From Monzo to Barclays: What’s Behind the Recent Wave of AML Failures?

July 2025

Fintech & Payments

Lorien Carter

Senior Research Analyst

Earlier this month, Monzo was hit with a £21 million fine for "systematic financial crime control failings." The penalty sent ripples across the fintech landscape; prompting heated debates around whether challenger banks, which often scale rapidly, are outgrowing their compliance capabilities.

However, just a week later, Barclays was fined a staggering £41 million for similar lapses; demonstrating that legacy institutions are also struggling to meet anti-money laundering (AML) standards.

The Financial Conduct Authority (FCA) stated that Barclays had “facilitated the movement of funds linked to financial crime” by misclassifying two high-risk clients -Stunt & Co, and WealthTek - as low-risk. Both clients were already under investigation for money laundering; raising serious questions about how they passed through Barclays’ due diligence net.

These fines are the largest the FCA has issued so far this year; underlining how seriously the regulator views these breaches. In fact, Barclays’ £41m penalty surpasses any AML-related fines issued in 2023 and 2024. Only Santander UK's £107 million fine in 2022 - which was also levied for deficient AML controls - stands out as a larger historic case in recent years.

But Barclays and Monzo are not alone. Other commercial banks in the UK have also faced scrutiny for similar lapses. In 2024, Metro Bank was fined £16.7 million after flaws in its transaction monitoring system left gaps in financial crime detection. The issue originated when Metro automated parts of its AML processes, only to discover that incorrect data inputs between 2016 and 2020 compromised the effectiveness of the entire system.

Starling Bank, another digital challenger, was fined £29 million after its automated screening tool failed to properly identify customers on sanctions lists. It turned out the system had only been checking against a subset of the official list of sanctioned individuals and entities.

Types of AML Processes

Source: Juniper Research

So, the question begs: why have banks old and new been failing to provide adequate AML checks?

Established banks are hampered by legacy systems; many of which are siloed and lack interoperability. Santander planned to upgrade its transaction monitoring system by integrating it with its Customer Risk Assessment (CRA) system. However, this was technologically complex and deemed unachievable; leaving Santander relying on temporary fixes and exposed to compliance risks.

In contrast, challenger banks are built on modern tech stacks and should, in theory, be more agile. Yet rapid deployment without sufficient oversight presents its own risks. Both Metro and Starling were fined after their automated systems failed. Metro’s Automated Transaction Monitoring System had operational deficiencies, while Starling’s sanctions screening system only checked a partial list. To avoid such issues, significant resources need to be invested into skilled human oversight during implementation.

Unfortunately, a shared challenge across both types of banks is under-resourcing in AML teams. The FCA found that Monzo’s monitoring tasks were handled by inexperienced staff, while Santander’s Suspicious Activity Reporting (SAR) unit faced a five-month backlog on medium-risk alerts due to staff shortages. Technology, no matter how advanced, cannot compensate for a lack of human oversight.

Whether hampered by legacy tech or hindered by rushed innovation, banks are repeatedly falling into the same traps. These cases reveal a common lesson: effective financial crime prevention is not just about having the right tools, it’s about how those tools are integrated, supported, and governed. Automation can significantly enhance transaction monitoring, but only when paired with experienced personnel and robust processes.

Lorien is a Research Analyst in the Fintech and Payments team at Juniper Research, and specialises in analysing and forecasting emerging trends and innovations in financial markets. Her latest reports have covered topics including Contactless Payments, Virtual Cards, and Network Tokenisation.