THE GRC NAVIGATOR
Your Bi-Weekly GRC Intelligence Briefing
Issue 5 | 15 July 2025
Executive Summary
Top Story: FCA Imposes £21 Million Fine on Monzo for Financial Crime Control Failures
The FCA has imposed a £21 million penalty on Monzo Bank Limited for significant failings in financial crime controls, marking one of the most substantial enforcement actions of 2025. The digital bank received a 30% discount for early resolution, with the original penalty set at
over £30 million.
KEY IMPLICATIONS:
◆ Demonstrates FCA’s continued prioritisation of financial crime enforcement despite broader regulatory simplification agenda
◆ Highlights particular scrutiny faced by digital-first banking models in AML/CTF compliance
◆ Sets expectation that transaction monitoring systems must evolve with business growth and risk profile changes
◆ Reinforces importance of timely suspicious activity reporting and customer due diligence procedures
◆ Signals that early cooperation and remediation can significantly reduce penalty exposure
This underscores the FCA’s commitment to robust enforcement even as it adopts a more measured approach to public communications about ongoing investigations.
Regulatory Updates
FCA Publishes Comprehensive Non-Financial Misconduct Framework
ALL FINANCIAL SERVICES
The FCA has published Policy Statement and Consultation Paper CP25/18, marking the most significant expansion of regulatory oversight into workplace behaviour beyond traditional financial services activities. Nearly two years in development, the new framework introduces Code of Conduct rules covering a broader range of workplace behavioural issues.
◆ Expands FCA’s remit beyond financial misconduct to include wider workplace behavioural standards
◆ Industry experts predict significant increase in legal involvement in HR processes across financial services
◆ Final rules expected by end of 2025, giving firms time to prepare implementation strategies
◆ Creates new compliance obligations requiring coordination between legal, HR, and compliance functions
◆ May impact recruitment, performance management, and disciplinary procedures sector-wide
FCA Abandons 'Naming and Shaming' Strategy
ALL FINANCIAL SERVICES
The FCA has confirmed it is dropping its controversial ‘naming and shaming’ approach for ongoing investigations, except in exceptional circumstances. This policy reversal represents a significant shift in regulatory communication strategy.
◆ Reduces reputational risk exposure for firms during investigation phases
◆ Allows for more measured regulatory engagement without premature public disclosure
◆ Maintains deterrent effect through traditional enforcement mechanisms
◆ Creates uncertainty around what constitutes “exceptional circumstances”
Government Responds to FCA Performance Assessment
ALL FINANCIAL SERVICES
The UK Government has published its official response to Section 1JA recommendations made to the FCA in November 2024, addressing the regulator’s performance against statutory objectives and providing feedback on regulatory approach.
◆ Forms part of ongoing dialogue between government and regulators on competitiveness balance
◆ May influence future regulatory priorities and resource allocation
◆ Reflects continued government focus on financial services growth objectives
Bank of England Governor Issues Stablecoin System Risk Warning
DIGITAL ASSETS, BANKING, PAYMENT SYSTEMS
Governor Andrew Bailey has issued his strongest warning yet about private stablecoin issuance, stating that such digital currencies could destabilize the entire financial system and cause governments to lose control over their currencies.
◆ Represents most explicit central bank concerns about growing digital currency sector
◆ May signal tighter regulatory approach to stablecoin authorization and oversight
◆ Could influence international regulatory coordination on digital currency standards
◆ Banks and payment providers should reassess stablecoin integration strategies
Central Bank Independence
BANKING, MONETARY POLICY
Governor Bailey has defended Bank of England independence amid political scrutiny, arguing against proposals to eliminate interest payments on reserves and warning of monetary policy transmission risks.
◆ Highlights ongoing tensions between political and monetary policy objectives
◆ Reinforces central bank commitment to independent monetary policy operations
◆ May influence market expectations around future policy coordination
New UK Trading Platforms for Unlisted Companies
CAPITAL MARKETS, INVESTMENT MANAGEMENT
Regulatory developments continue to support new trading platforms for unlisted company shares, enhancing market access and liquidity for private securities.
◆ Expands investment opportunities for qualified investors
◆ Creates new operational and compliance requirements for platform operators
◆ May increase market fragmentation requiring enhanced best execution procedures
PRA Developments
Capital Buffer Framework Overhaul
BANKING, INSURANCE
The PRA has published Policy Statement PS8/25, introducing comprehensive updates to the UK policy framework for capital buffers, alongside new guidance on identifying Global Systemically Important Institutions (G-SIIs) and setting appropriate buffers.
