Digital bank Monzo has been ordered to pay a £21m fine by the Financial Conduct Authority (FCA) for failing to maintain robust anti-financial crime measures between 2018 and 2020.
According to UKTN, the FCA’s action comes after it found Monzo did not adapt its crime prevention systems in line with the bank’s rapid growth, which saw its customer base surge from 600,000 to nearly six million during that period.
According to the FCA, Monzo “failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime”. These shortcomings led to the regulator imposing strict conditions in 2020, requiring Monzo to overhaul its financial crime controls and halt onboarding of high-risk customers.
Despite these requirements, the FCA discovered that Monzo onboarded more than 34,000 high-risk clients between August 2020 and June 2022, directly breaching the imposed restrictions. FCA joint executive director of enforcement and market oversight Therese Chambers said, “Banks are a vital line of defence in the collective fight against financial crime. They must have the systems in place to prevent the flow of ill-gotten gains into the financial system. Monzo fell far short of what we, and society, expect.”
Chambers added that Monzo’s controls were so weak that the bank accepted implausible details during onboarding, citing examples like customers registering with well-known London landmarks as their address. She said, “This illustrates how lacking Monzo’s financial crime controls were. This was compounded by its inability to properly comply with the requirement not to onboard high-risk customers.”
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