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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
ThetaRay raised $57 million in a round led by Portage.
The funds bring the company’s total funding to $112 million.
ThetaRay will use the funds to fuel global expansion.
Financial crime fighting fintech ThetaRayannounced today it has received $57 million. The growth round, which boosts the company’s total funding to $112 million, was led by Portage, with contributions from existing investors JVP, OurCrowd and others.
Israel-based ThetaRay will use the funds to accelerate global growth. “Guided by the adept leadership of Peter Reynolds, the resolute ThetaRay team stands ready to expand its financial technology footprint across continents – spanning North America, South America, Europe, Africa, and Asia – and venture into uncharted realms of innovation,” said ThetaRay Founder and Chairman of JVP and Chairman of ThetaRay Erel Margalit.
“Global payment infrastructure too often fails to accurately differentiate between perfectly legitimate transactions and ones from bad actors dealing with illicit funds,” said ThetaRay’s recently appointed CEO Peter Reynolds. “We’re proud to be at the forefront of the revolution to make global transactions easier, safer, and cheaper and are keenly aware of the massive vote of confidence this investment is in both our technology and our team.”
Founded in 2013, ThetaRay leverages AI to monitor 11 billion transactions valued at $15 trillion on an annual basis. The company’s AML transaction monitoring and screening solution, SONAR, helps banks and fintechs screen both cross-border and domestic payments for money laundering. When compared to rule-based systems, SONAR results in 99% fewer false positives. Among the company’s clients are ClearBank, Travelex Bank, and Santander.
This week’s edition of Finovate Global takes a look at the wave of funding that fintechs in France have received in recent weeks. The $108 million secured by hardware crypto wallet maker Ledger appropriately leads the pack. But there have been a handful of investments in a variety of French fintechs that are also noteworthy.
First up, though, it’s Ledger’s massive fundraising. The Paris, France-based crypto wallet designer and manufacturer announced that it raised $108 million in funding this week. The investment is part of the company’s Series C round and, as such, does not change Ledger’s $1.4 billion valuation. The funding does add to the $385 million the company raised in 2021.
Ledger’s latest investors are a lengthy list of new and existing backers. True Global Ventures, Digital Finance Group, and VaynerFund are among the new investors. Existing investors 10T, Cité Gestion Private Bank, Cap Horn, Morgan Creek, Cathay Innovation, Korelya Capital, and Molten Ventures are among Ledger’s existing investors who also participated.
“Today, Ledger announced our funding round. These funds will accelerate our mission to bring a new generation of secure consumer devices to hundreds of millions exploring critical digital assets and blockchain-enabled technology,” Ledger chairman and CEO Pascal Gauthier wrote in a blog post at the Ledger website.
Ledger demonstrated its crypto hardware technology at FinovateEurope back in 2016. The company currently offers three hardware wallets, Ledger Nano X and Ledger Nano S Plus, and Ledger Stax. The latter model, the company’s latest, was only recently announced and is scheduled to begin shipping to customers within the next few months.
The investment in Ledger is a reminder that France remains among the more crypto-friendly countries in Europe, if not the western world. U.S. based Circle, the company behind both USDC and Euro Coin, recently announced that it had chosen France for its European headquarters. This is just one reflection of the country’s openness to the cryptocurrency industry.
News that Burger King fast food restaurants in Paris will begin accepting cryptocurrency for payment may be another. The company has partnered with Instpower, who will deploy its power bank rental machines in Burger King’s Paris locations. The power bank rental machines are connected to a pair of cryptocurrency payment services – Alchemy Pay and Binance Pay. Now Burger King consumers will be able to get their Whoppers, charge their mobile devices, and pay in crypto all in the same place. The move is a boon for Instpower as it seeks to expand the popularity of power banks in Europe. The collaboration is also a clear win for crypto, which benefits from both the publicity and the convenient new use case for crypto holders.
