UK Regulator Fines Monzo £21 Million ($28.6 Million) for Weak Financial Crime Controls

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Britain’s financial regulator, the Financial Conduct Authority (FCA), has fined digital bank Monzo £21.1 million ($28.57 million) for inadequate anti-financial crime systems and controls. The FCA highlighted failures in Monzo’s procedures between October 2018 and August 2020, including accepting customers who used well-known landmarks such as Buckingham Palace and 10 Downing Street as their addresses.

As Monzo expanded rapidly, it did not maintain sufficient safeguards to prevent financial crime risks, the FCA said in a statement issued Tuesday. After a 2020 review, the FCA imposed restrictions preventing Monzo from opening accounts for high-risk customers. However, from August 2020 to June 2022, Monzo repeatedly breached this requirement, onboarding over 34,000 high-risk customers.

Therese Chambers, FCA joint executive director of enforcement and market oversight, said, “Monzo onboarded customers on the basis of limited, and in some cases, obviously implausible information — such as customers using well-known London landmarks as an address. This illustrates how lacking Monzo’s financial crime controls were.”

Monzo’s CEO TS Anil acknowledged the issues but stressed that the problems have been resolved and substantial improvements have been made. Monzo remains committed to fighting financial crime.

Launched in 2015, Monzo is among the fastest-growing fintech firms in the UK. Yet, regulatory scrutiny has increased over financial crime controls in fintechs; Starling Bank was fined £29 million in 2024 for similar failings in anti-money laundering and sanctions screening systems.

Despite the fine, Monzo reported strong financial performance in its latest results, with pretax profit rising to £60.5 million for the year ending March 31, 2025, compared to £13.9 million the previous year. CEO Anil said it was too early to discuss a potential IPO.

Tesla Shares Drop Nearly 8% as Elon Musk’s ‘America Party’ Sparks Investor Concern

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Tesla’s stock fell close to 8% on Monday amid mounting investor worries over CEO Elon Musk’s new political venture, the so-called ‘America Party,’ which raises doubts about his focus on the company’s future. The announcement came shortly after a public clash with former President Donald Trump, who dismissed Musk’s political move as “ridiculous” and threatened to cut subsidies worth billions to Musk’s companies, escalating a feud that previously erased $150 billion from Tesla’s market value in a single day.

Tesla’s shares have already dropped 35% since their record high last December, making it the worst-performing stock among the high-profile “Magnificent Seven” tech firms this year. The company also reported its second consecutive quarterly decline in vehicle deliveries, intensifying pressure on its stock.

Investors voiced frustration over Musk’s political distractions. Shawn Campbell, adviser at Camelthorn Investments, said, “I and every other Tesla investor would prefer to be out of the business of politics. The sooner this distraction can be removed and Tesla gets back to actual business, the better.”

Tesla now faces a challenging sales target, needing to deliver over one million vehicles in the second half of the year to avoid another annual sales decline amid ongoing tariff-related economic uncertainty and fallout from Musk’s political involvement. Should losses persist, Tesla could see its market valuation shrink by over $80 billion, while short sellers stood to gain about $1.4 billion on Monday alone.

Tesla Board Under Scrutiny

Musk’s political ambitions have also put Tesla’s board of directors under the spotlight. Despite rumors of potential leadership changes, board chair Robyn Denholm denied any plans to replace Musk. However, some investors, such as Azoria Partners, have expressed concern. Azoria delayed launching a Tesla ETF, with CEO James Fishback stating the board must assess whether Musk’s political role is compatible with his CEO responsibilities.

Tesla’s board has faced criticism for lacking firm oversight of Musk, who manages five other companies alongside Tesla and now a political party. Ann Lipton, a business law professor, argued, “This is exactly the kind of thing a board of directors would curtail — removing the CEO if he refused to curtail these kinds of activities.”

Despite Musk’s dominant shareholder status, the board has the authority to replace him without a shareholder vote, though such a move remains unlikely given their historical support. Lipton added, “The Tesla board has been fairly supine; they have not… taken any action to force Musk to limit his outside ventures, and it’s difficult to imagine they would begin now.”

Impact on Broader EV Market

Tesla’s stock movements heavily influence the entire electric vehicle (EV) sector. Shares of smaller EV makers Rivian and Lucid also fell around 3.5%. Analyst Craig Irwin of Roth MKM said, “Tesla is the umbrella stock for the EV space. Generally, EV stocks price up into the Tesla valuation.”

The impending expiration of the EV tax credit subsidy at the end of September (earlier than previously expected) is also expected to dampen near-term EV sales, affecting all automakers in the segment, noted Morningstar analyst Seth Goldstein.

US SEC Issues First Guidance Toward Rules Governing Crypto ETFs

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The U.S. Securities and Exchange Commission (SEC) took an important first step last week toward formalizing regulations for exchange-traded products (ETPs) linked to cryptocurrencies. The new 12-page guidance document lays out disclosure requirements for crypto ETFs, marking a shift in approach by the regulator under Republican leadership. This signals progress on approving dozens of pending applications for ETFs tied to cryptocurrencies such as Solana, XRP, and even former President Donald Trump’s meme coin.

The SEC has also formed a task force to develop detailed rules, revamped its crypto enforcement team, and stepped back from some high-profile enforcement cases previously seen as wins. This new guidance aims to create a clearer regulatory framework, helping asset managers and exchanges navigate the approval process more efficiently.

Industry experts welcomed the guidance as an essential step. Matt Hougan, CIO of Bitwise Asset Management, emphasized that its existence acknowledges crypto ETFs as part of the mainstream and begins to set “rules of the road” that benefit both issuers and the SEC. The guidance stresses issuers must explain in plain language key factors like custody arrangements and the unique risks within the competitive crypto market.

A more significant upcoming development will be a new SEC listing template to replace the current requirement for exchanges to submit a special exemption request (known as a 19(b)4 filing) for each crypto ETF listing. Eliminating this form could drastically shorten the approval timeline from up to 240 days to about 75 days, accelerating product launches.

While crypto ETFs linked to coins like XRP, Polkadot, Dogecoin, and the Trump meme coin await approval, many expect the next wave of products will focus on Solana. Some firms are already innovating around regulatory hurdles: last week, REX Financial and Osprey Funds launched the first U.S. ETF providing Solana exposure via an indirect structure involving staking—a process where crypto holders validate blockchain transactions for rewards—allowing them to bypass some commodity fund regulations.

REX’s Solana ETF raised $12 million on its first day, with CEO Greg King acknowledging ongoing regulatory uncertainty but optimistic about the SEC’s forward progress. He also hinted at plans to launch a spot Solana ETF once the SEC finalizes the relevant rules.