UK’s FCA Fines Monzo $28.57 Million Over Weak Financial Crime Controls

UK’s Financial Conduct Authority (FCA) has penalized digital bank Monzo $28.57 million for failing to provide sufficient safeguards against financial crime, UK News reported. Monzo’s FCA fine was also triggered by the bank’s failure to scale its financial crime safeguards as it grew.

Monzo’s Regulatory Shortcomings

According to the FCA, Monzo did not maintain sufficient controls to mitigate financial crimes as its customer base grew from 2018 to 2022. During this time, Monzo grew its user base from 600,000 to about six million.

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

The FCA further said that the digital bank “failed to design, implement, and maintain adequate customer onboarding, customer risk assessment, and transaction monitoring systems to mitigate the risk of financial crime.”

AML Compliance Issues

Monzo launched about a decade ago. It is one of the few fintechs that offer financial services in the UK. In 2020, the FCA ordered a comprehensive review of the digital bank’s financial crime framework. The order was triggered by poor anti-money laundering controls in the UK fintech. FCA’s order blocked Monzo from opening new accounts for customers that the agency considered to be at high-risk.

The FCA accused Monzo of failing to comply with this requirement between 2020 and June 2022. Within this period, the digital bank onboarded over 34,000 high-risk users. Monzo customers opened accounts using addresses such as 10 Downing Street, the Buckingham Palace, and the fintech’s business address.

“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,” Chambers added.

However, the FCA said that Monzo has improved its systems. In its statement, the UK regulator said Monzo has “established and completed a financial change program to remediate and enhance its wider financial crime control framework in line with recommendations made in the independent review.”

Monzo’s Response

In a statement issued by Monzo, the fintech’s CEO TS Anil claimed that the issues highlighted by the FCA have already been resolved.

“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,” Anil said.

The Monzo CEO also appreciated the FCA for acknowledging that the company had made significant improvements in its controls.

“I’m pleased the FCA recognises the significant investments we have made, as well as our ongoing commitment to managing these risks today. Financial crime is an issue that affects the entire industry – and at Monzo, we have the right team, best-in-class technology and an unwavering commitment to doing all we can to stop it in its tracks,” he added.

The latest fine comes barely a year after the UK Competition and Markets Authority (CMA) accused Monzo of breaching antitrust regulations. Another UK bank, Starling, was fined £29 million last year for failing to establish sufficient financial crime control systems.

Earlier this year, Monzo reported a sharp increase in its annual profits. The company’s pretax profit for the year ending March 2025 rose to a high of £60.5 million compared to the £13.9 million reported in the previous year. Monzo may opt to go public in future. However, Anil said it’s still very early to discuss an IPO.