Monzo Fined £21 Million Over Financial Crime Control Failings as FCA Flags ‘Systemic’ Lapses

The UK’s Financial Conduct Authority (FCA) has fined Monzo Bank £21,091,300 for serious and repeated failures in its financial crime controls, citing deficiencies in the digital bank’s customer onboarding, risk assessment, and transaction monitoring systems between 2018 and 2022.

According to a statement issued Monday, the regulator found that Monzo’s financial crime framework failed to keep pace with its explosive growth, expanding from 600,000 customers in 2018 to over 5.8 million by 2022. The FCA said Monzo’s controls were not only inadequate but “obviously implausible” at times, such as when it onboarded customers listing famous London landmarks as their residential addresses.

“Banks are a vital line of defence in the collective fight against financial crime,” said Therese Chambers, joint executive director of enforcement and market oversight at the FCA. “Monzo fell far short of what we, and society, expect.”

Repeated Breaches After Regulatory Intervention
Monzo’s initial failings occurred between October 2018 and August 2020. In response, the FCA imposed a requirement in August 2020 that barred the bank from opening accounts for high-risk customers until it could improve its systems. However, Monzo breached that requirement multiple times, signing up over 34,000 high-risk customers between August 2020 and June 2022.

The FCA’s investigation revealed that Monzo’s onboarding processes lacked rigor and its systems often failed to flag or mitigate financial crime risks effectively. Chambers noted that the bank’s reliance on “limited” information and its failure to screen for red flags exemplified how its controls “fell far short.”

Since then, Monzo has undertaken a financial crime change program in line with recommendations from an independent review ordered by the FCA. That program has now been completed, and the regulator continues to supervise the firm’s ongoing compliance.

Article Credit: https://www.grcreport.com/post/monzo-fined-ps21-million-over-financial-crime-control-failings-as-fca-flags-systemic-lapses