The popular digital bank Monzo has been hit with a staggering £21.1 million fine by the UK’s Financial Conduct Authority (FCA), marking one of the most significant penalties imposed on a fintech firm to date. The sanction was issued after regulators discovered that Monzo’s anti-financial crime systems between October 2018 and August 2020 were deeply inadequate—failing to keep pace with its rapid expansion.
Rapid Growth Outpacing Compliance
Monzo’s explosive growth skyrocketed from around 600,000 customers in 2018 to nearly six million by 2022. While this surge reflected great commercial success, it also highlighted a critical imbalance: the bank’s crime prevention framework did not evolve fast enough to handle the risk exposure that inevitably comes with such scale.
During this period, the FCA identified three major weaknesses:
- Customer onboarding failures, including inadequate verification,
- Weak customer risk assessments, and
- Insufficient transaction monitoring capabilities.
As a result, Monzo repeatedly onboarded individuals with implausible identities and addresses—including false registrations using iconic locations like Buckingham Palace, 10 Downing Street, and even Monzo’s own headquarters.
Breaking Rules for High‑Risk Applicants
On top of these breaches, the FCA had imposed a specific restriction on Monzo in August 2020: the bank must not onboard any “high-risk” customers without enhanced scrutiny. Yet between August 2020 and June 2022, Monzo still allowed over 34,000 such customers to open accounts—directly flouting the imposed rule.
Internal reviews later confirmed that Monzo lacked clear definitions for high‑risk individuals, and its enhanced due diligence processes were also inconsistent or improperly documented. In fact, two customers were allowed to re-open accounts even after being shut down over prior financial crime concerns.
Lax Verification and Weak Oversight
A deeper dive into Monzo’s internal processes revealed that it had even disabled address verification for personal customers in 2019. The bank prioritized speed and ease for users over robust checks, relying heavily on post‑account-creation monitoring—a system that turned out to be ill-equipped for early detection.
Furthermore, Monzo’s “enhanced due diligence” (EDD) procedures were vague and only partly followed. Politically exposed persons (PEPs) were not always flagged or subjected to standardized processes. And staff responsible for managing transaction investigations were often undertrained, undermining both consistency and reliability.
Enforcement Action and Improvement Programme
In August 2020, the FCA intervened and required Monzo to bring in an independent expert (a “Skilled Person”) to conduct a deep and formal review of its financial crime controls. A formal restriction (known as a “VREQ”) on onboarding high-risk customers was also imposed.
Subsequent reports from the Skilled Person revealed major gaps and recommended sweeping reforms. Monzo responded by launching a comprehensive Financial Crime Change Programme, which included:
- A large-scale back‑book customer review,
- Enhanced customer due diligence (CDD) processes,
- Reinforced transaction monitoring, and
- Major hires to strengthen the financial crime compliance team across multiple tiers.
By early 2025, the FCA acknowledged that Monzo had addressed nearly all outstanding issues, allowing the high‑risk onboarding restrictions to be lifted.
Penalty Discount and Context
The initial fine was set at over £30 million. However, because Monzo cooperated promptly, admitted the findings, and entered into a settlement, the FCA granted a 30% discount—reducing the final penalty to £21.1 million.
This decision places Monzo alongside other fintechs like Starling and Revolut, which have faced similar enforcement action in recent years. In fact, rival Starling was fined £29 million in 2024 under comparable circumstances.
Leadership Response and Future Outlook
Monzo’s CEO, TS Anil (who took on the leadership role in May 2020), described the failings as “historical” and emphasized that they have been resolved. He affirmed that Monzo now has a “best-in-class” compliance team, advanced technology, and a strong commitment to stopping financial crime.
Despite the setback, Monzo continues to thrive commercially. It served nearly 13 million customers by early July 2025, with strong revenue and earnings. Its pre-tax profit for the year ending March 2025 reached approximately £60.5 million—up significantly from the previous year.
With a valuation of around £4.5 billion and potential IPO ambitions, Monzo appears determined to move forward with enhanced resilience and maturity, particularly in its compliance functions. The FCA has indicated that it will continue to supervise and ensure that Monzo maintains robust defences against financial crime.