◆ Represents significant overhaul of prudential regulation for systemically important institutions
◆ Balances financial stability concerns with competitiveness and growth objectives
◆ May affect capital planning and business strategy for major UK financial institutions
◆ Creates new compliance requirements for G-SII identification and buffer calculations
Loan-to-Income Flow Limit Relief
MORTGAGE LENDING, BANKING
The PRA has published PS11/25, raising the de minimis threshold for LTI flow limits from £100 million to £150 million in annual residential mortgage lending, exempting approximately 10 additional smaller lenders from the 15% high LTI lending restriction.
◆ Provides competitive relief for smaller, niche mortgage lenders
◆ Addresses inadvertent regulatory tightening due to economic growth since 2014
◆ All consultation respondents supported the increase
◆ Requires immediate systems and process updates for affected lenders
Temporary LTI Modification by Consent
MORTGAGE LENDING
The PRA is offering interim modifications by consent to disapply the 15% limit on high LTI lending while conducting a broader review of the loan-to-income flow limit rule, following Financial Policy Committee recommendations.
◆ Allows individual lenders to exceed 15% high LTI lending limit until June 30, 2026
◆ Simple email request process with no additional supporting documentation required
◆ Maintains aggregate 15% limit across the market while providing individual firm flexibility
◆ Does not prejudge outcome of ongoing consultation on permanent rule changes
Insurance Annuity Transaction Guidance
The PRA has issued guidance on solvency-triggered termination rights clauses in bulk purchase annuity transactions, providing clarity on regulatory expectations for these increasingly common pension risk transfer arrangements.
◆ Addresses contractual arrangements affecting millions of pension scheme members
◆ Provides regulatory certainty for complex financial arrangements
◆ Supports continued growth in bulk annuity market
Operational Resilience for Critical Third Parties
BANKING, INSURANCE, TECHNOLOGY
The PRA has implemented enhanced operational resilience requirements for critical third parties to the UK financial sector, strengthening oversight of key service providers.
◆ Mandatory resilience testing and reporting for designated providers
◆ Enhanced coordination between PRA and FCA supervision
◆ Increased due diligence requirements for firms using critical services
Fund Launches & Capital Raises
Major Fund Closings Signal Continued Institutional Appetite
PRIVATE EQUITY, VENTURE CAPITAL
The first half of July has witnessed strong fundraising activity across alternative investment strategies, with several funds exceeding their targets despite broader economic uncertainties.
Notable Fund Closes:
◆ Levine Leichtman Capital Partners (LLCP): Completed final close of seventh flagship fund at $3.6bn, demonstrating strong LP confidence in mid-market strategies (July 10)
◆ BlueFive Capital: Concluded raising $2bn BlueFive Reef Private Equity Fund I, marking a significant milestone for the emerging manager (July 11)
◆ Exponent: Final close of Exponent Private Equity Partners V at €1.2bn, surpassing original target by 20% (July 9)
◆ Shore Capital Partners: Closed third dedicated food and beverage fund at $450m, highlighting continued sector-specific appetite (July 3)
◆ OnePrime Capital: Closed OnePrime Secondary Fund III at $305m, exceeding $275m target amid growing secondary market activity (July 10)
Fund Launches & Strategic Initiatives:
◆ Evantic Capital: Former Sequoia Capital partner Matt Miller nearing $400m target for UK-based venture capital firm, signaling
continued transatlantic investment flows (July 14)
◆ BB Capital Investments: Launched Infrastructure Fund as evergreen fund of funds, reflecting growing institutional demand for
perpetual capital structures (July 10)
◆ Tikehau Capital: Launched first private equity continuation fund for Egis exceeding €1bn, demonstrating innovation in portfolio company
value realization (July 7)
◆ Brookfield-backed Pinegrove Capital Partners: Marketing new $800m venture credit fund, highlighting growth in alternative credit strategies (July 9)
Climate Finance Initiative Expands
ESG, INFRASTRUCTURE
The UK government’s £12 million climate finance plan continues to attract private sector participation, supporting sustainable investment development across multiple sectors and enhancing the UK’s position as a sustainable finance hub.
Enforcement Watch
Major Financial Crime Enforcement Action
BANKING, FINTECH, FINANCIAL CRIME
The FCA’s £21.1 million fine against Monzo Bank represents the most significant recent enforcement action, highlighting serious deficiencies in anti-financial crime controls across multiple operational areas.
