wannabe-Googlers do that.

"Well at Google, they'd use a global distributed fault tolerant Hadoop cluster for their data store." "Dude??? We're building a Wordpress site. We're gonna run MySQL on the same shared server as the php code."

While I'm not a big fan of Atlassian's software - I did end up in their old offices for various hackerspace related meetups a long time back.

They had a big sign on the wall "Don't fuck the customer."

That's a much better ethos that "move fast and break things", or "Get shit done" in my mind... (Even if it is just performative customer facing propaganda, at least it shows that management understands that's a key requirement customers want to be told they'll meet...)

And after reading about their work culture, I also don't tend to trust companies that grind their employees down and spit them out. Banking is high pressure at the best of times, but reading about how they work doesn't fill me with confidence in their quality.

"Move fast and break things" is my red flag. I kind of get it for early start-ups in, say, the social media space where the phrase was coined. But when I hear it remotely connected to health care, or critical data, I cringe. I even cringe when I hear it applied to Facebook now, now that it's de-facto a communications platform and whether we like it or not it is depended on by people for important communications and things they are led to believe are private.

Don't move fast and break things. Move productively and build things.

"measure twice, cut once" in big cedar letters on the wall of my next business.

"Safety Third"

the first startup i worked at had a 'get shit done' poster on one of the walls. I think it was more of a fellowkids thing, meant to be half serious/funny and looked more like cargo-culting a startupy phrase.

it was a great place to work - engineering was pretty lax, most of us were there only from 10-4.

I prefer "Move cautiously and make things".

As in, spend your time making something you'd be proud to sign your name to.

> personal and health reasons

That could easily be a way to say that he got threatened to leave that anti-money laundering system switched off 'or else'. Keep in mind that as soon as you create a way for organized crime to do their thing on your service and you are making money of them that they will happily consider you to be in their debt. It happens in the movies, and sometimes it happens in real life.

Someone I know peripherally had something like that happen to him because of a series of movie theaters. Not good, even if you are not aware that such things are happening.

This is why casinos, online gambling, bitcoin related stuff and payment systems as well as two-sided market places always require extra care, before you know it you have a bunch of criminal coat tail riders on board.

Also Revolut CEO's father is CEO of Gazprom (or some division, I'm not sure I understand their structure). And it got it's money from DST Global incubator, which has Kremlin ties.

Meaning, despite their London HQ, Revolut is Russian owned and Russian managed pseudo-bank.

Giving them more money might not be great idea.

Considering both senior politicians in Lithuania and Luxembourg have raised formal concerns about Revolut's bid for a bank licence, specifically because of the CEO's alleged Kremlin ties, I'm willing to assume there's some substance to that concern.

Them not having the license also means that the deposits aren't insured the way they normally are in EU, meaning you get nothing if things go wrong.

We use Revolut around the office to split bills for lunches, etc, but I wouldn't keep more than few bucks in there.

edit: They have a banking license but current account customers now still get an e-money account only - quite confusing state. With an e-money account, the client money is supposed to be in a separate account and if they go under, you still get your money. (FCA regulates all this)

They have a banking license from Lithuania (but customers are not switched to it) which might be revoked by Lithuania and they are trying for another license in Ireland.

Thanks to comment below - edited this make more sense.

Revolut received its banking license from Lithuania in December 2018, but hasn't switched its customers over yet. After the family connection with Gazprom became public, Lithuania started considering revoking the license, and Revolut applied for another one in Ireland. It's not clear now, when and which banking license Revolut will start using. It's worth pointing out, though, that Revolut already has more customers than there are tax payers in Lithuania[1].

[1] https://www.theguardian.com/money/2018/dec/22/lithuania-icel...

As an Irish person who watched the crapshoot of our banking regulation in 2000s I can assure you that this does not fill me with confidence.

thanks, you are right, I have edited my original response (which itself is quite confusing now) - the Revolut state of regulation quiet confusing - better to stick with Monzo in UK/N26 in EU.

They have a UK bank license now, so deposits are covered up to EUR 100k

They're only covered against bankruptcy though - if someone steals your phone and drains your account, you're SOL.

There’s a YC company called Ysplit which solves this exact problem. I highly recommend it. ysplit.com

Revolut seems overkill for that, maybe try Splitwise?

