FCA fines Monzo £21 million for financial crime control failures

The cost of compliance failures

The original fine was set at £30.1 million, but Monzo qualified for a 30% discount under the FCA’s settlement procedures, reducing the penalty to £21 million.

Beyond the financial penalty, the reputational damage could have broader implications, particularly as Monzo prepares for a potential public listing. Investor confidence may be shaken by concerns over the bank’s operational resilience and internal controls.

Lessons for the industry

This case serves as a stark reminder of the importance of robust financial crime frameworks. To avoid similar pitfalls, organisations should focus on the following areas.

• Stringent training: Ensure that both junior and senior staff are well-trained on financial crime controls, including how to identify high-risk customers and flag suspicious activity, especially during onboarding.

• Data integrity: Maintain accurate, complete, and up-to-date customer data that reflects the customer's risk profile. This includes verifying addresses, identifying duplicate accounts, and ensuring that customer information is consistent across systems. Identify what a customer’s ‘normal’ behaviour is so that the unusual can be identified.

• Quality assurance: Implement strong quality assurance processes across all stages of customer review, particularly for high-risk accounts. This includes regular audits, system testing, and oversight of third-party providers involved in onboarding or transaction monitoring.

• Operational resilience: Ensure that systems and outsourcing arrangements are resilient to disruption. This includes having contingency plans for system outages and clear escalation paths when issues arise.