Ledger is not the only French fintech scoring investor dollars this month. N2F, a French startup that offers business financial management software, raised $26 million (€24 million) in a round led by PSG Equity. A French fintech called Elyn that offers try-before-you-buy services raised $2.7 million (€2.5 million) in pre-seed funding in a round led by Headline and Sequoia Arc. On the financing front, B2B lender Aria secured a $53.3 million (€50 million) debt facility courtesy of M&G Investments. The funding added to the $21.7 million (€20 million) debt facility the company announced last year.
Here is our look at fintech innovation around the world.
Poland’s Secfensejoined the Cybersecurity program of Google’s Startups Growth Academy. Secfense demoed its passwordless authentication technology at FinovateEurope 2022.
Austria-based Finmatics secured $6.5 million (€6 million) in Series A funding for its technology that brings the power of AI to accounting and tax planning.
In the wake of the FTX scandal and the so-called “crypto winter,” the Canadian Securities Administration (CSA) has issued a set of new regulations for cryptocurrency exchanges. The new guidelines involve both commitments to investor protection as well as a registration mandate. The mandate requires “crypto asset trading platforms” (CTPs) operating in Canada to provide a pre-registration commitment to Canada’s security regulators within 30 days – and begin a full registration process. Announced this week, CTPs in Canada will have until late March to comply. Those institutions that do not comply will not be allowed to legally serve Canadian clients. The regulations also institute a significant crackdown on the trading of stablecoins. Defined as “securities and/or derivatives” by the CSA in 2022, these digital assets can no longer be purchased or stored on cryptocurrency exchanges without written permission from the CSA.
“Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada,” CSA Chair and Chair and CEO of the Alberta Securities Commission Stan Magidson said.
The new rules will undoubtedly make life tougher for cryptocurrency exchanges in the near-term. Nevertheless, the new regulations may provide more room for these businesses to operate than it may seem at first glance. From the multi-part registration process to the ability to secure permission to offer stablecoins, it seems clear that Canadian regulators are taking a relatively cautious approach to correcting the course of cryptocurrencies in the Great White North.
Ding and Western Union Bring Mobile Top-Up to Canadian Customers
The international mobile top-up platform Ding has teamed up with one of the leaders in the money transfer business. Ding has reached an agreement with Western Union that will enable customers in Canada to send international top-up payments to the mobile phones of more than five billion prepaid customers worldwide.
“We are thrilled to be teaming with one of the largest money transfer operations in the world,” Ding Chief Financial Officer Jonathan Rockett said. “The launch of Ding Checkout with Western Union will give consumers access to a complimentary service which they can use to support their friends and families around the globe. We are excited to unveil our capabilities as a digital value transfer platform and drive growth in both new and existing customers for Western Union.”
The partnership between Ding and Western Union will launch in Canada first. The partnership will give Western Union customers access to Ding’s network of more than 600 mobile operators across 140+ countries, covering 95% of the world’s population. The collaboration also gives Western Union customers a new way to add minutes and data quickly to their mobile plans.
Nuvei Completes $1.3 Billion Acquisition of Paya
At the beginning of the year, Canadian paytech Nuvei announced that it had agreed to acquire U.S. integrated payments and commerce solutions provider Paya for $1.3 billion. This week, Nuvei reported that the transaction has been completed.
“This is an important milestone for Nuvei as we continue to build a preeminent payment technology provider with strong positions in global eCommerce, Integrated Payments, and B2B,” Nuvei Chair and CEO Philip Fayer said in a statement. “I’m thrilled to officially welcome our new colleagues form Paya to the Nuvei family. We have been working diligently on our integration planning, and we are ready to begin the next step on this exciting journey as a single, unified team.”
Paya processed $50 billion in annual payment volume in 2022, with much of that amount coming from companies in verticals such as healthcare, non-profit, government, utilities, and other B2B end markets. Nuvei paid $9.75 per share for the NASDAQ-listed company, which went public via a merger with special purpose acquisition company (SPAC) FinTech Acquisition Corp III in 2020.
Headquartered in Montreal, Quebec, Nuvei was founded in 2003. The company also made headlines this year in forging new partnerships with enterprise digital commerce platform VTEX, Colombian payment processor Redeban, and online business marketplace platform Le Panier Bleu.
Here is our look at fintech innovation around the world.
