Monzo fined £21 million for allowing customers to use ‘implausible’ addresses – including Buckingham Palace and 10 Downing Street
The Financial Conduct Authority (FCA) announced that it has fined Monzo over £21 million for inadequate anti-financial crime systems and controls.
The FCA said that Monzo also repeatedly breached a requirement that prevented it from opening accounts for high-risk customers between August 2020 and June 2022.
Over this period, Monzo signed up more than 34,000 high-risk customers despite this requirement being in place.
The digital-first bank has seen rapid growth of its customer base, which has increased from 600,000 in 2018 to over 5.8 million in 2022, but its anti-fraud and financial crime framework has struggled to keep pace.
The FCA found that Monzo failed to design, implement, and maintain adequate systems for customer onboarding, risk assessment, and transaction monitoring, which led it to sign up customers who used obviously ‘implausible’ addresses.
In it’s final notice, the FCA noted that Monzo’s systems were calibrated to accept only UK postcodes, but lacked independent address verification throughout its registration process.
This allowed customers to open accounts with Monzo using ‘obviously implausible’ addresses that included Buckingham Palace, 10 Downing Street, and even Monzo’s own business address.
“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 FCA joint executive director of enforcement and market oversight Therese Chambers.
“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.”
“Banks are a vital line of defence in the collective fight against financial crime. They must have the systems in place to prevent the flow of ill-gotten gains into the financial system. Monzo fell far short of what we, and society, expect,” Chambers said.
Following the discovery of these issues, Monzo has established and completed a financial crime change programme to remediate and enhance its wider financial crime control framework.
