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Money laundering (the process of transferring assets to conceal the illicit origin of the funds behind them) has been a huge and growing business for many years, with terrorists financing their jobs and criminals using their booty. It has been used to cleanse and (some) fat. Cats to avoid taxes and such. Aided by the rise of digital tools to accelerate the flow of money and increasingly sophisticated techniques to evade detection, the villain is moving between $800 billion and his $2 trillion annually, which is Equal to his 2-5% of world GDP. united nations.
Of course, in the world of technology, this is also an opportunity. Engineers interested in solving particularly nasty problems are challenged to build better tools to detect and block such activity.
And today, an Israeli startup is doing just that, announcing a major funding round on the back of strong business growth. Theta RayA company that built an AI-based anti-money laundering (AML) platform that automatically scans and identifies illegal transaction activity in banks and other financial institutions has won $57 million.
Fintech expert investor Portage is leading the all-equity investment, with participation from JVP, OurCrowd and other previously unnamed backers. The company has raised about $160 million to date, and previous backers include strategic companies such as ABN Amro, as well as General Electric, Alibaba, PwC and SVB Financial. . The company did not disclose the valuation, but chairman Eller Margarit, who is also leading the investment from JVP, said the valuation was higher and the round itself was oversubscribed.
Its customers include the likes of Banco Santander, who know very well how things can go wrong. In 2022, The company received one of the hefty fines of nearly $135 million from UK regulators for failing to secure its AML processes. So do Travelex and many other large corporations and fintech start-ups. CEO Peter Reynolds said the company plans to continue growing the business along this trajectory.
“This gives us a few years to expand our business and drive existing growth vectors in the fintech and enterprise payments space,” he said in an interview. The company has seen its customer base grow tenfold over the last year and annual recurring revenue he has increased fivefold. The start-up estimates he is worth $9 billion in the larger market for AML tools, and the potential for further expansion is enormous.
Apparently, Reynolds himself was previously the company’s chief revenue officer and has taken over. June A comment from co-founder David Gazit, who has been advising businesses.
In a world where there are now dozens, possibly hundreds, of AML tools, many, if not all, of which employ some level of artificial intelligence to operate, ThetaRay is particularly useful in how it works. We are pioneering noteworthy businesses. We are looking deeper into a wider range of financial applications.
One of them is in the area of telecommunications banking, where the financial institutions involved in sending funds are themselves neither the sender nor the recipient of the funds. These have become an effective way for bad actors to hide the origin and ultimate recipient of their funds. But at the same time, it’s often one of the only ways to get money from one place to another, and of course it’s a business opportunity for some banks.
Using an AI toolset (ThetaRay is branded Sonar) to monitor these transactions and identify when they are illegal is essential. Some modern techniques involve splitting transactions across hundreds of accounts, so it’s important to use automation to monitor movements at once to identify fraudulent transactions. pattern.
“In this environment where AI is such a hot topic, it’s common to see AI in your company’s name or leveraging AI technology,” said Devon Kirk, partner and co-founder of Portage. said. “We dug into his ThetaRay and found it to be a very clear portrayal of the effectiveness of AI and how it could be implemented. It will continue to apply.”
Reynolds said the company’s future plans include going public when markets are more likely to adapt. The plan has been in the works for some time, and the former CEO even brought the idea home. 2021.