The FCA has fined Monzo Bank Ltd £21,091,300 for its inadequate anti-financial crime systems and controls between October 2018 and August 2020.
Monzo also repeatedly breached a requirement preventing it from opening accounts for high-risk customers between August 2020 and June 2022.
Monzo's customer base has grown rapidly, increasing almost tenfold from around 600,000 in 2018 to over 5.8 million in 2022. However, Monzo's financial crime controls failed to keep pace with its customer and product growth.
In particular, 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 systemic failings resulted in the FCA requiring a comprehensive, independent review of the firm's financial crime framework in August 2020.
Alongside the independent review, the FCA imposed a requirement preventing Monzo from opening new accounts for high-risk customers. However, between August 2020 and June 2022, it repeatedly failed to comply with the terms of the requirement, including signing up over 34,000 high-risk customers.
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.'
Monzo 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.
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 4 years.
The FCA highlighted financial crime as one of its priorities for retail banks in its 2024 supervisory strategy (PDF)[2].
Notes to editors
- Read the Final Notice for Monzo (PDF)[3].
- Monzo would have been fined £30,130,475, but it agreed to resolve these matters and so qualified for a 30% discount under the FCA's processes.
- Read the FCA's previous review of financial crime controls at challenger banks[4].
- Find out more information about the FCA[5].