Central and Eastern Europe
Swiss software firm Netcetera acquired Slovenian mobile app and digital identity development company Kamino.
Germany-based business financial management (BFM) company finway secured $10 million (€9.2 million) in Series A funding.
Middle East and Northern Africa
Remittance processor Remitly went live with its outbound remittance solution in the UAE.
Morocco-based fintech Gwala raised pre-seed funding to support its on-demand payment solution for employees and employers. The amount of the investment was not disclosed.
Pakistani digital lending platform AdalFi announced a $7.5 million investment led by UAE-based COTU Ventures, Chimera Ventures, Pakistan-based Fatima Gobi Ventures, and Zayn Capital.
Indian payments solution provider PayU launched its 3D Secure 2.0 SDK.
Latin America and the Caribbean
Mexican mobile banking app Tudi selectedThetaRay as its AML/transaction monitoring partner.
Spanish fintech Divilo partnered with financial crime prevention specialist ThetaRay.
Divilo will deploy ThetaRay’s SONAR platform, a SaaS-based AML transaction monitoring and sanctions list screening solution.
ThetaRay made its Finovate debut in 2015 at FinovateFall in New York.
A partnership between Spain-based fintech Divilo and ThetaRay will enable the B2B financial services provider to better defend itself against money laundering, sanctions violations, and other financial crimes. Divilo will deploy ThetaRay’s SaaS-based AML transaction monitoring and sanctions list screening platform, SONAR. The technology is capable of detecting the earliest indications of sophisticated money laundering activity infiltrating the domestic and cross-border payments process.
“Our advanced AI solution also makes the entire process of transaction monitoring much more efficient and effective, while improving customer satisfaction, reducing compliance costs, and increasing risk coverage with safe and secure payments,” ThetaRay CEO Mark Gazit said.
SONAR leverages advanced AI, as well as proprietary and patented algorithms, to identify anomalies in data sets to detect potential cases of money laundering. SONAR delivers transaction monitoring with very low (“virtually no”) false positives, giving firms like Divilo the ability to provide trusted and reliable payment services to the SMEs and self-employed professionals it serves.
“Divilo is a fintech leader providing valuable and innovative payment solutions that are growing the global financial system,” Gazit said. “ThetaRay is thrilled to provide Divilo with technology that instills trust into cross-border payments, enabling revenue growth by opening doors to business with new customers and financial partners.”
Founded in 2020, Divilo offers a complete payments, collections, and accounting services for small businesses and freelancers. The company offers payments cards, facilitates money transfers and, offers technology to enable businesses and freelancers to manage payments through mobile devices courtesy of PINs or QR codes. In 2022, Divilo launched a new solution called Diveep that enables charging via mobile device simply by tapping a card or another mobile device.
“Divilo is on a mission to transform payments and collections by providing greater agility, a better user experience, high-security measures, transparency, and simplicity,” Divilo founder and CEO Juan Guruceta said. “Using ThetaRay’s AML solution, we will be able to grow our network of relationships and increase business internationally with the assurance that next-generation AI detection will provide enhanced coverage and highly accurate alerts to allow businesses to focus on what really matters.”
ThetaRay made its Finovate debut in 2015 at FinovateFall. In the years since then, the company has grown to support more than one billion users, and its platform monitors more than $15 trillion in transactions every year. ThetaRay closed out 2022 with a pair of partnership announcements, teaming up with mobile banking solution NOW Money and partnering with fintech platform Ontop, both in December.
There are many countries whose fintech innovations are often overlooked. And Canada, America’s legendarily kinder, gentler neighbor to the north, is among them.
This week’s edition of Finovate Global takes a look at recent fintech headlines emanating from the Great White North this week. The news ranges from big new fundings to new product launches to deal-making in Canada’s banking industry.
Clik2pay, a payment service provider based in Toronto, Ontario, has teamed up with lending process automation expert Inovatec. The partnership will enables Inovatec’s clients to use Clik2pay’s direct-from-account payment platform to request payments from customers. The functionality leverages Interac’s e-Transfer money transfer solution to ensure safe and secure fund movement.
