Source: used to work on Monzo's financial crime team.
A frozen account could be due to any number of things. The customer service person may or may not have access to the reasons. In any case, it might be money laundering (from the bank’s perspective), therefore they can’t tell you anything.
Of course this is ridiculous. Due process should exist, even when a private organization “accuses” someone of illegal activity.
This is why you don’t build your own solutions to well solved problems.
Other banks run their AML systems in batch at the end of the day, and will only freeze an account after the money has left.
So yeah, you’ll see a lot more people complaining about Monzo, because their money will be frozen while they’re trying to exfiltrate it. That doesn’t mean Monzo has an unusually high false positive rate, it just means that people are used to being able to get away with fraudulent behaviour, and have their accounts frozen empty. Rather than being stopped mid-act and having their accounts frozen while they still contain illegitimate funds.
There should be a penalty for this. When "innocent" users are denied access to their money, those actions are much more felt by the user than the bank. That user's money is a rounding error to a bank, but to the user it is everything.
An incorrectly frozen account should come with some sort of "oops we're sorry" type of something that a bank can understand: monetary reward for the user.
I would rather criminals get away with a laundering transaction than me not being able to buy/pay for something in my day to day because of some dumbass AI algo.
There are, the FCA and Financial Ombudsman hold banks to an extremely high standard and hand out fines and compensation on a regular basis. Denying access to funds is a serious issue which banks and regulators take very seriously. However there’s an acknowledgment that AML systems have false positives.
> I would rather criminals get away with a laundering transaction
Easy to say when it’s not your money that’s been stolen. Most money being laundered through retail banks like Monzo isn’t drug money, or high stakes bank heists. It’s the millions stolen every year from normal people subjected to high pressure, complex, coercive and extremely effective social engineering scams.
We’re talking about peoples house deposits (because their solicitors emails got hacked), their life savings, their retirement funds.
Don’t assume you’re immune to these scams, or that you’re paying a cost for it. The scams trick even the most savvy individuals. Costs are borne by everyone with a bank account because victims are reimbursed, and I can assure you, no bank is sacrificing their profit margin to do that.
False positives are one thing, but it shouldn't take a year to resolve?
And it’s not just a criminal act for the organisation, but the individual customer service agent can be held personally criminally liable for disclosing, even accidentally.
So yeah, they have a really strong incentive not to tell you anything.
I don't know anything about Monzo specifically, but perhaps anti-money-laundering laws might be the reason. Monzo is presumably obligated to take steps against money laundering, under UK law, where it's essentially an offence to say Our system has flagged you as a potential money-launderer. [0] Freezing your account without comment may be their safest course of action.
edit I see this explanation was mentioned in the reddit thread.
[0] https://www.lawsociety.org.uk/en/topics/anti-money-launderin...
I've also had great experiences with Monzo, so will also back them up.
And yeah as others have said that’s not a Monzo thing not telling you, no UK bank would tell you why they think you’re laundering money
That's what's so kafkaesque (and frankly rather violating) about the experience: you literally haven't the faintest idea what you've done wrong and the bank refuses to tell you.
Perhaps the law is too strict due to the impact it can have on individuals.
[1] https://www.thebureauinvestigates.com/stories/2021-07-28/mon... / https://www.forbes.com/sites/afontevecchia/2012/07/16/hsbc-h...
My employer paid me a couple of grand in expenses, which I quickly moved to another account. That triggered an account freeze.
I asked the customer service rep for "why" - couldn't tell me. They then asked me for payslips to prove my story. I told them feck off because they could see the monthly entries marked "Salary" from the same source.
I escalated the matter and it took several hours before my account was unfrozen.
Lesson: only keep a minimum amount of money in UK bank accounts.
One gets the feeling they're hiding behind the "we can't tell you why" excuse to escape accountability for a broken system that's literally ruining lives.
How do you know the scale and how are you not sure that it's a vocal minority? After all, Monzo does target more tech-savvy users that might be more likely to voice their frustration online than with other high-street banks.
> One gets the feeling they're hiding behind the "we can't tell you why" excuse to escape accountability for a broken system that's literally ruining lives.
