Monzo has been fined £21 million by the Financial Conduct Authority (FCA) after fraudsters were able to open bank accounts using clearly fake or implausible addresses — including Buckingham Palace and 10 Downing Street.
The FCA said Monzo’s financial crime controls were “completely inadequate”, allowing thousands of suspicious accounts to be opened between 2018 and 2022. In one instance, an account holder even gave Monzo’s own business address in London as their residential address.
“Banks are a vital line of defence in the collective fight against financial crime,” said Therese Chambers, joint executive director of enforcement at the FCA. “Monzo fell far short of what we, and society, expect.”
Monzo is one of the UK’s fastest-growing digital banks, with more than 12 million customers. But according to the FCA, its systems failed to keep pace with rapid growth — particularly in vetting new customers, assessing risk and monitoring suspicious transactions.
In one major breach, Monzo opened 34,000 accounts for high-risk customers for almost two years after it had been banned from doing so by the regulator. It also allowed some customers — whose accounts had been closed over financial crime concerns — to simply open new accounts.
Among the catalogue of failings identified by the FCA were:
• Customers using high-profile or clearly false UK addresses such as royal residences and government buildings;
• Use of PO Boxes, mail-forwarding services and addresses linked to previously banned customers;
• Accounts opened with invalid or non-UK addresses falsely listed with UK postcodes;
• Card orders redirected overseas shortly after UK-based accounts were opened;
• Multiple accounts linked to the same address, often without proper checks on criminal risk.
The watchdog said the majority of breaches occurred between October 2018 and August 2020, with violations of the high-risk account ban continuing until June 2022.
Monzo has since reformed its controls and says it has invested significantly in improving its financial crime defences. Chief executive TS Anil said the bank had learned from past mistakes and had made “substantial improvements”.
“The FCA’s findings relate to a historical period that ended three years ago,” Anil said. “We’ve since invested heavily in our systems and controls. I’m pleased the FCA acknowledges our progress.”
The £21 million penalty makes Monzo the latest in a series of banks fined for money laundering and onboarding failures. Nine UK banks have faced similar action in the past four years.
While the regulator welcomed Monzo’s remedial actions, it said the failures highlighted serious weaknesses in the UK’s fintech sector when it comes to fighting financial crime.
With high-profile fraud and scams continuing to rise across the banking industry, the FCA is expected to increase scrutiny of challenger banks and digital-first financial institutions.
Monzo’s distinctive coral cards and slick app-based banking have helped it grow rapidly since its full banking licence was granted in 2017. But today’s fine is a reminder that even fast-growing disruptors must uphold the same anti-money laundering standards as traditional banks.
