Monzo Faces FCA Investigation Into Alleged AML Contraventions

London FinTech Monzo is facing an investigation from the Financial Conduct Authority (FCA) over allegations of possibly violating anti-money laundering (AML) laws, Financial Times reported on Friday (July 30).

Monzo CEO TS Anil said in its most recent annual report that despite a year that posed numerous obstacles, the digital bank showed fortitude and posted a “significant amount of growth,” FT reported.

The challenger bank also used its annual report to discuss the startup’s current FCA probe regarding alleged AML violations. But the report also turned the spotlight on Monzo’s ability to keep losses at bay despite early hits from the worldwide COVID-19 pandemic.

Anil said Monzo has its sights set on turning a profit next year and would raise additional funds in the coming months that will power growth and help it keep a few steps ahead of regulations regarding capital.

Monzo landed over £200 million (approximately $278 million) during its last year, while the FinTech is “fielding a significant amount of inbound interest” from new and present investors, Anil said, according to the FT report.

Although the FCA’s investigations are just getting out of the gate, the probe potentially includes both criminal and civil liability, Monzo said, per FT.

“The prevention of financial crime is an issue that affects the entire banking industry and one which Monzo is taking extremely seriously. Over the past year we have made major investments in our controls in this area as a priority and will continue to invest heavily in this part of the business,” Monzo said, per FT.

Monzo is not the only challenger bank facing scrutiny over money laundering allegations. In Germany neobank N26 was ordered by the Federal Financial Supervisory Authority (BaFin) to step up its AML efforts. BaFin mandated that N26 Bank change how it approaches IT monitoring and customer due diligence.