Hawk Raises $56 Million to Help Banks Counter Financial Crime

Fraud and money laundering prevention provider Hawk has raised $56 million in new funding.

The Germany-based company says its Series C round, announced Tuesday (April 8), will help it finance further product innovation and fuel expansion efforts, especially in the U.S.

“Hawk enables banks to move beyond the traditional rules-based approach to anti-money laundering and fraud,” the company said in a news release. “Traditional systems create significant problems for compliance teams, including huge volumes of false positive alerts that need to be reviewed, which in turn leads to staffing challenges and costs.”

The company added that criminals can also find ways to subvert the rules, causing illegal activity to be overlooked. Hawk says its artificial intelligence (AI)-powered tools can boost accuracy to uncover more financial crime, while reducing false positives.

“Every financial institution that wants to reduce compliance workloads and increase the accuracy of risk detection should be using AI to achieve those goals,” Hawk CEO Tobias Schweiger said in the release.

“The results are compelling — we’ve been able to increase alert accuracy to almost 90% in some cases, while significantly cutting false positives. We’re also uncovering twice as many previously undetected cases of ‘novel’ criminal activity.”

The round comes at a time when banks are calling for stronger anti-money laundering (AML) and fraud protections. At a hearing before Congress last week, witnesses from the industry called for a “whole government” approach to fighting payment and investment scams.

Darrin McLaughlin, executive vice president and chief AML and sanctions officer for Flagstar Bank, testified on behalf of the American Bankers Association, saying that 1 in 3 American adults had experienced financial fraud in just the past 12 months.

“Bad actors have leveraged cutting-edge technologies, social media and telecommunications to target Americans’ life savings,” he told the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions.

“We need a strategic approach” that includes the banking industry, the government and other stakeholders, he said, and that “regulatory reforms let us focus on the real threat.”

Meanwhile, research by PYMNTS Intelligence shows that — in keeping with Schweiger’s argument — a majority of financial institutions (FIs) are using technologies such as AI and machine learning (ML) to uncover and prevent fraud.

“Protecting Accelerated Disbursements From Fraud,” a report compiled in collaboration with Ingo Payments, found that 71% of FIs were using AI and ML for fraud detection last year, up from 66% in 2023. These tools, PYMNTS wrote, can identify anomalies and patterns that might escape human analysts, allowing for faster decision-making.