The Financial Conduct Authority has fined Monzo Bank Ltd over £21m for inadequate anti-financial crime systems and controls between October 2018 and August 2020. The bank also repeatedly breached a requirement preventing it from opening accounts for high-risk customers between August 2020 and June 2022.

Monzo's customer base increased almost tenfold from around 600,000 in 2018 to over 5.8 million in 2022 – its financial crime controls failing to keep pace. In particular, Monzo failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime – systemic failings that led to the watchdog demanding a comprehensive review of the firm's financial crime framework.

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.

Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said banks are a vital line of defence in the collective fight against financial crime, and that they therefore 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,” she added. “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.”

Monzo has established and completed a financial crime change programme to remediate and enhance its wider financial crime control framework in line with recommendations.

This is the tenth fine the FCA has imposed on a bank for financial crime control failings in the last four years.

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