[xyst]

It’s definitely their anti money laundering (AML) detection system kicking in. However it’s clearly getting false positives and their internal AML team is getting hit with a high amount of them thus causing the delays in resolving them.

This is why you don’t build your own solutions to well solved problems.

[avianlyric]

Monzo’s system is a little unique in that it runs fraud and AML checks in real-time while the transaction is being processed, and thus able to block a high risk transaction before it completes. As a result Monzo is frequently able to return stolen funds to victims.

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.

[Nextgrid]

I wonder if their system, by virtue of being modern, is too good and catches a lot of fraud that would otherwise remain undetected by legacy banks' systems? Not to mention, opening a Monzo account is much easier and can be done remotely, thus it could be attracting a lot of malicious activity that just wouldn't even reach the legacy banks because the laborious account opening process would filter those out?

[dalyons]

I work for a different fintech and both of your points are spot on. Much higher baseline fraud attempts due to online/remote accounts, but much more sophisticated real-time ML/detection systems.

[dylan604]

>getting false positive <snip> delays in resolving them.

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.

[avianlyric]

> There should be a penalty for this.

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.