Warning over Monzo financial crime review
04 Aug 2020

Monzo is reviewing the quality of its financial crime controls and warned that the outcome could have a significant impact on its finances.

The troubled digital bank, which issued a warning on Thursday over its ability to remain in business, began an investigation of its “financial crime control framework” in June after a review by the Financial Conduct Authority.

Monzo said it could not anticipate the outcome or implications of the work but said “they could be material”.

Founded in 2015, Monzo wants to disrupt the retail banking industry with features such as an app that allows customers to track their spending and to hold savings in different pots.

It has endured a turbulent period. Its valuation fell by about 40 per cent in a fundraising last month and it has made 120 job cuts in the wake of the coronavirus pandemic. Tom Blomfield, the bank’s co-founder, swapped the chief executive’s role for that of president in May.

Monzo’s review had not yet highlighted a need to compensate customers “due to past actions” so was not reflected in the balance sheet published with Monzo’s annual results this week, with any costs arising from the investigation yet to be accounted for.

Monzo’s annual report did not give any further details over what the work relates to. The bank has been freezing and closing certain accounts in recent months in order to comply with anti-money laundering regulations, provoking anger among some customers.

Its annual accounts for the year to the end of February showed significant growth in its revenues and customer base but losses widened from £47 million to £114 million.

EY, the bank’s auditors, conducted additional due diligence in light of “material uncertainties” over its going concern status. This is thought to have delayed publication of the results.

By James Hurley and Katherine Griffiths, The Times, 1 August 2020

Read more at The Times

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