The online bank Monzo was fined £21 million for having inadequate financial crime controls after allowing users to open accounts with “implausible ” residential addresses, including 10 Downing Street, Buckingham Palace, and Monzo’s own offices
The FCA’s punishment comes after a protracted inquiry. Monzo failed to establish and implement appropriate controls for customer registration and transaction monitoring over the first two years, according to the regulator.
Additionally, it “repeatedly breached” regulations that forbade it from opening accounts for high-risk clients from 2020 to 2022.
According to FCA documents detailing the scope of the breaches, the controls were sufficiently lenient to allow consumers to create accounts using “obviously implausible UK addresses when applying for an account.” This included famous London locations like Monzo’s office address, 10 Downing Street, and Buckingham Palace.
Therese Chambers, the FCA’s joint enforcement director, stated: “Monzo onboarded customers based on limited, and in some cases, obviously implausible information.
“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.”.
Customers of Monzo, a company that was established in 2015 and is well-known for its vivid coral-coloured debit cards, were also able to register using PO boxes or overseas addresses with UK postcodes, according to the report. After applying for an account using one address, other clients reordered their cards from a non-UK location.
Several clients were able to use the same address in other instances, which increased the possibility of money making, the practice of allowing one’s bank account to be used as a conduit for the proceeds of organised crime.
According to the FCA, Monzo’s decision to not check or oversee customer addresses “increased the risk that Monzo had onboarded, and maintained a business relationship with, non-UK resident customers outside of its risk appetite.”
The fine puts a stop to four years of conjecture over the FCA investigation’s foundation, which was initially revealed in Monzo’s 2021 annual report.
Monzo’s chief executive, TS Anil, said in a state that the FCA’s fine drew a line under issues that he said “have been resolved and are firmly in the past.
“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,” Anil added.