Identity/AML checks would be passed before the point of having to enter a sort code so I think, as you say, they are two different things in this instance.
(Do councils perform AML checks for paying council tax?)
I think its a case of 
0h 40004 “sort code not found” and has been entered wrong.
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I looked at his profile and he does have a pattern of going into various topics to randomly bring this up.
I understand that it may be a big thing for him but there is a topic already dedicated to this. It’s not fair on people who have started topics to have them derailed like this. So I’m going to stop responding now 
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I work in finance In Tower Hamlets, I have literally moved into a new place this week, in Tower Hamlets.
My lovely girlfriends monzo was declined to pay our Council tax, for the exact reason I’ve stated. (She’s Italian with no accounts other than a monzo per my recommendation!)
I used my HSBC to be safe and it was no problem! A quick call and an email with her statement off the app and it was changed over no problem. (to the originally declined monzo)
Point is, she wouldn’t have been able to set up the DD as she failed idenity checks as TH obviously don’t check with TU.
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This sounds like a no credit history issue rather than a ‘having a monzo account’ issue?
Was she declined or was the sort code declined?
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I’m not quite sure that’s the same issue.
Some websites do not update their sort code databases frequently (or at all). And as Monzo’s sort code is fairly new, some websites do not recognise it at all.
A website will just throw the error “sort code not recognised” or “sort code is invalid”.
It doesn’t take the sort code and then decline your application like you mention, it outright refuses to accept the sort code.
acceptance@monzo.com deals with this issue specifically, as @Ordog mentioned above
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The sort code was initially declined on the website.
Apparently the DD switch form is fine with the monzo which makes sense the identity has been verified at opening of the DD. I called and sent a statement, so can’t confirm if thats the case tho!
Which indicates it’s a technical problem with their system, rather than anything AML related.
Would AML even apply for paying Council Tax? 
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It is, for the reasons i’ve stated. You cannot use Monzo to Initially set up the DD, as the OP stated.
However you are correct, once identity has been verified, you can change to monzo. I did this by calling, but Doolspj66 suggests it’s possible via the website.
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The council won’t need to verify ID for paying council tax. Nothing to do with credit history.
The council cares that the bill is paid, not who pays it.
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DD and bacs guidelines updated late 2016/17.
You must verify ownership and identity
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Is that should a must ? As it is recommended or mandatory.
If it is required then I feel thats a lot rising being kicked out by breaking the rules.
I wouldn’t have thought any council would try and make it harder for people to give them money out of choice.
the Direct Debit Scheme (Section 16.3) states: “Prior to the origination of any Direct Debits the service user must verify the identity of the payer and his address, and ensure that the account details provided relate to the payer.”
I agree, some companies are skirting the rules but a government-related bureau can’t really get away with not following the rules.
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Is “verify the identity” defined in how they do that? Are we talking KYC or wishy-washy they seem legit.
Going back to the sequence of the sort code not being allowed. Wouldn’t this identify check be implemented before getting to the Direct Debit stage? Edit: This one? Looks like address would have been done before as you need an council account number. This to me would only be checking DD info.
To meet the Bacs’ Paperless Direct Debit verification requirements organisations MUST therefore have in place solutions that can do ALL of the following:
- Carry out a modulus check of bank account data
- Prove that their customers are who they say they are
- Prove their customers live at the address stated
- Prove that the bank account details given relate to that customer
…
You mentioned you just moved, does Tower Hamlets appear in your Experian, Clearscore, Credit Karma?
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I can put in garbage and it lets me submit a request. 
@GalaxyMergirl were you doing this via phone?
…
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That’s a totally different form to the one for having just moved to the borough…
I see well reading @Dpg91 they probably tried the same form as you having it declined but fine if switched to Monzo once setup.
This isn’t the first time I’ve heard Monzo customers that they have experienced a different check system once already established, and even gone as far to setup a burner bank account to get it set to Monzo as a workaround.
Have you tried calling Tower Hamlets to setup DD that way? (Looks like you creating a SO is another way to pay?)
Was it the snappily named ‘scripts/OPENPortal-Live.wsc/ctax/movein.p’ form?
Whats the chances the shitty script is trimming the 0 at the start and turning it into 40004.
I currently pay my Direct Debit to Tower Hamlets through Monzo… but I heard from a friend recently that they tried to move their Direct Debit from their personal to their joint account and got told the Monzo sort code doesn’t exist, despite their existing DD already coming from the same sort code!
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Many years later, I have exactly the same problem with the Lewisham council.