Revolut auditor waves the red flag over £477m of unverified revenues

Revolut is on the verge of obtaining a UK banking license, despite the accountant revealing major problems with its accounts.

In a long-delayed report, the £28bn company said it made its first profit in 2021 as revenue tripled in the cryptocurrency boom.

But in great embarrassment for the financial services giant, auditor BDO said £477m in revenue – three-quarters of its £636m turnover – could not be verified and may have been misreported.

Despite this, Revolut believes it will “soon”, possibly within days, receive a UK banking license from regulators the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).

The news – first revealed by The Mail on Sunday last week – raised concerns among MPs and industry experts.

Baroness Altmann, a former pensions minister, said: “If regulators decide not to hit the pause button on licensing, they need to make a clear public statement as to why they are confident to proceed.”

Will Wragg, Conservative MP and co-chair of the multi-party banking parliamentary group, said: “It is extraordinary that a company the size of Revolut, and a financial technology company, has faced questions about its internal IT system and that his accountant is unable to verify the origin of three quarters of the profits.

‘Getting a banking license comes with a huge responsibility and not accounting for nearly £500 million is no small feat.

“I call on the regulators to think very carefully about this.”

Revolut’s 2021 accounts were due to be published at the end of September. This was pushed back to December 31, a deadline it missed.

Yesterday, BDO said the group’s IT and accounting systems were not sophisticated enough to track revenue for most of 2021, when the company was growing rapidly.

This meant that the auditors could not confirm which parts of the business accounted for three-quarters of its revenue, posing the risk of ‘material misstatements’.

The error was rectified in late 2021, a source said, and it is not expected to be an issue again. The source said regulators were “well aware of the issues.”

Finance chief Mikko Salovaara said Revolut was “outgrowing” its IT systems, adding: “It’s a one-off. We do not expect further delays on an ongoing basis in our accounts.”

Revolut was launched in 2015 by former Lehman Brothers and Credit Suisse trader Nikolay Storonsky, 38, and Vlad Yatsenko, 39. I

It is now a sprawling digital finance group with 27 million customers worldwide offering everything from vacation rentals to stock trading.

It has a full banking license in the EU, but can only offer certain services in the UK. A license would make it possible to take deposits and borrow money.

Revolut said it had made a profit of £40m in 2021, compared to a loss of £221m in 2020. In an update on current trading, it said revenues had risen by a further third to £850m in 2022 – and were much less dependent on crypto.

Storonsky, who is also the CEO, wants it to become the “Amazon of banking.”

Angela Eagle, a Labor MP on the Treasury Select Committee, said: ‘I would certainly be concerned about what on earth has happened in an organization that cannot explain where three-quarters of its income comes from trying to become a bank. .’

BDO is working on the 2022 accounts, which are expected to be released before the September deadline this year.

Revolut has been recruiting heavily, hiring about 300 people per month since last summer, increasing its total workforce from 2,900 people at the start of 2022 to about 6,000.