Monzo hit with £21M fine after onboarding customers with Buckingham Palace and 10 Downing Street addresses

Monzo has been hit with a £21m fine by the UK financial watchdog over lax financial crime controls, after the challenger bank onboarded customers with "implausible" London landmark addresses such as Buckingham Palace, 10 Downing Street and even Monzo’s business address.

The Financial Conduct Authority (FCA) began reviewing Monzo’s financial crime controls in 2020 and opened a formal probe in 2021.

The watchdog said the financial crime controls of Monzo, whose customer base grew almost tenfold from around 600,000 in 2018 to over 5.8 million in 2022, failed to keep up with its customer base.

The FCA said: “In particular, Monzo failed to design, implement and maintain adequate customer onboarding, customer risk assessment, and transaction monitoring systems to mitigate the risk of financial crime.

“These systemic failings resulted in the FCA require a comprehensive, independent review of the firm'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. 

But between August 2020 and June 2022, Monzo repeatedly failed to comply with the terms of the requirement, including signing up over 34,000 high-risk customers, the FCA said. 

Therese Chambers, FCA joint executive director of enforcement and market oversight, 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 watchdog said Monzo has set up 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.

Monzo 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.”