Monzo penalized with a $28.7M fine due to Anti-Money Laundering shortcomings
In a recent development, the Financial Conduct Authority (FCA) has imposed a £21 million fine on Monzo, a UK neobank, for systemic failures in its Anti-Money Laundering (AML) controls. This penalty comes after Monzo allowed customers to open accounts with blatantly fraudulent addresses, such as Buckingham Palace and 10 Downing Street, and onboarded high-risk customers despite having a voluntary requirement agreement (VREQ) with the FCA.
This fine marks the third time a challenger bank has been fined within a year for similar financial crime control deficiencies, following Metro and Starling Bank. Starling, another UK neobank, was fined £28.96 million for flaws in its financial crime prevention systems and controls in 2024.
The FCA's investigation found that Monzo failed to design, implement, and maintain adequate customer onboarding, customer risk assessment, and transaction monitoring systems. These lapses in AML controls exposed the UK financial system to risks of money laundering and financial crime.
Therese Chambers, FCA joint executive director of enforcement and market oversight, stated that Monzo's controls fell far short of what society expects. Chambers emphasised the importance of banks in the fight against financial crime, stating that they are a vital line of defense in preventing the flow of ill-gotten gains into the financial system.
The FCA's crackdown on UK banks is not limited to challenger banks. In December 2022, Santander UK received one of the largest FCA AML fines, amounting to £107.7 million, due to serious and persistent AML failures. The penalty reflects longstanding shortcomings in Santander's ability to detect and prevent money laundering activities.
While the provided search results do not specify recent FCA AML fines against HSBC UK, HSBC has historically faced global AML enforcement actions by regulators.
Monzo's CEO, TS Anil, stated that the FCA's findings relate to a historical period that ended three years ago. He assured that the issues addressed by the FCA are resolved and are in the past, with improvements made in Monzo's controls.
Financial crime is an issue that affects the entire financial industry, and Monzo has an unwavering commitment to stopping it. The bank has made significant investments in managing financial crime risks, boasting a team with best-in-class technology and a commitment to preventing financial crime.
As the FCA continues its crackdown on UK banks, it is clear that the importance of robust AML controls cannot be overstated. Banks must have systems in place to protect the financial system from the risks of money laundering and financial crime.
Sources: [1] The Guardian. (2025, July 1). Monzo fined £21m by FCA over money laundering failings. Retrieved from https://www.theguardian.com/business/2025/jul/01/monzo-fined-21m-by-fca-over-money-laundering-failings
[2] Finextra. (2025, July 1). Monzo fined £21 million by FCA for AML failures. Retrieved from https://www.finextra.com/newsarticle/39447/monzo-fined-21-million-by-fca-for-aml-failures
[3] The Telegraph. (2023, December 1). Santander UK fined £107.7m by FCA for AML failings. Retrieved from https://www.telegraph.co.uk/business/2023/12/01/santander-uk-fined-107-7m-fca-aml-failings/
- The recent fine on Monzo, a UK neobank, for AML failures highlights the importance of robust financial crime controls across the banking-and-insurance and fintech sectors, as this is the third instance in a year where a challenger bank has been penalized for similar deficiencies.
- Given the FCA's ongoing crackdown on UK banks, it is evident that all financial institutions, including traditional banks like HSBC UK, need to prioritize impeccable banking-and-insurance and fintech practices, particularly in terms of Anti-Money Laundering controls.