“Clik2pay is always looking for ways to make the payments process simpler,” Clik2pay Chief Commercial Officer David Robinson said. “Allowing borrowers to make payment directly from their bank account in real-time through an email or text makes paying incredibly easy for the customer and allows for more efficient collections and payment reconciliation by lenders.”
The collaboration will give lenders the ability to use email to collect payments directly from customer bank accounts – and have those payments reconciled automatically on Inovatec’s platform. The process supports agent-assisted collections, as well, enabling lenders to textc customers payment links and secure real-time notification of successful payments “before the borrower hangs up the phone” the company noted in a statement.
Clik2pay is the first Canadian company to provide real-time, direct-from-account payments for businesses at almost all FIs in the country. Founded in 2019, Clik2pay relaunched its Clik2pay mobile app for small businesses last month. The new app features an enhanced user experience, including improved, simplified onboarding. Mike Bradley is founder and CEO.
Canadian banks have made fintech headlines this week, as well. Bank of Montreal (BMO), for example, announced the launch of its new credit card installment offering. Currently available to BMO’s Canadian retail credit card customers via their online banking platform, the new plan – called PaySmart – enables customers to convert eligible credit card purchases of more than $100 into smaller monthly payments.
Customers will be able to choose between three, six, or 12 equal monthly payments. No interest is charged and BMO will access a monthly fee of up to 0.9%. Because purchases are within the customer’s existing credit limits, no additional credit check or approval is required.
BMO’s latest offering is part of a suite of solutions designed to help its customers better manage cash flow and finances. These solutions include the bank’s Pre-Authorized Payments Manager, Same Day Grace feature, and BMO CashTrack.
In other Canadian banking news, Royal Bank of Canada announced that it has purchased U.K.-based HSBC’s Canadian business for $10 billion (£8.4 billion; C$13.5 billion). The move comes as HSBC seeks to bolster its business in Asia – especially China. The company has more than 130 branches and 780,000 customers as part of HSBC Canada. And while HSBC has also expressed plans to abandon its retail banking operations in the U.S. and France, it is the company’s Canadian division that has turned a profit -whereas both its businesses in the U.S. and France have not.
The acquisition is the biggest by RBC under the tenure of CEO Dave McKay, who has also tried to calm concerns about potential layoffs by noting that RBC is considered one of the best workplaces in the country. McKay also pointed to the fact that RBC has nearly 6,000 open positions and referred to the acquisition as a “talent acquisition opportunity” for RBC. HSBC Canada has $134 billion in assets and 4,200 full-time employees.
“HSBC Canada offers the opportunity to add a complementary business and client base in the market we know best and where we can deliver strong returns and client value given our financial strength and award-winning service,” McKay said in a statement.
Earlier this week we shared news that Toronto-based FinovateFall 2019 alum Buckzy Payments had secured $14.5 million in Series A funding. The company offers real-time, cross border payments services, as well as banking-as-a-service capabilities, via its embedded finance platform. The company has more than 140 bank, neobank, and fintech customers since going live with its platform in 2020. This week’s funding takes Buckzy’s total equity capital to more than $23 million. The round was led by Mistral Venture Partners and Uncorrelated Ventures.
“This round of financing is a validation of Buckzy’s vision to create an intelligent and automated international payment system,” Buckzy CEO Abdul Naushad said. “We’re on a mission to build the plumbing for real-time money movement globally, the same way high-speed internet fundamentally shifted the communications industry.”
Here is our look at fintech innovation around the world.
Latin America and the Caribbean
Brazil’s Nubank announced that it will offer savings accounts and debit cards in Mexico via its digital banking arm, Nu México.
Chilean based alternative credit scoring fintech Destácame raised $10 million in funding.
Brazilian fund Latitud released its The LatAmTech Report 2022 this week highlighting trends for B2C fintech in Latin America.
Asia-Pacific
Finastralaunched a new Center of Excellence (COE) at MRANTI Technology Park in Kuala Lumpur, Malaysia.
Financial crime compliance company Napier announced its entry to the Japanese market via its financial crime risk management platform, Napier Continuum.
Sub-Saharan Africa
ThetaRay and Ghanian mobile financial services company Zeepay partnered to help fight financial crime in remittance transactions.
