The UK’s Financial Conduct Authority (FCA) has slapped digital bank Monzo with a £21.1 million fine for serious lapses in its financial crime controls, including allowing customers to register accounts using Buckingham Palace and 10 Downing Street as their addresses.
What Went Wrong?
The FCA found that between October 2018 and August 2020, Monzo’s anti-money laundering (AML) and fraud prevention systems were inadequate as the bank rapidly expanded. Despite warnings, Monzo continued onboarding high-risk customers—including over 34,000 flagged individuals—between 2020 and 2022.
Key Failures:
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Fake Addresses Accepted: Customers used famous landmarks (including Monzo’s own HQ) as residential addresses.
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Weak Customer Checks: Incomplete or implausible information was approved.
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Repeated Non-Compliance: Monzo breached FCA restrictions meant to curb risky sign-ups.
Therese Chambers, FCA’s Joint Executive Director of Enforcement, stated:
“Monzo’s systems were so lacking that criminals could easily exploit them. Letting customers use Buckingham Palace as an address is beyond reckless.”
For more on UK banking regulations, visit FCA’s official site or read Financial Times’ fintech coverage.
Monzo’s Response: “Issues Are Resolved”
Monzo CEO TS Anil acknowledged the fine but insisted the problems are “firmly in the past.” The bank has since:
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Overhauled its financial crime controls
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Strengthened customer verification
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Invested in advanced fraud detection
Despite the penalty, Monzo’s latest financials show strong growth, with pre-tax profits surging to £60.5m (up from £13.9m in 2024).
A Wider Fintech Problem
Monzo isn’t alone—UK neobanks have repeatedly faced scrutiny over AML failures:
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Starling Bank was fined £29m in 2024 for weak money laundering checks.
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Revolut has faced delays in securing a UK banking license due to compliance concerns.
Experts warn that rapid growth often outpaces risk management in fintech. As The Economist reports, regulators are tightening oversight.
What’s Next for Monzo?
While profitability is improving, Anil said it’s “too early” to discuss an IPO. The bank must now:
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Rebuild regulatory trust
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Prove long-term compliance
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Regain customer confidence
For deeper analysis, check BBC’s business news or Reuters’ fintech investigations.
