Monzo discloses money laundering probe
British digital bank Monzo is facing a potential civil and criminal money laundering investigation by the Financial Conduct Authority (FCA), the lender disclosed in its annual report released on Friday.
For the second year running, the bank’s auditors also warned
its ongoing losses cast uncertainty over its ability to continue as a going
concern.
The bank reported a 130 million pound loss ($181.68 million)
for the year to February, up from 114 million pounds the previous year.
“We’re cooperating with the FCA’s investigation, which is at
an early stage,” Monzo said in its report. The bank declined to comment further
on the probe.
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 digital bank suffered a further setback in the pandemic
as customers cut spending and holidays abroad – a key source of income for the
company.
Monzo CEO TS Anil said he believed the company had an
independent future and did not have to sell to a competitor.
“There’s very strong support from investors, so it’s not a
concern,” he told Reuters.
The bank said on an underlying basis, stripping out one-off
costs, its losses were largely flat.
Customer deposits more than doubled, to 3.1 billion pounds,
but the bank said fewer customers were using their accounts on a weekly basis –
55%, down from 60% – which it blamed on limited spending in lockdowns.
Anil said transactions had jumped 40% since the accounting
period ended in February and the bank was targeting monthly profitability next
year on the back of more customer spending and expanding lending and
subscription services.
The FCA has been ramping up its scrutiny of potentially
inadequate money laundering controls in recent years.
The regulator is separately pursuing criminal money
laundering charges against state-backed bank NatWest.
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