UK regulator fines Monzo after accepting fake addresses like Buckingham Palace

LONDON

Digital bank Monzo accepted customers using fake addresses including Buckingham Palace, the prime minister’s 10 Downing Street office/residence, and even its own offices, a regulator has found, as it fined the firm £21 million (nearly $28 million) for anti-money laundering failings.

An investigation by the UK Financial Conduct Authority (FCA) found Monzo did not adequately verify customer addresses, allowing people to open accounts with PO boxes, foreign addresses that included UK postcodes, and well-known London landmarks, the watchdog announced Tuesday.

Between 2018 and 2022, Monzo's customer base grew from around 600,000 to more than 5.8 million. The bank, which operates entirely online and has no physical branches, marketed itself as a digital banking pioneer.

The FCA said the bank had accepted “obviously implausible UK addresses, such as well-known London landmarks,” including the home of the UK prime minister and the royal residence, as well as Monzo’s own business premises.

The lack of proper verification meant the bank “took on risky customers who were based outside of the UK,” the FCA said, adding that the failings highlighted “how lacking Monzo’s financial crime controls were.”

Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said: “Banks are a vital line of defence in the fight against financial crime. They must have the systems in place to prevent the flow of ill-gotten gains into the financial system. Monzo fell far short of what we, and society, expect.”

Monzo said the findings related to issues more than three years old, and that it had made “vast improvements” to its systems since then.

The FCA investigation, which spanned several years, found Monzo’s controls had not kept pace with its rapid growth.