U.K. digital bank Monzo has been slapped with a $28.57 million fine for failing to crack down on financial crimes such as clients pretending to live at Buckingham Palace.
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London Landmarks
The U.K.’s financial regulator, the Financial Conduct Authority (FCA), said Monzo’s anti-financial crime systems, which included onboarding customers who had listed London landmarks as their address, had failed. These landmarks included the home of the U.K. royal family Buckingham Palace, the Prime Minister’s residence 10 Downing Street and even Monzo’s own business address.
The FCA said Monzo had repeatedly breached a requirement preventing it from opening accounts for high-risk customers between August 2020 and June 2022.
Monzo’s customer base has grown rapidly, increasing almost tenfold from around 600,000 in 2018 to over 5.8 million in 2022. However, the FCA said that its financial crime controls had failed to keep pace.
In particular, Monzo “failed to design, implement and maintain adequate customer onboarding, customer risk assessment and transaction monitoring systems to mitigate the risk of financial crime.”
Therese Chambers, FCA joint executive director of enforcement and market oversight, said: “Banks are a vital line of defense in the collective fight against financial crime. Monzo fell far short of what we, and society, expect. “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.”
IPO Hopes
Monzo would have been fined $40 million, but it agreed to resolve these matters and so qualified for a 30% discount.
Monzo said the problems “have been resolved and are firmly in the past” and that it acted quickly to implement a program to address financial crime issues in February 2021.
However, the fine comes at a pivotal time for the company as it potentially gets set to go public.
Over the past few months, the London-based firm has been stacking its bench with IPO-savvy hires such as Stripe and Robinhood executive Conor Walsh, who joined as its new U.S. CEO in April.
However, these revelations could make potential investors nervous.
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