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The Financial Conduct Authority (FCA) has fined Monzo Bank Ltd £21,091,300 for inadequate anti-financial crime systems and controls, covering the period from October 2018 to August 2020.
Monzo, which saw its customer base surge from around 600,000 in 2018 to over 5.8 million in 2022, failed to ensure its financial crime controls kept pace with its rapid growth. The FCA highlighted that Monzo did not design, implement, or maintain adequate systems for customer onboarding, risk assessment, or transaction monitoring, leaving the bank exposed to financial crime risks.
The FCA required Monzo to undergo a comprehensive, independent review of its financial crime framework in August 2020 after identifying systemic failings.
Alongside this review, the FCA imposed a restriction preventing Monzo from opening new accounts for high-risk customers. However, between August 2020 and June 2022, Monzo breached this requirement multiple times, onboarding over 34,000 high-risk customers during the restricted period.
Therese Chambers, FCA joint executive director of enforcement and market oversight
Therese Chambers, FCA joint executive director of enforcement and market oversight, commented:
“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 noted that Monzo has since established and completed a financial crime change programme to address and enhance its control framework, following recommendations from the independent review.
The penalty was reduced from £30,130,475 after Monzo agreed to settle the matter, qualifying for a 30% discount under FCA processes.
This fine marks the tenth instance in four years that the FCA has penalised a bank for failings in financial crime controls, underscoring the regulator’s continued focus on financial crime as a supervisory priority for retail banks.
