The UK’s Financial Conduct Authority (FCA) has imposed a £21m ($28.5m) fine on digital bank Monzo for financial crime failings.
The regulated alleged that Monzo failed to maintain adequate anti-financial crime controls from October 2018 to August 2020.
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It also violated requirements by opening accounts for “high-risk” customers, despite being under an FCA directive to halt such actions.
Monzo’s shortcomings included inadequate customer onboarding, risk assessments, and transaction monitoring systems.
These “systemic” issues led to the FCA mandating an independent review of Monzo’s financial crime framework in August 2020.
The digital challenger bank allegedly failed to comply the requirements by signing up over 34,000 high-risk customers, which regulator restricted, between August 2020 and June 2022.
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By GlobalDataIn response to these failings, Monzo has since carried out a financial crime change programme to improve its control framework, following the recommendations from the independent review.
FCA enforcement and market oversight joint executive director Therese Chambers said: “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.”
Monzo, authorised in August 2016 and granted full banking permissions in April 2017, has acknowledged the problems, stating they “have been resolved and are firmly in the past,” reported Reuters.
Last year in October, Starling Bank, another UK digital bank, was fined £29m after FCA report outlined “shockingly lax” financial crime controls.
The bank accepted the findings released in FCA’s Final Notice, which revealed failings associated with the onboarding of certain high-risk customers.
In November, UK’s Metro Bank was fined £16m for failings in their anti-money laundering systems and controls.
