Monzo Bank Fined £21M by FCA Over Financial Crime Control Failures

The Financial Conduct Authority (FCA) has imposed a £21,091,300 fine on Monzo Bank Ltd, citing serious deficiencies in the bank’s anti-financial crime systems and controls between October 2018 and August 2020.

In its findings, the FCA accused Monzo of repeatedly violating a regulatory requirement that barred the bank from opening accounts for high-risk customers, breaching this restriction between August 2020 and June 2022. Despite warnings, Monzo reportedly onboarded more than 34,000 high-risk clients during that period.

Monzo expanded its customer base from roughly 600,000 in 2018 to over 5.8 million by 2022. However, its customer risk assessments, onboarding procedures, and transaction monitoring systems failed to evolve accordingly.

Due to these shortcomings, the FCA conducted an independent review of Monzo’s anti-financial crime framework in August 2020. In tandem, it imposed restrictions to prevent the bank from onboarding high-risk customers, which Monzo later failed to observe.

Therese Chambers, the FCA’s Joint Executive Director of Enforcement and Market Oversight, criticized the bank’s practices, citing instances where customers registered using "obviously implausible information" such as London landmarks as addresses, a clear indicator of weak financial crime controls.

In response, Monzo has since established and completed a financial crime change programme, aiming to fortify its financial crime control framework and align with the FCA's recommendations.

The FCA reiterated its commitment to supervising financial firms rigorously, emphasizing the need for the right systems and controls to manage financial crime risks. This case marks the tenth financial crime control-related penalty imposed by the regulator on banks in the past four years.

In a similar move last November, Metro Bank PLC was fined £16,675,200 for failing to implement adequate money laundering risk monitoring procedures.