Because maybe they are being forced to hide behind that? UK banking regulations are notoriously strict when it comes to what banks are allowed to share with their customers.
Read the articles and look for similar experiences for other banks. There's definitely a lot more noise about Monzo doing it. Maybe (as another comment suggested) there's a selection bias at work but I assure you it's a real thing, and appallingly handled by Monzo when it happens.
> Because maybe they are being forced to hide behind that?
That misinterprets what I said. If there are rules that say they don't have to be accountable for a misfiring fraud prevention system that hurts real people, where is the incentive to fix it?
If that's the case, it's fairly obvious why there'd be a lot more noise - a lot larger percentage of people in that age group doing crypto, and a larger percentage are "very online" and likely to complain about it there.
Statistically it doesn't seem likely that Monzo and its ilk would be so overrepresented merely because their customers are more fazed than others about having their money taken away. Still, if the FCA have published meaningful statistics I could be proved wrong.
https://www.which.co.uk/news/2021/09/why-banks-are-freezing-...
This in turn means that they will have their risk assessments inverted from the usual high-street banks: optimise signup/account creation flow, and deal with AML requirements in a slightly delayed fashion. Making it really easy and smooth to open a current account brings in a surprising fraction of the crowd who would be rejected or otherwise earmarked by high-street banks.
Being digital upstarts, these modern banks also don't have the fraud and risk departments their established competition has. In order to not get hammered by the FCA, they almost certainly veer on the blunt instrument side when dealing with suspicious activity. And law of large numbers guarantees that there will be a significant number of false positives.
This, I should add, at a time when there was a high incidence of fraud with people trying to open business accounts for dormant and non-existent companies simply so they could claim Govt backed loans where it was clear that very few checks were actually being carried out.
You are simply a false positive of this ineffective policy that has a success rate of 0.2% according to recent United Stations study: https://www.effectiveaml.org/un-slams-aml-success-rate/
Globally, it has almost zero impact on crime for an infinite cost.
(I don't work for Monzo, but I've been a happy customer since day 1)
Don't touch them with a ten foot pole.
As others have pointed out already, AML/KYC laws are strict. They are strict in general for financial services, but for banks, because of their privileged position in the financial system, its even stricter.
But there is a second aspect which is that challenger banks such as Monzo take an even more cookie-cutter approach. If you don't fit their definition of what a "client" is then you will be in for a hard time. Normal banks do this too (to a degree) but challenger banks are much more hard-core about it because if you fall outside the cookie-cutter then you mess up their fragile business model.
Case in point, I know of a well-known, well-established, UK VoIP operator. They moved their business over to one of these challenger banks (might have been Monzo !) because the challenger bank provided APIs to enable integration to their internal systems, which is something that the old-school high-street bank did not offer - and the banking fees were lower too, always a bonus !
TL;DR: $challenger_bank had a definition of a client that did not include provision of VoIP services. So after about a year as a client, said VoIP provider found their account frozen (in this instance they were explicitly told, it wasn't a silent freeze). VoIP provider attempted to constructively engage with $challenger_bank but it was like talking to a brick wall "computer says no".
(N.B. I have oversimplified the story a bit, so please don't nitpick !)
Nope, not them. I'm surprised they haven't been frozen given Monzo's stated policy[1]:
"Certain industries have higher risks, where we need to put extra checks and controls in place. We’re currently focusing on industries that don’t need these. In future, we might offer accounts to some of these industries. But we appreciate this is disappointing for some businesses at the moment."
Followed by a long list that includes "technology equipment, like lasers or telecommunications"
(For those wondering, telecoms wasn't there at the time the other guys had an account, and they were not selling equipment anyway)
Switched to Starling instead and created one instantly.
https://www.vice.com/en/article/bvg7n3/monzo-freezing-closin...
https://www.reddit.com/r/UKPersonalFinance/comments/db9j5z/m...
https://www.theguardian.com/money/2020/jun/06/monzo-customer...
I'd be far more interested in a blog post explaining that than how great their infrastructure is.