By Tommy Reggiori Wilkes and Elizabeth Howcroft
LONDON (Reuters) -Britain's financial regulator has fined digital bank Monzo 21 million pounds ($28.57 million) for inadequate protection against financial crime, which included taking on customers who had listed landmarks such as Buckingham Palace as their address.
As Monzo grew rapidly, it failed to maintain good enough controls to prevent the risk of financial crime, the Financial Conduct Authority (FCA) said in a statement on Tuesday. The regulator issued a fine of 21.1 million pounds for “inadequate anti-financial crime systems and controls” between October 2018 and August 2020.
Monzo CEO TS Anil said in a statement that the problems “have been resolved and are firmly in the past” and that it has since made “substantial improvements” in its controls. Monzo is committed to stopping financial crime, Anil said.
Launched in 2015, Monzo is one of a handful of apps offering financial services, known as “fintechs”, to have emerged in Britain in the last decade.
After a 2020 review, the FCA imposed a requirement on Monzo to prevent it from opening new accounts for high-risk customers. But “between August 2020 and June 2022, it repeatedly failed to comply with the terms of the requirement, including signing up over 34,000 high-risk customers,” the FCA said.
Customers had applied for Monzo accounts with addresses including Buckingham Palace, 10 Downing Street and Monzo's own business address, according to FCA documents.
“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,” said Therese Chambers, FCA joint executive director of enforcement and market oversight.
“This illustrates how lacking Monzo's financial crime controls were.”
Other fintechs in Britain have triggered regulatory concerns about their controls to stop financial crime. Starling Bank was fined 29 million pounds in 2024 after the FCA found its anti-money laundering controls and sanctions screening systems left the financial system “wide open to criminals”.
Monzo reported a sharp rise in annual profit in its latest results, with pretax profit hitting 60.5 million pounds for the year ending March 31, 2025, compared with 13.9 million pounds a year earlier. Anil said it was too early to talk about an IPO.
($1 = 0.7349 pounds)
(Reporting by Tommy Reggiori Wilkes and Elizabeth Howcroft; Editing by Amanda Cooper, Susan Fenton, Louise Heavens and Rachna Uppal)
