Explainer-in-brief: fintechs face-off with the watchdog for legitimacy
New challenges have arisen for the fintech world, as the Financial Conduct Authority warned of the inadequacy of some of the online banks’ securities against financial crimes. The financial watchdog stressed the importance of striking the right balance between providing effortless and speedy banking services with strong guarantees against fraud.
The FCA is worried that as digital banks have quickly risen to stardom over the past years, their security mechanisms haven’t kept up with the pace.
All-digital bank Monzo, while popular, has struggled to operate as a traditional bank. Last July, it was under investigation over potential breaches of anti-money laundering laws in the UK. Then in October, it had to renounce its effort to get a US banking licence after years of negotiations.
The UK watchdog has seen an increase in reports of potential criminal activity last year, so it’s ramping up efforts to crack down on money laundering and fraud. Fintechs, for now, are caught in the crossfire.