Enforcement Details:
◆ Customer Onboarding Failures: Inadequate systems for verifying customer identity and assessing risk profiles during account opening processes
◆ Risk Assessment Deficiencies: Insufficient ongoing monitoring and assessment of customer risk levels throughout the relationship lifecycle
◆ Transaction Monitoring Gaps: Ineffective systems for detecting suspicious transactions and patterns of potentially criminal activity
◆ Systemic Issues Identified: Problems spanned multiple years and affected thousands of customer relationships
FCA's Enhanced Digital Enforcement Operations
ALL FINANCIAL SERVICES, TECHNOLOGY
The FCA’s annual report reveals a dramatic escalation in technology-enabled enforcement actions, with over 1,600 websites suspended, removed, or blocked in 2024 for promoting financial services without proper authorization.
Summary:
◆ Actions: Over 1,600 websites targeted for unauthorized financial services promotion
◆ App Store Coordination: Collaboration with tech platforms resulted in removal of over 50 apps from Google Play
◆ Technology : Enhanced use of data analytics and automated detection systems to identify harmful content
◆ Rapid Response: Faster identification and removal of fraudulent financial promotions The FCA’s latest annual report demonstrates a strategic evolution toward fewer but more impactful enforcement operations, with enhanced focus on technology-enabled detection and
prevention.
Broader Regulatory Review
ASSET MANAGEMENT, RETAIL INVESTMENT
The FCA continues extensive non-enforcement regulatory activities including reviews of complex ETF/ETP sales practices, Consumer Duty-focused assessments, and ongoing policy consultations across multiple sectors.
◆ Complex Product Reviews: Enhanced scrutiny of ETF and ETP sales practices to retail investors
◆ Consumer Duty Implementation: Ongoing reviews to ensure firms are meeting new consumer protection standards
Market Developments
DIGITAL ASSETS, PUBLIC MARKETS
London-listed Panther Metals has become one of the first UK public companies to accept Bitcoin for company equity, creating new regulatory precedents and enforcement considerations.
◆ Creates precedent for other listed companies considering crypto transactions
◆ Raises new regulatory questions around market abuse and disclosure requirements
◆ May influence FCA’s approach to crypto integration with traditional markets
◆ Requires enhanced monitoring for potential market manipulation involving digital assets
Asset Reality Receives FCA Crypto Custody Approval
DIGITAL ASSETS, CUSTODY
Asset Reality has gained FCA approval to offer cryptocurrency custody services in the UK, expanding the regulated crypto services ecosystem and demonstrating continued regulatory openness to compliant digital asset businesses.
◆ Demonstrates FCA’s continued willingness to authorise compliant crypto businesses
◆ Increases competition in regulated crypto custody market
◆ Sets compliance benchmark for other custody service providers
◆ Reinforces importance of robust operational and security controls for digital asset custody
Bank of England Growth Warning
ALL FINANCIAL SERVICES
The Bank of England has warned that the UK growth outlook is “a little weaker and more uncertain” than previously assessed, citing global economic headwinds and domestic challenges.
◆ May influence monetary policy decisions and interest rate expectations
◆ Could impact credit risk assessments and lending strategies
◆ Suggests continued economic volatility affecting market conditions
House of Lords Financial Services Inquiry
BANKING, PRIVATE MARKETS
The House of Lords committee has launched a comprehensive inquiry targeting banking and private markets sectors, focusing on regulatory effectiveness and market development.
◆ May lead to significant regulatory reform recommendations
◆ Creates opportunity for industry input on future policy direction
Regulatory Calendar
July 2025
- 20 July: FCA consultation deadline on operational resilience implementation
- 25 July: PRA stress testing results expected for major UK banks
- 31 July: Implementation deadline for enhanced AML transaction monitoring systems
August 2025
- 5 August: Deadline for responses to non-financial misconduct consultation
- 15 August: FCA annual enforcement statistics publication expected
- 30 August: PRA capital buffer framework updates take effect
Question of the Week
Given the FCA’s £21 million penalty against Monzo and simultaneous retreat from ‘naming and shaming,’ how should firms balance transparency in their own enforcement communications while maintaining stakeholder confidence during regulatory investigations?
We welcome your perspectives on this challenge.
Insights
Under the FCA’s “maturing” enforcement strategy, the immediate benefit for firms under investigation is a reduction in premature reputational damage and potentially less market volatility during the investigation phase. This allows for a more controlled internal and external communication strategy. However, it does not mean reduced scrutiny or lower fines.
In fact, the Monzo case shows the opposite. The challenge for firms is to understand that “silence is not necessarily innocence.” Boards must ensure management isn’t complacent; rather, they should interpret this as an opportunity to address issues thoroughly and cooperatively behind the scenes, knowing that significant penalties still await if failings are found.