Market News

BY Samuel Norman

Monzo has been slapped with a £21m fine by the Financial Conduct Authority after “repeatedly” opening accounts for “high-risk” customers.

The UK fintech was blasted by the City watchdog for failing to keep the pace of its crime control with its customer and product growth.

Between August 2020 and June 2022, Monzo signed up over 34,000 high risk customers, a review by the FCA found.

The regulator said Monzo onboarded customers on the basis of “limited, and in some cases, obviously plausible information – such as customers using well known London landmarks as an address”. These included Buckingham Palace and 10 Downing Street and Monzo’s own business address.

The firm’s customer base increased almost tenfold from 2018 to 2022 as the neobank notched 5.8 million customers.

But the FCA has said Monzo “failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime.”

FCA: Monzo ‘fell far short’

The watchdog said Monzo’s failings between August 2020 and June 2022 triggered a “comprehensive, independent review” of the firm’s financial crime framework.

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

TS Anil, group chief executive of Monzo, 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.”

Monzo’s digital banking peer Starling was also hit with a fine last year from the City watchdog for a failings in financial crime which were branded “shockingly lax”.

The FCA found the bank had opened more than 54,000 accounts for 49,000 “high-risk customers” between September 2021 and November 2022.