Monzo said on 30 July 2021 that the Financial Conduct Authority (FCA) has launched a probe into its compliance with anti-money laundering rules.

Charlie Palmer, Chairman of IFAC analyses what this really means for Monzo.

By way of background, Monzo is lost £130m in the year to February 21, and similar amounts the previous year.  They are very popular in our household with my three university children…who talk up the user-friendly app.  Before the pandemic the business was signing up 10,000 customers per day, and the app was downloaded 7,000 times per day in 2020.  It’s gone quiet for 18 months with the pandemic putting travel on skids, but the business is hot, as they say, particularly with frequent travellers. 

The investigation into potential breaches is a very serious event indeed.  How so – is it not just an enquiry?  

Well yes, just as much was revealed in the August 2020 annual report.  The problem is the timing.  The investigation means uncertainty.  Monzo will not be able to raise funds with the uncertainty of the investigation hanging over it.  That means that while the investigation is in place, the business is heading for shipwreck.  Put bluntly it matters not the right or wrong of the Anti Money Laundering controls, the only thing that matters is that the firm get rid of this investigation as quickly as possible.  That means they need to settle, regardless of the facts.  Admit to everything, and, very likely the CEO loses his job. 

Once the investigation is out the way, and the new controls implemented, then they can move forward again.  Sadly the FCA are not bothered with profit and loss.  It is not in the FCA vocabulary to do deals with potential criminals. 

Why is this relevant to the IFA?  Your relationship with the FCA is critical. It is not just doing things right and being able to show that you are doing things right that count, but there is a third strand - that you maintain a good relationship with the regulator.  And you do that by staying below the radar.  File those returns accurately and on time, avoid disputes and try and get on equitably with counter parties.  Avoid at all costs third party or ex-employee emails going to FCA. 

If you think you have a good relationship, then you are deluded.  There is no such destination.   If you listen to what IFAC say and do, and maintain a proper dashboard of compliance controls in BAT then you have a very good chance of avoiding investigation.