Hi everyone,
I love that this is encouraging debate about financial crime risk! The more everyone talks about risks and how to mitigate them, the safer all of our money will be… but that aside, let me answer some questions.
@DaveTMG you bring up a great point. Why did we not just include all EU countries? It would perhaps be easier to explain, and what is the downside? Well, @jzw95 has hit the nail on the head; we looked at the data and did a risk assessment to work out which countries to include on this list.
To be more specific, let me tell you about how we assess country risk in general. We have taken research carried out by Transparency International and the Global Slavery Index, used data showing the amount of illicit financial flows going through a company and compared that to each country’s GDP, looked at high-risk and non-cooperative jurisdictions as defined by the Financial Action Task Force (FATF) and finally at countries that are sanctioned. Based on this information we came up with our own analysis of what a high risk country means to us.
When looking at this particular problem of Stripe top ups, the main concern is that one of our customers will receive a top up that comes from a sanctioned person. If we were to allow that to happen we would be in breach of the financial crime regulations in the UK. In order to mitigate this risk, we thought about our country risk assessment and what we deemed a high risk country. We also considered how certain countries regulate their banks, and how strict banks in different countries are about performing sanctions screening on their customers.
By thinking about these things, we concluded countries that were part of the EEA and FATF would be likely to have the best sanctions screening procedures in place. We did not include all European countries because there are certainly some that we deem to be higher risk from this perspective (Azerbaijan and Bosnia and Herzegovina to name just a few).
Finally, and of course, we thought about our customers. How would this list of countries impact you? We looked at the countries which top ups have come from in the past, and we decided that we should add Australia and New Zealand to the list. They are both the lowest rating on our country risk assessment, and would enable us to cover a greater percentage of top ups.
The list we ended up with covers about 99.7% of all top ups done so far at Monzo. We also think it mitigates our financial crime risk to a low level, and one that is within our risk appetite.
I hope this helps you understand where the list came from, and let me know if you have any other questions!
Thanks,
Natasha