The current wave of anti-money laundering (AML) technology has been largely precipitated by a series of directives issued by the European Parliament since 2015. Nevertheless, financial institutions (FIs) operating in the bloc have more to gain than legislative compliance when it comes to intercepting the flow of illicit money.
The same tools and frameworks being used in the fight against money laundering and crime/terrorism financing are also being applied by FIs to protect their customers from cyber threats and financial fraud.
In the context of ever more sophisticated fraud and money laundering operations, PYMNTS looks at some of the startups in the European Union that are driving innovation in the AML tech space.
1. Seon
British-Hungarian company Seon was founded by Tamás Kádár and Bence Jendruszák in 2017 out of frustration with the fraud prevention solutions on the market at the time. Having been unable to find a satisfactory tool to counter fraud on their crypto exchange, Kádár and Jendruszák decided they could build a better one themselves.
Read more: SEON CEO Says Rising Cyber Threat Requires Multi-Provider Security Approach
It was a move that paid off, and soon other crypto platforms and high-risk merchants were asking if they could use it too.
In the years since, Seon has built on its success protecting crypto and foreign exchange platforms and has grown into a powerful suite of anti-fraud and AML tools for banks, eCommerce, online lenders and payment gateways.
From the beginning, Seon recognized that existing authentication technology was inhibiting the user experience of digital financial services. The company focuses on creating a system that can be easily integrated at any online point of authentication.
As Kádár told PYMNTS earlier this year: “It’s a frictionless, invisible way of verifying user accounts and transactions. We use methods of data enrichment, digital footprint analysis, and machine learning to score onboarded customers and their transactions.”
Proving that AML and anti-fraud technology are in demand around the world, Seon’s client base now reads like a who’s who of global tech innovators and includes such names as Revolut, NuBank, Afterpay and Patreon.
2. Salv
Estonian startup Salv is on a mission to build the first pan-European AML information and data exchange platform.
Salv’s flagship product, AML Bridge, connects banks and other FIs in a cross-border intelligence-sharing network that facilitates the exchange of encrypted information. It provides a secure messaging channel through which network members can alert other banks to high-risk customers and suspicious transactions.
In a pilot scheme, during which the technology was tested by Estonian banks, participants told Salv that up to €500,000 per month was being prevented from reaching criminal-controlled accounts. So far, more than 1,300 collaborative investigations have been undertaken thanks to the AML Bridge.
3. Intigriti
If you haven’t heard of ethical hacking, it refers to the practice of “white hat” hackers attempting to break into secure systems in order to expose vulnerabilities.
Related: Crowdsourced Bug Bounty Programs Help EU Firms Beat Hackers at Their Own Game
Intigriti has created a platform where companies in need of ethical hacking services can submit a bug bounty, inviting security professionals to hack their systems. Businesses provide a budget and Intigriti takes care of payouts.
Bug bounty programs are a more agile alternative to traditional penetration testing methodologies. By crowdsourcing cybersecurity, Intigriti can help FIs prevent money laundering by identifying network vulnerabilities before malicious actors are able to take advantage of them.
4. Lucinity
In the world of AML, machine learning algorithms that can sift through millions of data points are allowing FIs to apply statistical models at a scale that has never been seen before.
While artificial intelligence (AI) is increasingly applied to the task of automating fraud detection and prevention in banking, Icelandic startup Lucinity has set to work connecting the dots between AI-centric frameworks and the necessity for human oversight and direction.
Calling its approach “human AI,” Lucinity believes that machine learning and data science should exist to complement the work of human security professionals, rather than replace it.
Lucinity’s technology creates interpretable and intuitive displays of AI-generated data. Comprising tools for transaction monitoring, actor intelligence and a Suspicious Activity Report (SAR) monitor, the AML platform emphasizes the synergy between humans and AI and the necessity for the two to work together to fight money laundering.
Through its open design, Lucinity’s AML software allows users operating under different regulatory and law enforcement regimes to customize the platform to suit their specific needs.
See also: Currencycloud Hires Lucinity To Fight Money Laundering
For example, it was announced this month that Denmark-based FinTech Pleo chose Lucinity to provide AML software as part of its plans to expand across Europe. With Lucinity, Pleo will be able to integrate with the Danish Financial Intelligence Unit (FIU) and any other AML authorities it will need to interact with as it scales its operations throughout Europe.
5. Sanction Scanner
When it comes to know your customer (KYC) protocols, businesses operating internationally have to be able to screen for sanctioned individuals against the backdrop of sanctions lists from different jurisdictions that change daily.
Combining global coverage with real-time data, Sanction Scanner draws from over 3,000 Global Sanctions lists, including politically exposed persons (PEPs) and adverse media data, which is updated every 15 minutes.
For businesses that need to screen customers for potential security risks and political exposure, Sanction Scanner can help ensure that they have the most up-to-date information available.
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