UK digital challenger Monzo has been fined £21.1m ($28.3m) after a four-year-long investigation by the Financial Conduct Authority (FCA) found it had failed to implement adequate anti-financial crime systems and controls. While the digital bank could have faced a more substantial penalty of £30.1m received a discount to £21.1m due to its co-operation with resolving the found issues.
GlobalData 2025 Financial Services Consumer Survey
Monzo’s rapid expansion from 2018–22 saw it acquire over 5.2 million new customers, and it now holds 2% of the UK retail banking market share, according to GlobalData’s 2025 Financial Services Consumer Survey. With this rapid growth, Monzo’s internal systems struggled to adapt accordingly. The investigation revealed that Monzo’s systems for verifying customer identities were insufficient, as it was automatically accepting many customers who had limited information and were using implausible addresses, such as Buckingham Palace or, ironically, the bank’s own headquarters. Alongside this assessment, Monzo failed to comply with the terms of an FCA mandate, onboarding over 34,000 high-risk customers from 2020–22.
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The bank’s ‘growth-first’ culture, often celebrated in the fintech space, appears to have clouded strategic judgement, exposing regulatory and reputational risks. With profitability achieved in FY25, Monzo is no longer a scrappy start-up; yet this fine shows its governance frameworks lagged its commercial ambitions.
FCA ramps up regulatory scrutiny
This is the 10th fine the FCA has imposed on a bank for financial crime control failings in the last four years, with Monzo’s digital rival Starling also being found guilty of lenient financial crime controls, landing it with a £29m fine in 2024. This highlights the heightened regulatory scrutiny across the UK digital banking sector as numerous digital banks face challenges in switching from e-money licences to banking licences. They must contend with significantly stricter regulations and the complexities associated with lending operations, which they are not used to. Therese Chambers, FCA joint executive director, emphasised that banks must have robust systems to combat financial crime, stating: “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.” As Monzo eyes an eventual IPO, its credibility will hinge on demonstrating that governance, not just growth, is embedded at its core. Hence, it is imperative that Monzo, along with other rising neobanks, handle its customers’ assets responsibly to build trusting relationships while avoiding undermining market integrity.
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