Monzo has been fined more than £21 million over financial crime failures including allowing customers to register accounts to “implausible” addresses such as Buckingham Palace and No 10 Downing Street.
The UK’s financial watchdog said the fine related to failures regarding anti-financial crime measures dating back to between October 2018 and August 2020.
The Financial Conduct Authority (FCA) pointed out cases where the digital bank onboarded customers based on limited or invalid information.
For example, it found customers were allowed to register bank accounts using addresses such as PO Boxes, foreign addresses with UK postcodes, or well-known London landmarks.
It counted “Buckingham Palace” and “10 Downing Street” as addresses provided by fraudsters applying for an account, as well Monzo’s own headquarters.
Other instances of weak onboarding controls included two customers opening multiple accounts without Monzo being aware, despite having them previously closed as a result of financial crime concerns.
The digital challenger bank also repeatedly breached a requirement preventing it from opening accounts for more than 34,000 high-risk customers between August 2020 and June 2022, according to the FCA.
The FCA said Monzo’s financial crime systems and controls “failed to keep pace” with its rapid growth in customer numbers in recent years, which ballooned from 600,000 in 2018 to more than 5.8 million in 2022.
Therese Chambers, FCA joint executive director of enforcement and market oversight, said Monzo’s actions “fell far short of what we and society expect”.
She 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.”
The FCA said the fine of £21.1 million had been discounted from £30.1 million after Monzo agreed to resolve the issues.
Monzo said the group had since made “substantial improvements” in its systems and controls.
TS Anil, the bank’s group chief executive, 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.”
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