The Financial Conduct Authority has slapped Monzo with a £21 million fine after the digital bank repeatedly fell short on its financial crime controls during a period of rapid growth.
Between 2018 and 2020, Monzo’s systems for vetting new customers and spotting suspicious activity failed to keep pace with its ballooning user base, which surged from 600,000 to nearly six million. The FCA said Monzo lacked adequate onboarding processes, risk assessments, and transaction monitoring, crucial defences against financial crime.
Things didn’t improve quickly. Even after the FCA ordered Monzo in August 2020 to stop opening accounts for high-risk individuals, the bank went on to open more than 34,000 such accounts over the following two years, including cases where customers listed well-known London landmarks as home addresses.
The fine could have been worse. Monzo qualified for a 30% discount after agreeing to resolve the matter, cutting the total from just over £30 million to £21 million.
The bank has since overhauled its internal systems, completing a change programme to address the shortcomings flagged by an independent review. The FCA noted this is the tenth time in four years it has fined a bank over failings in financial crime prevention.
Monzo responded to the FCA’s findings with the following statement from Group CEO TS Anil:
“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.”
While Monzo’s customer numbers now top 12 million, this case underlines the challenges fast-growing fintechs face when scale outpaces compliance.