Monzo Fined $28 Million for Lower Financial Crime Controls
Digital bank Monzo was fined 21 million pounds ($28.57 million) by Britain's financial authority for failing to provide sufficient security against financial crimes, including accepting clients who had provided London landmarks as their address.
The Financial Conduct Authority (FCA) stated that Monzo failed to maintain adequate controls to reduce the risk of financial crime due to its rapid growth.
For "inadequate anti-financial crime systems and controls" from October 2018 to August 2020, the regulator fined the company 21.1 million pounds.
According to Monzo, the issues "have been resolved and are firmly in the past" and the company moved swiftly to put in place a program in February 2021 to address financial crime concerns.
Monzo, which was introduced in 2015, is one of the few financial services apps, or "fintechs," that have appeared in the UK in the past ten years.
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Following a review in 2020, Monzo was required by the FCA to refrain from creating new accounts for high-risk clients.
But "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," the FCA said.
"Much narrower in scope" are the conclusions regarding 2020 to 2022, according to a statement from Monzo, whereas the FCA's primary findings pertain to 2018 to 2020.
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"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," Therese Chambers, FCA joint executive director of enforcement and market oversight, said.
"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," Chambers added.
Regulators in Britain are worried about other fintechs' measures to prevent financial crime. After the FCA determined that Starling Bank's anti-money laundering and sanctions screening procedures left the financial system "wide open to criminals," the bank was fined 29 million pounds in 2024.