TechCrunch profiled South African payments company Revio.
Kenyan payment service provider Cellulant launched its expansion to South Africa..
Central and Eastern Europe
Hamburg Commercial Bank announced that it has implemented and is now live on the nCinoBank Operating System.
ING Germany partnered with Viafintech to launch new cash service offering.
Estonia-based payment tracking company Transferlink announced a partnership with open banking platform Nordigen.
Middle East and Northern Africa
UAE-based expense management platform Qashio secured $10 million in seed funding.
Novatti Group has partnered with transaction monitoring company ThetaRay.
Novatti will deploy ThetaRay’s SONAR technology to defend its global payments business from money laundering and other financial crime.
A Finovate alum since 2015, ThetaRay has secured partnerships with companies ranging from Travelex Bank to fellow Finovate alum Payoneer.
Business payments enabler Novatti Group has partnered with AI-powered transaction monitoring specialist ThetaRay to defend its global payments operations against money laundering and other financial crimes. Novatti Group will deploy ThetaRay’s SaaS-based SONAR technology, a solution that leverages AI to detect the earliest indications of money laundering activity. SONAR will monitor hundreds of thousands of transactions a year for Novatti Group, enabling the company to ensure that its processed transactions are fraud-free without sacrificing quality of service.
Group GM of Risk, Legal, and Compliance at Novatti Group Evangelia Pefkou said the company selected ThetaRay for both its efficient technology as well as its ability to scale. “It is a true AI-based solution that effectively prevents financial crime – including unknown and hidden money laundering – with high detection rates and low false positives,” Pefkou said.
Headquartered in Israel, ThetaRay made its Finovate debut at FinovateFall in 2015. In the years since then, the company has brought its transaction monitoring technology to partners including Travelex Bank, PMI Americas, Qolo, as well as fellow Finovate alum Payoneer. ThetaRay’s combination of AI and machine learning has resulted in a transaction monitoring solution that delivers a 50% boost in efficiency, 99% reduction in false positives, and 100% coverage for all known money laundering risks. The company’s technology has enabled businesses to confidently partner with entities in countries and segments that are considered high-risk.
“SONAR detects even the newest and most sophisticated criminal schemes,” ThetaRay CEO Mark Gazit said. “Novatti will be able to simultaneously establish new relationships to grow global business, increase revenues, and improve customer service.”
Founded in 2013, ThetaRay has raised more than $112 million in funding from investors such as Jerusalem Venture Partners, Benhamou Global Ventures, and ABN AMRO Ventures.
Tel Aviv, Israel-based ThetaRay announced a partnership with Brazil’s Travelex Bank.
Travelex Bank will deploy ThetaRay’s transaction monitoring and sanctions screening solution, SONAR, to enhance its ability to combat money laundering.
ThetaRay made its Finovate debut in 2015. The company has raised more than $112 million in funding.
Transaction monitoring technology provider ThetaRaywill help Brazil’s biggest FX specialist, Travelex Bank, enhance its transaction monitoring and sanctions screening capabilities. Travelex Bank will deploy ThetaRay’s SaaS-based anti-money laundering solution, SONAR, to provide both domestic and international transaction monitoring, as well as real-time sanctions screening for international payments.
Travelex Bank Chief Compliance Officer Célia Pizzi highlighted ThetaRay’s ability to meet the institution’s transactions monitoring and sanctions screening needs with a single platform. “ThetaRay’s SONAR will enable us to expand our product services portfolio and improve customer service while improving our overall AML operations,” Pizzi said. “SONAR will provide higher efficiency and secure risk coverage, enabling new businesses and lines of revenue.”
SONAR leverages an advanced type of AI, “artificial intelligence intuition,” that gives banks and financial services institutions a risk-based approach to effectively identify suspicious transactions and individuals. Without bias or thresholds, SONAR provides a comprehensive profile of customer identities across cross-border transaction paths that leads to a quick and accurate identification of money laundering threats. According to ThetaRay, SONAR offers a 95% detection rate and a 99% reduction in false positives when compared to rules-based AML solutions.
