UK watchdog fines digital bank Monzo £21m for financial crime failings
Make us a preferred source
Make us a preferred source on Google
The news: The UK Financial Conduct Authority (FCA) has fined digital bank Monzo £21 million ($43.4 million) over inadequate protections against financial crime, including onboarding customers who had listed Buckingham Palace as their address.
The numbers: In a statement released Tuesday, the FCA said that the failures occurred between August 2020 and June 2022. The FCA said Monzo’s customer base grew from around 600,000 in 2018 to over 5.8 million in 2022, but that the challenger bank’s financial crime controls failed to keep pace with customer and product growth.
The context: Specifically, the FCA said 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.
The FT reports that the bank would have been fined £30 million, but received a 30% discount for agreeing to resolve the issues.
What they said: Therese Chambers, FCA joint executive director of enforcement and market oversight, said: “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.”
