The Financial Conduct Authority (FCA) confirmed the penalty was imposed for shortcomings in Monzo’s anti-financial crime measures, with the failures dating back to between October 2018 and August 2020.
The digital challenger bank also repeatedly breached a regulatory requirement, preventing it from opening accounts for over 34,000 high-risk customers between August 2020 and June 2022, the Financial Conduct Authority (FCA) stated.
The FCA said Monzo’s financial fraud systems and controls ultimately “failed to keep pace” with its rapid growth in customer numbers in recent years. Its customer base ballooned from 600,000 in 2018 to over 5.8 million in 2022.
Monzo was found to have taken on customers using using PO Boxes, foreign addresses with UK postcodes or “obviously implausible UK addresses, such as well-known London landmarks”, according to the regulator.
Therese Chambers, FCA joint executive director of enforcement and market oversight, said Monzo’s actions “fell far short of what we and society expect”.
She said: “Banks are a vital line of defence in the collective fight against financial crime.
“They must have the systems in place to prevent the flow of ill-gotten gains into the financial system.
“Monzo fell far short of what we and society expect.
“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.”
The FCA said the fine of £21.1 million had been discounted from £30.1 million after Monzo agreed to resolve the issues.
Monzo said the group has since made “substantial improvements” in its systems and controls.
TS Anil, the bank’s group chief executive, said: “The FCA’s findings relate to a historical period that ended three years ago and 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.
“I’m pleased the FCA recognises the significant investments we have made, as well as our ongoing commitment to managing these risks today, as we go from strength to strength as a business approaching 13 million customers.”
