Monzo, one of the UK’s most prominent digital banks, has been hit with a £21.1 million ($28.6 million) fine by Britain’s Financial Conduct Authority (FCA) for serious shortcomings in its systems to prevent financial crime.

The regulator found that between October 2018 and August 2020, Monzo failed to implement adequate checks and safeguards, leaving it vulnerable to misuse by criminals. Among the concerning findings: the bank accepted customer applications using clearly fictitious or implausible addresses — including iconic landmarks like Buckingham Palace and 10 Downing Street.

Therese Chambers, the FCA’s joint executive director of enforcement and market oversight, said the case highlights “how lacking Monzo’s financial crime controls were” during that period. The FCA emphasized that Monzo onboarded thousands of customers with insufficient or questionable information, putting the broader financial system at risk.

Monzo’s CEO, TS Anil, responded to the fine by acknowledging past missteps but insisted those issues have long since been corrected. “These problems are firmly behind us,” he said, adding that Monzo has made “substantial improvements” to its compliance framework since the period in question.

Despite a previous FCA restriction in 2020 limiting Monzo’s ability to onboard high-risk customers, the bank reportedly failed to fully adhere to those terms and continued opening accounts for over 34,000 individuals flagged as high risk between August 2020 and June 2022.

Founded in 2015, Monzo is part of a wave of British fintech startups that disrupted traditional banking with sleek mobile apps and user-friendly digital services. But with that innovation has come increasing regulatory scrutiny. Just last year, another challenger bank, Starling, was fined £29 million for similar failings in its anti-money laundering protocols.

Ironically, Monzo’s recent financial performance tells a different story. The bank posted a significant profit jump for the year ending March 31, 2025 — reporting a pretax profit of £60.5 million, up from £13.9 million the previous year. However, CEO Anil said it’s still too soon to discuss an initial public offering (IPO).

While Monzo appears to be on a more secure footing operationally and financially, the hefty fine serves as a stark reminder of the critical role compliance plays — especially as fintech firms grow and handle greater volumes of customer data and funds.