Monzo Banking. Credits: Inkdrop, Shutterstock
British digital bank Monzo was fined £21 million (Euro 25 million) for failing to prevent financial crimes after allowing thousands of accounts to be opened using clear fake or incredible addresses, including Buckingham Palace and 10th Daring Street.
The Financial Conduct Authority (FCA) announced the fine on Tuesday, July 8th, citing “completely inadequate” anti-financial crime management between October 2018 and August 2020, with the violation continuing in June 2022.
In a statement by DAMNING, Therese Chambers, co-executive director of FCA execution, said:
“Monzo has onboarded customers based on limited and, in some cases, clearly incredible information, including customers who use famous London landmarks as addresses.” Reuters It has been reported.
Fake address and prohibited customer slipped a crack in Monzo
An investigation by the FCA revealed that Monzo has allowed more than 34,000 high-risk customers to open accounts, despite the ban issued in 2020 specifically prohibiting them from doing so. In some cases, customers who previously closed their accounts due to fraud concerns could easily open new ones.
Some of the obstacles identified by the FCA include:
- Customers registering accounts using government buildings such as Royal Residence and 10 Downing Street
- PO Box, Mail Forward Services, and Incorrect U.K. Postcode Use
- Card orders redirected overseas immediately after an account is opened
- Multiple accounts linked to a single suspicious address without proper risk checking
- Business issues Some applicants added that they use Monzo’s own business address as the address of their home.
Chamber warned:
“Banks are an important line of defense in the collective battle against financial crime. Monzo was far below what we and society would expect.”
Founded in 2015, Monzo currently has over 12 million customers and is one of the UK’s fastest growing challenger banks. However, the FCA said internal systems are not responding to rapid growth, particularly when it comes to reviewing customers, assessing risks and detecting suspicious activity.
This latest fine will put Monzo in other UK fintechs and companies facing serious regulatory scrutiny. According to the FCA, Sterling Bank was fined £29 million (EUR 39.4 million) in 2024 after its system left the financial sector “widely open to criminals.”
Monzo: “The problem is a thing of the past.”
Monzo has since overhauled its compliance system and says it is now meeting regulatory expectations.
“We’re looking forward to seeing you in the future,” said Ts Anil, CEO of Monzo.
“The FCA findings are related to the historic period that ended three years ago. We have invested heavily in systems and controls ever since. We are pleased that the FCA recognizes our progress.” Business issues
Despite the controversy, Monzo reported a sharp increase in profits, with nominal payouts for the year ending March 31, 2025 at £65 million (€82.3 million), up from the previous year’s £13.9 million (€18.9 million). Anil declined to comment on when the bank would pursue its public list. Reuters.
Is the fintech boom at risk for financial security?
With multiple digital banks currently firing, the FCA said it plans to step up industry-wide surveillance. The Monzo incident highlights growing debate. Are “fast-moving” fintech cutting out the fraud prevention corner in the race to control the bank?
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