Monzo Bank Fined £21 Million Pounds Over Laughable Customer Address Verification Failures

Digital challenger bank Monzo has been slapped with a £21 million fine by the Financial Conduct Authority (FCA) after its verification systems allowed customers to open accounts using patently absurd addresses, including Buckingham Palace and 10 Downing Street.

The regulatory body uncovered severe inadequacies in Monzo’s financial controls designed to prevent money laundering, with the bank’s systems failing to flag obviously implausible residential details. In one remarkable instance, an applicant successfully opened an account using Monzo’s own London business address as their domicile.

The situation was exacerbated when Monzo breached an FCA-imposed restriction by opening 34,000 accounts for high-risk customers over nearly two years from June 2020. The bank’s oversight was so poor that it permitted multiple new accounts for individuals whose existing accounts had been terminated due to financial crime concerns.

Therese Chambers, FCA joint executive director of enforcement and market oversight, emphasised the gravity of the failings: “Banks serve as a crucial defence against financial crime. Monzo’s performance fell dramatically short of both regulatory and societal expectations.”

The investigation revealed additional concerning practices, including the acceptance of PO Box addresses, mail-forwarding services, and suspicious patterns of customers initially using UK addresses before quickly requesting card delivery to international locations.

Despite these serious shortcomings, Monzo’s chief executive TS Anil maintained that the issues were historical, stating: “The FCA’s findings relate to a period that ended three years ago. We have since made substantial improvements to our controls and continue to strengthen our anti-financial crime measures.”

The fine comes as Monzo reports significant growth, with its customer base exceeding 12 million and profits surging eightfold to £114 million in the year to March. The bank, recognised for its distinctive coral-pink payment cards, has positioned itself as a major challenger to traditional high street institutions since receiving its full banking licence in 2017.