Friday 30 July 2021 11:22 am

City watchdog launches money laundering probe into Monzo

The City watchdog is in the early stages of a probe into British digital bank Monzo over possible money laundering activity.

Monzo announced the potential probe alongside its annual results today, which showed the challenger bank swung to a £130m loss, up from £114m last year.

Read more: City watchdog slashes fundraising threshold to attract SPACs

“We’re cooperating with the FCA’s investigation, which is at an early stage,” Monzo said in its report.

Simon Deane-Johns, online financial services solicitor at Keystone Law, said: “The investigation should be yet another reminder that there are no shortcuts in the race to add customers, and that being good with marketing and technology does not necessarily translate into good business processes, governance or controls.”

“Financial firms need to get those fundamentals right and ensure they can be maintained before taking on new products and hordes of new customers.”

Losses were largely driven by a reduction in customers spending money whilst on holidays abroad – a key source of revenue for the bank – due to curbs on international travel.

The Financial Conduct Authority has been stepping scrutiny of potentially inadequate money laundering controls lately.

The FCA is currently investigating NatWest over criminal money laundering charges.

Read more: Watchdog warns Monzo and NatWest over banking transaction history breaches

Launched in 2015, Monzo has attracted five million customers with its bright coral card and spend-tracking data, but has struggled to turn its popularity into profits.

The challenger bank has struggled to lure consumers from traditional high street banks to use Monzo as their main bank account.

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