Venmo seems to be the standard here in the US. Is it not as common overseas?

lol no it assumes a US account. it's not even listed in the app stores here. people mostly use bank transfers for everything since it's free and fast

Haha, yeah, US banking is pretty awful in terms of ease-of-use.

I don't use Venmo myself - I'm at a point where I'd rather just pick up the check that try to split it (using any method). And let me friends pick up the next meal.

I tend to find that Venmo is a bit redundant in the UK - feature-wise, I'm not sure that it does anything that the standard bank mobile apps can't do? (There's a standard person-to-person via mobile number payments system that most banks support & integrate into their apps (https://en.wikipedia.org/wiki/Paym)).

That's nice. I wish US banks would do something like that, so we don't have to rely on 3rd party apps. But, they couldn't even roll out chip & PIN properly.

Gazprom ties, AML system randomly going offline, regulated by Lithuania...this looks more like a money-laundering scheme than a bank.

Why does being regulated by Lithuania make it look it like a money-laundering scheme?

I’m not certain as to the original post’s implication, but the multi-billion-dollar Russian “Laundromat” schemes that have come to light over the past few years fed through Baltic banks, including at least one in Lithuania. I’d think, though, that since these came to light there would be added scrutiny and it wouldn’t be an ideal place for further nefarious activity.

> through Baltic banks, including at least one in Lithuania

Just to clarify: The Russian Laundromat mostly relied on the banks from Latvia and Estonia[1], the two EU countries with the largest Russian population. The only banks which participated in the scheme from Lithuania – Danske and Nordea – were actually Scandinavian, and have either left the country (Danske), or merged with others (Nordea) afterwards.

[1] https://www.occrp.org/assets/laundromat/BarChartBank-big.png

I was thinking about the recently revealed 'Troika Laundromat'–smaller than the Russian Laundromat scheme but still a $5B operation–which involved the Lithuanian Ukio Bankas: https://www.occrp.org/en/troikalaundromat/the-troika-laundro...

This one was really a Lithuanian bank, even though founded by a person who was born in Russia, and who escaped to Russia when the bank collapsed in 2013. There are none of such banks left in the country anymore, and people are very concerned about any possible Revolut's connections to Russia.

> Why does being regulated by Lithuania make it look it like a money-laundering scheme?

It doesn't raise issues per se. But Lithuania has a sizable Russian population [1]. It's also a small country.

The latter means it has less experience supervising novel and complex financial systems. It also makes its regulators easier to unduly influence, either through bribery or threats (e.g. Revolut failing would probably deplete Lithuania's national deposit system).

[1] https://en.wikipedia.org/wiki/Russians_in_Lithuania

A Lithuanian here.

> But Lithuania has a sizable Russian population [1]. It's also a small country.

The Russian population (5%) is a tiny minority here, not represented by any political party in the parlament. It's much bigger (25%) in Latvia and Estonia, as Russians tend to live in the cities near the Russian border[1].

> The latter means it has less experience supervising novel and complex financial systems. It also makes its regulators easier to unduly influence, either through bribery or threats

In this case, there is a common view in Lithuania, that as a tiny economy we should focus on IT sector and follow Estonia's example, trying to be the most modern and innovative state in the EU.

Therefore, there is an entire goverment program for attracting and supporting fintech companies[2], hoping that they will open offices in Lithuania and employ recent graduates, preventing them from fleeing to Western Europe for better job opportunities.

Of course, it makes no financial sense to give a banking license to a foreign startup for such a small economy, but Revolut is extremely popular in Lithuania and the general population sees it as an alternative to Scandinavian banks which have occupied the local market.

As a result, those policitians who have tried to oppose giving the license to Revolut were publicly attacked from all sides as "working on behalf of Scandinavian banks".

[1] https://en.wikipedia.org/wiki/Russians_in_the_Baltic_states

[2] https://www.lb.lt/en/newcomer-programme

> Those policitians who tried to oppose giving the license to Revolut were publicly attacked from all sides as "working on behalf of Scandinavian banks"

I rest my case. That such financial regulation is being politically decided gives Revolut more leeway in Lithuania than it would have in e.g. the U.K.

> That such financial regulation is being politically decided

It's not being politically decided, but multiple senior members of the parlament in the committee on Budget and Finance have publicly expressed their concerns.

