The Financial Conduct Authority (FCA) in the United Kingdom has imposed an almost £21.1 million fine on digital banking giant Monzo for opening accounts for “high-risk” customers, thus “repeatedly” breaching requirements around financial crime controls.

Crime Control Lapses Cost Monzo Heavily

The regulator announced today (Tuesday) that its review found the digital bank had inadequate anti-financial crime systems and controls between October 2018 and August 2020.

Furthermore, it “repeatedly failed to comply with the terms” around onboarding high-risk customers between August 2020 and June 2022, and signed up more than 34,000 of such clients.

“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,” said Therese Chambers, the FCA’s Joint Executive Director of Enforcement and Market Oversight.

“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.”

Interestingly, Monzo’s customer base jumped tenfold from around 600,000 in 2018 to over 5.8 million in 2022.

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The FCA highlighted that the financial crime controls of the digital bank “failed to keep pace with its customer and product growth.”

A Fast-Growing Challenger Bank

Launched in 2015, Monzo received its full banking licence in 2017. It offers current accounts through a mobile app.

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The company reported its first annual profit in 2023 and continued to grow in 2024–25, with revenue reaching over £1.2 billion. About one-third of its customers now use it as their main bank.

The British regulator further highlighted that Monzo has now established and completed a financial crime change programme to fix and improve its broader financial crime control framework, in line with recommendations made in the independent review.

The FCA originally decided to impose a fine of over £30.1 million on Monzo but reduced the amount by 30 per cent as the challenger bank agreed to resolve the matter.

“The FCA’s findings relate to a historical period that ended three years ago,” said TS Anil, Monzo’s Group CEO, adding: “[They] 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.”

However, Monzo is not the only British challenger bank to be caught onboarding high-risk customers. Last year, the FCA imposed a £29 million fine on Sterling Bank for opening more than 54,000 accounts for 49,000 “high-risk customers” between September 2021 and November 2022, calling its financial crime controls “shockingly lax.”

This article was written by Arnab Shome at www.financemagnates.com.FinTechRead More

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