Digital bank Monzo has been fined £21m by the Financial Conduct Authority (FCA) for failures in its anti-financial crime systems between 2018 and 2020, during a period of rapid customer growth.
According to UKTN, Monzo expanded from around 600,000 customers to almost six million during this time but failed to scale its financial crime prevention controls to match the expansion, the FCA said.
The FCA noted that Monzo “failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime”. The regulator added that in 2020 it required Monzo to conduct a comprehensive review of its financial crime framework, which included a restriction on onboarding high-risk customers. However, the bank was found to have onboarded more than 34,000 high-risk customers between August 2020 and June 2022, in breach of this order.
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 also highlighted the extent of Monzo’s failures, stating, “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.”
This is not the first time Monzo has been reprimanded. Back in 2022, the UK’s Competition and Markets Authority (CMA) warned Monzo over a breach of retail banking regulations.
The warning came as the challenger bank failed to adequately disclose the monthly maximum charge for its personal current account.
One of the measures introduced in the Retail Banking Market Investigation Order regulation requires banks and building societies to specific the monthly maximum charge that could accrue in relation to a personal current account in any month as a result of exceeding, or attempting to exceed, a pre-agreed credit limit on a PCA.
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