Charlie Delingpole says that’s where he comes in. The founder and CEO of London-based fintech ComplyAdvantage says his superior AI tech can spot launderers better than peers, and has lured in some big Wall Street clients. The regulation technology, or “regtech” start-up says it has over 350 customers in 40 countries, including major European lenders such as Santander.
The company has an ambitious aim “to eradicate financial crime and stop terrorist financing.” It’s a tough job: Up to $3 trillion is laundered through the global financial system every year, and eradicating it has become a huge market.
Delingpole, a Cambridge University politics grad, says the company is growing rapidly and its eventual intention is to IPO. ComplyAdvantage has raised around $40 million in external funding from Index Ventures and Balderton Capital, among others, and will increase its headcount to 300 by the end of this year from 160 at the start of 2019.
Costs and fines
Banks are drowning in increasing compliance costs. It’s estimated that the cost of anti-money laundering (AML) staff has gone up 10 times in the last decade in the US. Banks employing thousands of investigators to perform manual review of the alerts generated by screening and monitoring tools accounting for a $25 billion a year.
Fines are also becoming more common. US Bancorp was fined $613 million last year for poor money laundering controls. While HSBC paid a record $1.9 billion fine in 2012.
Many AML tools are effectively blunt instruments with staff manually inputting alerts to a system with some Nordic banks recently teaming up to try and improve their systems but these practices may not be sufficient, Delingpole said in an interview with Business Insider.
Whereas some firms employ hundreds of analysts to manually sift through related media, ComplyAdvantage, founded in 2014, uses artificial intelligence to process over 150 million articles per month. The company adds 100,000 new entity profiles in that period, and updating 50,000 existing profiles every day, Delingpole said.
The recent Danske Bank scandal highlighted the complexity of stopping money laundering. In order to launder money through a bank, like Danske, flows pass through the global correspondent banking network, involving multiple financial institutions and legal entities, often including shell companies in numerous countries and jurisdictions.
“The Danske Bank scandal shows that despite concerted efforts by the EU to prevent money laundering, the existing global financial system, and the enablers within it, makes it possible for criminals to enjoy the spoils of their ill gotten gains,” according to Delingpole.
“Legacy systems are not fit for purpose against increasingly complex financial flows,” Delingpole adds.
The company uses a self improving algorithm which can provide a snapshot of a company’s risk in real time by scanning millions of data sources, both structured and unstructured.
“ComplyAdvantage has managed to design and implement a tool which is configurable to the risk profile of our clients, allowing them to spot unusual behaviour faster,” says Delingpole.
He says his firm identified cases that others would be unable to spot, including someone in the UK running an ice cream van that was linked with fraudulent activity.
Developing economies also bear the brunt of money laundering issues due to generally weaker controls. The annual cost to developing countries is $1.26 trillion through illicit financial flows, including corruption, bribery, theft and tax evasion, according to ComplyAdvantage.
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