Monzo Bank has been fined £21,091,300 by the Financial Conduct Authority for systemic failings in its anti-financial crime controls during a period of rapid growth, and for repeatedly breaching regulatory requirements concerning high-risk customers.

The FCA said Monzo failed to design and implement adequate systems to manage financial crime risks between October 2018 and August 2020, during which time the digital bank’s customer base expanded dramatically from around 600,000 to more than 5.8 million.

The bank’s controls did not keep pace with that growth, with particular weaknesses in onboarding, customer risk assessment and transaction monitoring.

The regulator imposed a requirement in August 2020 that prohibited Monzo from opening new accounts for high-risk customers while it undertook an independent review of its financial crime systems.

However, Monzo failed to comply with that restriction, signing up over 34,000 high-risk customers between August 2020 and June 2022.

THIS IS one of the largest penalties handed out in recent years for breaches relating to financial crime

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said the bank had “fell far short of what we, and society, expect” in the fight against financial crime.

“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,” she 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.”

The FCA fine is one of the largest penalties handed out in recent years for breaches relating to financial crime. It is the tenth such enforcement action against a bank since 2020.

Monzo has since completed a remediation programme to strengthen its financial crime framework, following recommendations from the independent review.

The FCA said it continues to supervise financial institutions to improve standards and ensure that they have appropriate systems and controls to detect and prevent financial crime.