Security & Fraud

EverCompliant Fights Transaction Laundering

Israel-based cyber-intelligence company EverCompliant is the first line of defense against transaction laundering, the digital payments space’s equivalent of traditional money laundering. In a nutshell, transaction laundering allows prohibited merchants to find safe passage into the payment system by exploiting valid merchant accounts.

Founded in 2007, EverCompliant began as a global acquirer enabler, helping acquiring banks to manage their merchants’ PCI compliance. Currently EverCompliant works with acquirers in the U.S., Europe and Asia.

In working with acquirers, the cyberintelligence company uncovered a larger issue facing the space, said founder and CEO of EverCompliant Ron Teicher.

“We noticed that acquirers were getting fined, accused of processing transactions that were damaging to the card brands,” said Teicher.

After looking into the source of the issue, he said the company uncovered a vast and largely unrecognized form of money laundering where unknown merchants could take advantage of legitimate payments systems.

“When we looked into what type of controls they had in place, we realized they had nothing. There was nothing to help identify eCommerce merchants processing transactions on behalf of someone else they don’t know about,” Teicher said.

Transaction laundering isn’t a brand issue, he added. Rather, it’s the digital evolution of money laundering.

“In traditional money laundering, there’s a huge overhead,” he said. “But today, we live in a reality where anybody can set up 1,000 businesses overnight without it costing anything. They’re able to launder money for whatever purpose that they want, for as long as they want, and they’re not going to get caught.”

Teicher said acquirers across the globe are facilitating an additional 6 to 10 percent of their portfolio volume in unknown merchants.

“If we go to an acquirer today and they tell us they have 100,000 merchants, we’ll show them they have an additional 6,000 to 10,000 merchants processing through them without their knowledge or consent,” said Teicher.

With its findings, EverCompliant now works toward methodologies and technologies to successfully enable acquirers to identify and mitigate the risk they were being used for transaction laundering.

“That’s what we’re focusing on today,” said Teicher. “That’s what we’re helping acquirers and merchants to do — to identify the unknown activity that is being channeled into their portfolio in order to protect them from unwillingly participating in the facilitation of criminal money in their systems.”

EverCompliant is largely the only provider of such technologies — the industry at large still remains in the dark, said Teicher.

“If you think about all the post-9/11 regulation to stop money laundering and terrorist financing, processes were put in place across the financial industry,” he said. “But if you look a little bit to the side to the payments industry, it’s a free highway. There was nothing there to stop money laundering there.”

Teicher anticipates regulators will soon enact the same controls in eCommerce that it had placed on the financial industry. Until that time and after, EverCompliant will continue to work with acquirers to ensure they’re aware of and can fight back against the threat of transaction laundering.

With the company’s recent $9.5 million venture capital funding round led by Arbor Ventures and existing investors Carmel Ventures, StarFarm Ventures and Nyca Partners, Teicher says EverCompliant plans to do just that.

“We’re using the new funds to support our growth in the U.S. market, which is our primary market,” says Teicher. EverCompliant said that it has already identified nearly 2 million unregistered merchants in the United States.

Additionally, EverCompliant expects transaction launderers will move more into the mobile space in the coming years, said Teicher.

“We will also use the funding to strengthen our technological capabilities to remove criminal money from the system. As this problem continues to grow — especially through mobile apps — we’ll work to create solutions to continue to mitigate the risk in the coming years.”



Digital transformation has been forcefully accelerated, but how does that agility translate into the fight against COVID-era attacks and sophisticated identity threats? As millions embrace online everything, preserving digital trust now falls mostly on banks and FIs. Now, advances in identity data and using different weights on the payment mix afford new opportunities to arm organizations and their customers against cyberthreats. From the latest in machine learning for fraud and risk, to corporate treasury teams working in new ways with new datasets, learn from experts how digital identity, together with advances like real-time payments, combine to engender trust and enrich relationships.

Click to comment