Online bank is facing a probe into potential breaches of anti-money laundering laws, it revealed in its latest annual report.
Britain’s financial regulator, the FCA was looking into both potential civil and criminal liability said though it stressed that the investigation was at an early stage.
“The prevention of financial crime is an issue that affects the entire banking industry and one which Monzo is taking extremely seriously,” said the report.
“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.”
A number of online banks have faced investigations over their processes and controls due to concern that the “know you customer” or KYC systems have not been keeping with the pace of their expansion.
Monzo’s report revealed that the six-year-old bank made a loss of £130mln in the year to end February 2021, up 13%, while revenue rose 18% to £66mln.
Customer deposits more than doubled to £3.1bn but fewer customers used their accounts on a weekly basis as lockdowns meant people spent less.
TS Anil, Monzo chief executive, said that in a difficult year the bank had shown extraordinary resilience.
At present, Monzo makes most of its revenues from card transaction fees especially from people travelling, an activity that has been badly disrupted by the Covid-19 pandemic.
Anil said the bank would also need to raise more money in the near term but was looking to turn a profit in 2022.
Transactions had jumped 40% since the accounting period ended in February, he told Reuters, and said the bank was targeting monthly profitability next year on the back of more customer spending allied to more lending and subscription services
Monzo raised more than £200m over the past financial year but included a going concern clause in the accounts for a second year because of the likely need for additional funds.
NatWest is facing criminal prosecution by the FCA over failings with its money laundering contriols.