UK watchdog fines Monzo £21mn for ‘falling far short’ on monetary crime | USAEMALL.com

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The UK financial regulator has fined Monzo £21mn for repeatedly breaching rules against opening accounts for “high-risk customers” after the digital bank took on clients that provided “obviously implausible information” including home addresses at Buckingham Palace and 10 Downing Street.

The Financial Conduct Authority said Monzo had for several years been unable to carry out proper checks on high-risk customers after it turned off an address verification system in 2019 because too many existing clients would have failed it.

The watchdog, which started reviewing Monzo’s financial risk controls in 2020 and opened a formal investigation in 2021, said on Tuesday that the bank’s checks had not kept pace with its expansion and were “inadequate to counter actual and potential financial crime risks effectively”.

Despite the watchdog imposing a block on Monzo opening new accounts for high-risk customers, the lender had “repeatedly failed to comply with the terms of the requirement” and signed up more than 34,000 high-risk clients between August 2020 and June 2022, the FCA said.

Regulators have stepped up scrutiny of digital banks’ financial crime controls. The FCA fined Starling Bank £29mn last year for its “shockingly lax” screening of higher risk customers.

Announcing the penalty on Tuesday, the FCA said Monzo had “failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime”.

Therese Chambers, FCA joint executive director of enforcement and market oversight, said: “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,” she said. Among them were Buckingham Palace, 10 Downing Street and Monzo’s own business address.

The bank would have been fined £30mn but received a 30 per cent discount for agreeing to resolve the issues.

Monzo was initially not a member of CIFAS, a national fraud prevention database. After it signed up in 2020, it found that about 53,600 customers failed CIFAS screening and committed to close over half their accounts.

However, Monzo has since “established and completed a financial crime change programme to remediate and enhance its wider financial crime control framework in line with recommendations made in the independent review”, the FCA said.

Monzo started by offering pre-paid payment cards and expanded rapidly after gaining a banking licence in 2017. It now offers current accounts, business banking, overdrafts, loans and money transfers. It has grown from 250,000 customers in 2017 to more than 12mn personal and business accounts in April 2025.

“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,” Monzo chief executive TS Anil said.

Anil, who has led the digital bank since 2020, added: “Financial crime is an issue that affects the entire industry.” He said that Monzo “is doing all we can to stop it in its tracks”.