The bank was found to have signed up some customers on the basis of “limited and implausible” information including the use of popular London landmarks as customer addresses.
Monzo came under the regulator’s scrutiny in August 2020 after it failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime.
At the same time as launching a comprehensive review into the bank’s failings, the FCA imposed a restriction banning Monzo from opening new accounts to high-risk customers.
Despite the restriction, between August 2020 and June 2022 the bank signed up over 34,000 high risk customers.
Monzo was authorised in August 2016 and granted full banking permissions in April 2017. Between 2018 and 2022, Monzo increased its customer base from 600,000 to over 5.8 million but the regulator says its financial crime controls have failed to keep pace with its customer and product growth.
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‘Implausible customer information’
Therese Chambers, FCA joint executive director of enforcement and market oversight, 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.
“Monzo onboarded customers on the basis of limited, and in some cases, obviously implausible information – such as customers using well known London landmarks as an address.
“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.”
The FCA said Monzo cooperated fully with the authority throughout the course of its investigation.
The bank has established and completed a financial crime change programme to remediate and enhance its wider financial crime control framework in line with recommendations made in the independent review.
Had the bank not agreed to resolve matters, it would have received a fine of £30,130,475.
The FCA continues to supervise firms to improve standards and ensure that they have the right systems and controls to manage financial crime risks. This is the 10th fine the FCA has imposed on a bank for financial crime control failings in the last four years.
The regulator highlighted financial crime as one of its priorities for retail banks in its 2024 supervisory strategy.
‘Draw a line under the issue’
Monzo’s group CEO TS Anil said: “The FCA’s findings relate to a historical period that ended three years ago and draw a line under issues that have been resolved and are firmly in the past – with our learnings at the time leading to substantial improvements in our controls.
“I’m pleased the FCA recognises the significant investments we have made, as well as our ongoing commitment to managing these risks today, as we go from strength to strength as a business approaching 13 million customers.
“Financial crime is an issue that affects the entire industry – and at Monzo, we have the right team, best-in-class technology and an unwavering commitment to doing all we can to stop it in its tracks.”
Start-up banks Starling Bank and Revolut have both received multi-million pound fines for financial crime failings in the last 18 months.
In 2024, the FCA handed Starling a £29m fine for financial crime failings related to its financial sanctions screening. Like Monzo, it also repeatedly breached a requirement not to open accounts for high-risk customers.
The FCA said Starling Bank had grown “quickly”, and its measures to tackle financial crime did not keep pace as its customer base rose from around 47,000 in 2017 to 3.6 million in 2023.
In April, Revolut received a £3m fine from the Bank of Lithuania for inefficiencies in money laundering controls.
This story was first published on YourMoney’s sister publication, Mortgage Solutions. You can read it here.
