The Financial Conduct Authority (FCA) has fined Monzo Bank Limited £21,091,300 for significant failings in its anti-money laundering (AML) systems and controls. The FCA found that, between October 2018 and April 2021, Monzo did not have an adequate financial crime framework to address the actual and potential risks associated with its rapidly growing customer base. During this period, Monzo’s customer numbers increased from about 250,000 in early 2017 to over 12 million by April 2025, while its range of financial products also expanded.
Key findings highlighted by the FCA include:
- Monzo failed to collect sufficient information during customer onboarding, particularly regarding the intended purpose and nature of customer relationships.
- Customer due diligence (CDD) procedures did not ensure full verification of all beneficial owners and persons with significant control, as required under the Money Laundering Regulations (MLRs).
- Monzo accepted customers based on PO Box and foreign addresses, without ensuring their customer base was UK-based.
- In breach of a Voluntary Requirement (VREQ), Monzo opened 33,039 accounts, including 26,325 for high-risk customers, contrary to previously agreed restrictions.
- Monzo did not apply the necessary VREQ controls to new or additional account applications, resulting in the onboarding of 34,262 high-risk customers.
The financial penalty was reduced by 30% after Monzo agreed to settle the matter through the FCA’s executive settlement procedures. The FCA noted that “Monzo’s financial crime framework was inadequate to counter actual and potential financial crime risks during the Pre-VREQ Period.”
This regulatory action underscores the importance for digital challenger banks to retain robust risk management systems as their operations and customer base expand. Enhanced controls may affect withdrawal speeds as banks implement new procedures to comply with FCA requirements.
| Issue | FCA Finding | Potential Impact |
|---|---|---|
| Onboarding & CDD | Incomplete verification and insufficient information collection | Heightened risk of financial crime |
| Account Opening Controls | Accounts opened in breach of VREQ and for high-risk customers | Regulatory scrutiny and operational changes |
| Customer Base Location | Accepted PO Box and foreign addresses | Non-compliance with UK regulatory expectations |
For further details, refer to the official FCA notice on Monzo Bank Limited.
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