The UK’s financial regulator, the Financial Conduct Authority (FCA), fined Monzo, a popular digital bank, £21 million (about $28 million) for serious gaps in its financial crime controls.

Why Did Monzo Get Fined?

Monzo, a UK-based digital bank launched in 2015, grew super fast, jumping from 600,000 customers in 2018 to over 5.8 million by 2022. But as it grew, its systems to stop financial crimes didn’t keep up.

Here’s why the FCA stepped in:

1. Weak Anti-Crime Systems (2018–2020): Between October 2018 and August 2020, Monzo didn’t have good enough checks to spot and stop financial crimes. For example, they let people sign up with fake addresses, like Buckingham Palace or 10 Downing Street! This made it easier for potential criminals to open accounts.

2. Ignoring High-Risk Customer Rules (2020–2022): In 2020, the FCA told Monzo to stop opening accounts for high-risk customers (people more likely to be involved in financial crimes). But Monzo didn’t follow this rule and opened accounts for over 34,000 high-risk customers between August 2020 and June 2022.

3. Poor Customer Checks: Monzo didn’t properly verify customer details. Some used PO boxes, foreign addresses with UK postcodes, or even Monzo’s own headquarters as their address. This raised red flags about possible “money muling” (when someone’s account is used to move illegal money).

4. Rapid Growth, Slow Fixes: Monzo’s fast growth meant they focused on adding customers but didn’t invest enough in systems to monitor transactions or assess risks. This left them open to financial crime risks, which banks are supposed to help prevent.

The FCA said Monzo’s actions “fell far short” of what’s expected, as banks are a key defense against financial crime. The fine was originally £30.1 million, but Monzo got a 30% discount (to £21.1 million) for agreeing to fix the issues.

Interesting Facts to Learn:

1. Fake Addresses Like Buckingham Palace! Imagine someone signing up for a bank account and saying they live at Buckingham Palace or the Prime Minister’s house! Monzo allowed this because their checks weren’t strict enough, which sounds almost comical but is a big red flag for regulators.

2. Monzo’s Huge Growth Spurt: Monzo went from 600,000 to 5.8 million customers in just four years. That’s nearly 10 times more customers! But this shows how growing too fast can cause problems if you don’t have strong systems in place.

3. Not Just Monzo’s Problem: Monzo isn’t alone. Another UK digital bank, Starling Bank, was fined £29 million in 2024 for similar issues. This shows that new “fintech” banks (apps offering financial services) are struggling to keep up with anti-crime rules as they grow.

4. They Fixed It (Mostly): Monzo’s CEO, TS Anil, said these problems are “in the past.” They started a big program in 2021 to improve their systems, and the FCA agrees Monzo has made “substantial improvements.” This shows they’re trying to make things right.

5. Big Fine, But Discounted: The £21.1 million fine sounds huge, but it could’ve been £30.1 million! Monzo got a discount for cooperating with the FCA. This shows regulators reward companies that own up and fix their mistakes.

6. Why It Matters to You: Banks like Monzo are supposed to protect the financial system from criminals, like those laundering money or funding illegal activities. Weak controls could let bad actors slip through, which affects everyone’s trust in banking.

What Can We Learn?

• Growth Needs Balance: Monzo’s story shows that growing fast is great, but you need strong systems to stay safe and legal. This applies to any business, not just banks!

• Rules Are Serious: Financial crime controls aren’t just paperwork—they protect the economy and customers. Ignoring them can lead to big fines and damaged trust.

• Tech Isn’t Perfect: Digital banks like Monzo are cool and convenient, but even they can mess up. Customers should know that new tech doesn’t always mean fool-proof systems.

Summary:

“Monzo, the UK’s popular digital bank, got hit with a $28 million fine for letting its financial crime controls slip. As it grew from 600,000 to 5.8 million customers, Monzo didn’t check addresses properly—some people even signed up using Buckingham Palace! They also ignored rules about high-risk customers.

The good news? Monzo’s fixed most of these issues and is working hard to stop financial crime. This shows that even trendy fintech banks need to keep their systems tight to stay out of trouble!”

[Note: Monzo’s profit growth (from £13.9 million to £60.5 million in 2025)].

“Big thanks to Investing.com, LiveMint, Bloomberg, The Independent, Metro, Sharecast, Lexology, Biztoc, and Sifted for their reporting on Monzo’s £21 million FCA fine. Their insights helped us share this story with you!”