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Monzo may have to freeze some accounts under new money laundering rules

13 June 2017  |  12401 views  |  7 Stop! One WAY!

Digital challenger bank Monzo is warning 20,000 customers that it may have to temporarily freeze their accounts if they fail to provide additional verification information under new money laundering regulations.

The new regulation, which comes into force on 26 June, hits a 10% subset of Monzo users who have opted for a 'standard' level of identity verification which limits their account balance to a maximum of £2000.

Monzo says it will send in-app push notifications and e-mails to affected account holders urging them to provide additional verification details.

"It should only take a minute or two to complete — snap a photo of your ID (passport or driving licence ideally) and a 5 second video of yourself and we’ll then verify your identity," states the bank. "If you don’t submit the information in time, we will have to temporarily freeze your account. If this happens, don’t worry — your money is still safe! You can reactivate your account at any time by submitting the information requested or ask for a refund."

Alongside access to higher transaction and withdrawal limits, Monzo says customers will also be freed from the hassle of repeating the process when it rolls out its current account offering later this year.

Comments: (7)

Russell Bell
Russell Bell - Fastbase Ltd - Wellington | 14 June, 2017, 02:37

I thought banks these days all want to be your friend ?  Traditional and challenger banks alike.  Freezing your money is the "with friends like these you don't need enemies" approach.

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Hector Gonzalez
Hector Gonzalez - Avaloq - Edinburgh | 14 June, 2017, 09:16

What I like from this article is the approach Monzo has taken to solve the problem, focusing on the user

Send a push notification to the customer and being able to verify the identity with a picture of an ID and a video of the customer. (Haven't done it personally, but it doesn't look it will take more that 10 - 20 min to do it)

While traditionally, you would have got a letter from your bank, asking you to go to the branch, you would have to wait in the queue, present your documents, etc...

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A Finextra member
A Finextra member | 14 June, 2017, 09:18

Will P: Russell - as the story states, this is due to new regulations, not something Monzo have made up.  Given that Monzo is still in Beta and it requires top-up, most customers would not have £2k in there anyway.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 14 June, 2017, 19:10

Attract customers by promising a more frictionless experience by having lightbrush KYC. Get them to deposit money. Then tell them their account is frozen and ask them to face the additional friction of undergoing full KYC if they want their money back. May seem like cheating to some but Monzo makes PayPal proud.

Good job Monzo. Look forward to many more devious tricks from you.

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Russell Bell
Russell Bell - Fastbase Ltd - Wellington | 14 June, 2017, 21:40

Customers with less than 2k are affected, according to the article.

New regulations should only apply to new customers.  The existing customers signed up to specific terms, the lighter-weight authentication was a material element of the bank's offering to the market.  Changing the rules like this is a breach of the agreement.

I expect the banks had some influence over how this regulation was formulated, the larger banks at least if not the likes of Monzo.  I'm naive enough to hope they'd stand up for the interests of their customers.

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A Finextra member
A Finextra member | 15 June, 2017, 08:16

Will P:  Well I can't remember what level of authentication I asked for, but I have not been contacted.  I expect you're right that the high street banks may have iinfluenced this, but probably not the challengers.  May just be a ruse to disadvantage the challengers!

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Sarah Francis
Sarah Francis - Altair - London | 06 July, 2017, 11:46

Humm, its called the 4th Money Laundering Directive. It has a wide spread effect including one all banks.

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