Monzo savings partner pulls products amid money laundering probe – CityAM : CityAM
OakNorth, a Monzo partner that provides savings products for the challenger bank, has temporarily withdrawn offers for new customers after it emerged that the FCA had launched an investigation into the British digital bank over possible money laundering activity.
Fellow challenger bank OakNorth, which is one of the lenders that have provided £1bn worth of savings products to Monzo customers, has halted new savings products while other lenders have asked for further details on the bank’s customer checks.
It comes after Monzo announced the city watchdog probe alongside its annual results a fortnight ago.
The FCA is investigating the bank’s potential civil and criminal liability over possible money laundering rule breaches between October 2018 and April 2021.
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“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.”
The Financial Conduct Authority has been stepping scrutiny of potentially inadequate money laundering controls lately, and is currently investigating NatWest over criminal money laundering charges.
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.
Monzo’s annual results revealed that the bank had swung to a £130m loss, up from £114m last year.
The surge in losses was 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.
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