You might want to look a bit closer at Monzo, there was an entire episode of BBC's Watchdog [0] about them closing accounts and keeping people's money. Mine was frozen for well over a year with about three grand in it, no explanation, no apology. I only got it back in the end by involving the financial ombudsman via a website [1] specifically set up to help people who Monzo have scammed, because there are literally tens of thousands of them. Even then, no apology, no explanation - just an email one day telling me they were closing my account but at least giving me the option to transfer my own money out.
This x100. A few months ago Monzo froze my account without warning or any reason. Thankfully they de-froze it after an hour, but I've spent months since then in a kafkaesque nightmare trying to get an explanation for their actions. "It was a mistake" ... "the law says we cannot tell you why" ... "if it was a mistake why does a law protect you from having to explain?" ... "the law says we don't have to answer that" ... "which law?" ... "the law says we can't tell you which law".
Absolutely demented. Apart from that they refused to send me a machine-readable copy of their response to a DPA request for my records and the support team behind their app literally ghosted me when I kept politely pointing out the inconsistencies in their arguments.
Bonus: when I complained they used someone else's name when responding to it. When I complained again they sent me their response to _a totally different person's complaint about a totally different thing_.
Eventually I went back to First Direct (which is owned by HSBC). Avoid Monzo like the plague.
The law is probably related to anti-money-laundering, sanctions compliance, etc. If they detect something possibly criminal, it's illegal for them to "tip off" the owner of the account.
This is true of basically any financial institution.
Of course, it is a problem that Monzo had a bug that caused your account to get flagged for this.
I (US citizen, freshman at a UK university) tried to set up a Monzo account a few months ago. They refused to give me an account, and refused (both in their app and over email) to tell me why. Left a bad taste in my mouth.
Ended up going with Nationwide, who are a bit behind tech-wise (they do this weird thing where they ask for 3 digits of a 6-digit PIN I'm supposed to memorize, which seems far less secure than a long random password in my password manager), but generally have been great. I tried to sign up for their student account, got told no and redirected to their no-credit-check account with no issues. (That's probably also an indication of what went wrong with Monzo.)
Nationwide aren't a bank, they are a Building Society, (similar to your "Savings & Loans").
I "bank" with them. Sensible. Reliable. Well run. That's preferable to the latest flashy technology when you are talking about people's hard-earned and long-saved money.
Monzo refused because of FATCA. That happens with banks outside the US to “US persons” all the time. They should have told you that, but you can blame FATCA for the cause (passed during the first two years of the Obama administration.)
I'd be surprised if that were the case. Their sign up path seemed to know about and handle US citizens (asked for my SSN), and I can't imagine they'd go to that trouble if they were just going to silently and mysteriously deny me.
[0] https://www.bbc.co.uk/programmes/articles/2qS0HM6nBkcPMx0W8t...
[1] https://www.resolver.co.uk/freeadvice/companies/monzo-compla...