FCA fines Monzo £21 million for significant financial crime control failings

The Financial Conduct Authority (FCA) has imposed a fine of £21,091,300 on Monzo Bank Ltd for serious weaknesses in its financial crime systems and controls. The failings, which occurred between October 2018 and August 2020, included shortcomings in customer onboarding, risk assessment and transaction monitoring processes, leaving Monzo exposed to financial crime risks.

Monzo’s customer base expanded rapidly during this period, growing from approximately 600,000 customers in 2018 to over 5.8 million by 2022. However, the bank’s controls did not keep pace with this growth, resulting in a systemic failure to identify and manage financial crime risks effectively.

In August 2020, the FCA required Monzo to undergo a comprehensive independent review of its financial crime framework and imposed a restriction preventing it from opening accounts for high-risk customers. Despite this, Monzo breached this restriction between August 2020 and June 2022, onboarding more than 34,000 high-risk customers in clear contravention of the requirement.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, commented:

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.

In response, Monzo has implemented and completed a financial crime change programme designed to strengthen its systems, controls and governance, reflecting recommendations made in the independent review.

This is the 10th fine imposed by the FCA on a bank for financial crime control failures in the last four years, underscoring its supervisory focus on financial crime. The FCA has reiterated that tackling financial crime remains a core priority in its 2024 supervisory strategy for retail banks.

The FCA’s action against Monzo serves as a warning to all financial institutions that rapid growth must not come at the expense of robust financial crime controls. Banks must ensure that they maintain proportionate and effective systems to mitigate the evolving risks associated with financial crime.

Read the press release here.