Monzo has been fined £21.1m by the Financial Conduct Authority (FCA) for having inadequate anti-financial crime systems and controls.

These failings relate to the period between October 2018 and August 2020.

The FCA also found that Monzo repeatedly breached a requirement preventing it from opening accounts for high-risk customers between August 2020 and June 2022.

Monzo’s customer base has grown rapidly in recent years, increasing from around 600,000 in 2018 to over 5.8 million in 2022. However, the FCA suggested that Monzo’s financial crime controls failed to keep pace with this customer and product growth.

An FCA investigation has found that Monzo failed to implement adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime.

These systemic failings resulted in the regulator requiring an independent review of the bank’s financial crime framework in August 2020.

Alongside this 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.

Joint executive director of enforcement and market oversight at the FCA, Therese Chambers, 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.”

Since the regulator’s independent review, Monzo has 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 review.

In response to the FCA action, Monzo’s group CEO, TS Anil, 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. 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.”

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