I agree that there is a lot of general inexperience in the entire system, and I don't believe that Lithuania would be able to regulate Revolut properly, as it's based in the UK.

The point was, that Revolut was more than welcome in Lithuania, and they didn't need to try to influence anyone. The politicians and regulators were even proud that one of the biggest fintech startups in Europe chose to set foot here.

They also saw that N26 was successfully granted a license in Germany, Monzo in the UK, and Bunq in Netherlands. Therefore, it wasn't seen as such a big risk.

Good point. I believe there are EU directives in place which mandate that if an institution is authorised in one member state it can operate in any other state

It's HQed in London, so not being regulated there raises questions.

I would guess that regulation in the UK is better, but I'm not really up on my Eastern European/pan European banking regulation to definitively say.

Does it? It seems logical, thinking about Brexit.

Brexit would also be an argument against HQing there too though...

The way I understand it, not really. Financial services seem to operate crossborder just OK, while the licenses are not cross border (I mean cross EU border).

> it got it's money from DST Global

So does Facebook, DoorDash, FlipKart and hundred+ other Silicon Valley companies. Revolut also has money from Seedcamp, Balderton, Index and tons of other VCs.

> Revolut is Russian owned and Russian managed pseudo-bank

Since when being a Russian is a crime? Besides if a company is London based it is regulated by UK authorities.

You make it sound like the guy being Russian, DST being Russian (and allegedly having "ties" to Kremlin) is somewhat a red flag. I would like to hear more on the reasoning behind how all that is negative?

Don't Silicon Valley CEOs have ties to White House? Should I not use their products? :)

> I would like to hear more on the reasoning behind how all that is negative?

There is outsized demand for money laundering from Russia, in large part owing to its endemic and unchecked corruption. This is why most recent European money laundering scandals have involved Russian money [1][2][3].

So when you see an AML deficient operation with multiple Russian ties based out of Lithuania, it raises legitimate questions.

[1] https://www.reuters.com/article/uk-danske-bank-eu-regulator/...

[2] https://www.cnbc.com/2019/04/18/deutsche-bank-shares-slip-am...

[3] https://www.insurancejournal.com/news/international/2019/03/...

We have unchecked corruption from the 2nd most powerful politician in the country, no one cares

https://www.nytimes.com/2019/06/02/us/politics/elaine-chao-c...

> We have unchecked corruption from the 2nd most powerful politician in the country

Chao is being investigated by the House [1]. Worst case, we’re talking single-digit millions of suspected malfeasance versus billions in Russia of cut-and-dry graft.

And most importantly, a wrong here doesn’t excuse a wrong there.

[1] https://www.politico.com/story/2019/06/24/house-chao-rules-t...

I thought that she had steered some $78,000,000 in Federal projects to her husband's state and then there were also some questions about the business interests of her family members in China[0]. Also Deripaska[1] just announced he's funding an aluminum plant in Mitch McConnell's state so I suppose it does involve billions in Russian graft. [0]https://www.vanityfair.com/news/2019/06/elaine-chao-china-tr... [1]https://www.cnn.com/2019/04/15/business/rusal-russia-kentuck...

Interestingly, all the banks in your sources involved in money laundering of "Russian money" are big non-Russian (Dutch, German, Estonian, UK, Swedish, French and so on) banks.

> all the banks in your sources involved in money laundering of "Russian money" are big non-Russian (Dutch, German, Estonian, UK, Swedish, French and so on) banks

And Revolut is a non-Russian service. Hence the comparison.

(Money laundering has three steps [1]. Dirty Russian money is typically placed with Russian banks. It is then layered between Russian and non-Russian banks before being integrated by a non-Russian bank, thereby masking its origins. Given the amount of dirty money flowing out of Russia, a Russian account tends to gather more scrutiny than e.g. a Danish one in the same way a Colombian account garners more scrutiny than a Miami one.)

[1] https://en.m.wikipedia.org/wiki/Money_laundering

financial services company accused of money laundering with ties to russian oligarchs in London is a little bit different from minority stake in a large american corporation, or even the American government, which at least as of today is still a liberal democracy.

I don’t think the problem is that it has ties to a political entity.

The problem is that that entity is a de-facto dictatorship that is well known for being corrupt.

