Source: Sharecast
The regulator found that Monzo’s systems and processes did not keep pace with its rapid customer growth and product expansion, leaving the bank exposed to financial crime risks.
According to the FCA, Monzo failed to design and maintain effective systems for customer onboarding, risk assessments, and transaction monitoring.
The deficiencies prompted the watchdog to commission an independent review of the challenger bank’s financial crime framework in August 2020.
It also imposed a restriction on Monzo in 2020, barring it from opening new accounts for high-risk customers.
Despite that, the bank continued to onboard over 34,000 such customers up to June 2022, in breach of the requirement.
“Monzo fell far short of what we, and society, expect,” said Therese Chambers, the FCA’s joint executive director of enforcement and market oversight.
“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.”
Monzo had since completed a financial crime change programme to overhaul and strengthen its control framework in line with recommendations from the independent review.
The fine was the latest in a series of enforcement actions by the FCA, which has penalised 10 banks over financial crime failings in the past four years.
Financial crime remained a supervisory priority for the regulator in its 2024 strategy for retail banks.
Reporting by Josh White for Sharecast.com.
