Jurisdiction(s):
United Kingdom

AI in UK AML Compliance: FCA Expectations, Lessons from Monzo and NatWest, and Practical Guidance for Lawyers on Explainability, Human Oversight and Regulatory Engagement

Published on: 17 September 2025

Published by a Law360 reporter

Legal News

Article summary

For further details on the FCA Monzo fine, see: FCA fines Monzo £21m for financial crime control failings, LNB News 08/07/2025 10.

Background

Between 2020 and 2022, Monzo brought on more than 34,000 high-risk customers without adequate due diligence. As a result, blatantly fictitious addresses, including ‘10 Downing Street’ and ‘Buckingham Palace’, were not challenged. The FCA noted the bank did not evolve its controls as its customer numbers grew, exposing it to contemporary fraud typologies such as synthetic identity fraud, where criminals mix genuine and fabricated data to build convincing profiles. The Monzo episode prompts the question of whether banks and other firms lean too heavily on manual AML review—a method vulnerable to inconsistency and human error. Could automated technology, particularly AI-driven tools, have helped avoid such failures?

AI's helping hand

Rapid progress and broad adoption of AI in recent years has shifted its role in combating financial crime from concept to practice. Financial institutions now utilise AI across AML and counter-terrorism financing to handle customer and transaction reviews; cut errors, including false positives; and enhance accuracy. There are several ways in which AI may support efforts to...

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