The fact that CEOs father works as a deputy executive in a government owned company qualifies does not qualify as "ties," in any meaningful way.

Most shareholders and the regulator in control are western based and run by people whose parents aren't employed in Russia's public sector, as far as I know.

Show me a government that's not known to be corrupt.

> Meaning, despite their London HQ, Revolut is Russian owned and Russian managed pseudo-bank. Giving them more money might not be great idea.

Giving any Russian oligarchs more money is always a bad idea.

> Revolut cited 'personal and health reasons' for the CFO's resignation. Whatever those personal and health reasons really were, they clearly passed quite quickly as within the space of a few weeks, said CFO has joined another FinTech company as their new CFO.

Just waited for the golden parachute check to be cashed in.

Maybe there was an argument and the CFO was against turning off the money laundering and lost out and left over that.

The CFO resigned only after the documents passed to The Telegraph by a whistleblower showed that for three months in 2018 Revolut switched off an automated system designed to stop dubious money transfers[1].

[1] https://www.telegraph.co.uk/technology/2019/02/28/revolut-fa...

Maybe that system was low quality and blocked valid transactions?

Maybe it was, but that's not a good excuse. "We wrote some software to prevent money laundering but it was crap so we turned it off"

> We attempted to write some software to prevent money laundering but it didn't work. So we turned it off.

What are you talking about, that's completely reasonable.

That seems like an entirely reasonable response in isolation. Sometimes you write new software and find it just doesn't work in production. Were they not doing anything else to prevent money laundering?

Or "We wrote some software to prevent money laundering but it worked properly and blocked heaps of profitable transactions, so we turned it off"

I saw that but it wasn't clear as far as I remember who did this - it may be the CFO took responsibility for some one else's actions.

> it may be the CFO took responsibility for some one else's actions

CFOs of financial services companies are typically senior AML officers. All AML actions are their actions, and AML liability for AML officers is almost strict liability. If something happens and if best practice wasn’t followed, the AML officer(s) are personally and criminally liable.

If someone could turn off the entire AML scanning system with the CFO’s prior knowledge, sign-off, and ex post facto notification, that’s a deficient AML policy.

It wasn't the entire system. It was some of the rules. They were rules which weren't very accurate, were leading to lots of unhappy real customers, and not catching many fraudsters.

For example, the rules stopped large numbers of women who had bank accounts or their passports in maiden names from transferring money to themselves. Revolut would see an incoming payment from supposedly the same person, but with a different name, and lock the whole account down until documents could be provided proving why that happened.

That means if you top up your Revolut account on saturday to buy some McDonalds, you are now going to be locked out of all financial services for probably 1+ week while you get official documents proving the name change. A marriage certificate isn't enough. If your salary is paid into Revolut, you might default on loan payments, loose your house/car, etc.

All that to stop only the stupidest of money launderers. Smart money launderers know to use business accounts where the name of the account holder isn't checked by any bank.

> Smart money launderers know to use business accounts where the name of the account holder isn't checked by any bank.

I don't quite follow - can you elaborate and explain the scenario?

If a human moves money from "Bob smith" at bank1 to "bob smith" at bank2, they can avoid many of the money laundering checks, because money laundering laws only apply when money is changing ownership.

If a business does the same, and claims they're moving their own money about, the name checks aren't applied, so they can work around many of the checks.

In Germany at least, when you order a transaction you have to specify recipient account holder name and IBAN. Recipient bank checks if the name on the IBAN matches with the one in their records (after normalization to reduce error rates e.g. from umlauts) and if there's an obvious mismatch reject the transaction.

Business accounts however are not checked as tightly as people often enough either outright mis-spell the company name, use outdated company names, specify departments in the name and not the comment field, ...

I'm not saying this is definitely the case, but it could be why he left. Could you imagine if you were criminally liable for something like this, and found out that the monitoring for it was disabled without your knowledge? I'd want to get out of there ASAP.

In a typical bank, AML is not part of the CFO responsibility (instead directly subordinate to CEO), and no sane bank will have a CFO whose experience is chiefly AML.

And use candidates to your job offers so they do free marketing campaigns for you. Basically.

To be honest, fuck Revolut, so use them with little money.

Something is not right with these freaks.

> And use candidates to your job offers so they do free marketing campaigns for you.

Can you expand on this? I'm not sure what the reference is to.