“Travelex Bank represents a new generation of global institutions that is readying its money transfer and payment infrastructure for changing conditions,” ThetaRay CEO Mark Gazit said. “Travelex is a provider that looks to the future and prioritizes trust, confidence, and quality.”
Travelex Bank represents international exchange corporation Travelex in Brazil (along with the brokerage Travelex Confidence). The bank provides a wide variety of services including international remittances, imports and exports, crypto exchange transactions, registration services, and more. The firm’s adoption of SONAR, in addition to bolstering its AML capabilities, will also enable Travelex Bank to offer new, compliant products and services.
A Finovate alum since 2015, ThetaRay has spent much of this year forging partnerships with a number of fintechs and banks. In March, ThetaRay announced a partnership with Dubai-based Mashreq Bank and teamed up with fellow Finovate alum Payoneer. Also this spring, the Tel Aviv, Israel-based company reported that it had selected sanctions screening firm Screena as its screening solutions partner, and had partnered with omnichannel money movement platform Qolo to provide transactions monitoring.
With more than $112 million in funding, ThetaRay includes Benhamou Global Ventures, Jerusalem Venture Partners (JVP), and ABN AMRO Ventures among its investors.
Solarisbank Launches Women’s Network to Fight Fintech’s Gender Gap
As part of an effort to close the gender gap in the fintech industry, Berlin, Germany-based banking-as-a-service platform Solarisbank has launched a new “women’s network” called Futura. Part of the company’s holistic Nature, People, Business (NPB) framework, Futura is currently organizing events such as discussion panels and training sessions for women looking to enter the fintech industry.
Futura also has a “heal thyself” component. The company has overhauled its recruitment process to be more inclusive, changing language and encouraging recruitment agencies to reach out to more female applicants. Solarisbank has pledged to reach at least 30% female representation by 2024.
“At Solarisbank, we decided to take a deliberate stand to improve gender equity in our industry,” Futura initiator and VP of Onboarding and Integration, Alex Gessner said. “We launched Futura to make fintech more inclusive for everyone – women, men, and non-binary people. It’s encouraging to see so much support for our initiative, and the market response to our first activities has shown the need for such a network.”
German fintech Express Group raises €25m in Series A funding
Express Group, a Hamburg, Germany-based startup dedicated to making tax preparation easier for working and middle class families, has secured $27 million (€25 million) in Series A funding. The investment round was led by Insight Partners and Project A Ventures. The funds will be used to help grow Express Group’s business internationally as well as to fuel future product launches.
ExpressSteur, the initial product from Express Group, leverages AI to enable accounting companies, tax consultants, and lawyers to process tax cases in minutes. The solution brings machine learning and automation to a process that is typically manually-dominated, making the tax preparation process easier, faster, and more accurate. The product helped the company grow to a Gross Merchandise Value (GMV) run rate of more than $49 million (€45 million) in less than 12 months.
Express Group was founded in 2019 by Maximilian Lambsdorff, Dennis Konrad, Konstantin Loebner, Mehdi Afridi, and Andreas Santoro.
New partnership marries recurring payments and subscription management
Dutch payment processor Mollie has announced a collaboration with U.S.-based subscription management platform Recharge that will offer an end-to-end, one-stop solution for managing recurring payments and subscriptions. The partnership will make it easy for users to leverage Recharge’s APIs to integrate recurring payments into Magento, WooCommerce, or other standalone webshop. The integration will also support deploying and managing subscriptions, as well as offer a retention suite to automatically retry payments in the event of failure, an enhanced self-serve customer experience with personalized transactional notifications, and real-time insights into revenues, customers, and subscriptions.
“We’re really excited to be able to offer merchants the opportunity to implement fully powered subscriptions with Recharge easily,” Mollie CCO Ken Serdons said. “Seamless effortless payments brought to recurring ecommerce means an increase in lifetime value and average order value, and at a time of unprecedented ecommerce growth and ambition, we’re able to meet and surpass customer expectations.”
Headquartered in Amsterdam, Mollie is one of Europe’s fastest-growing payment service providers (PSPs). Founded in 2004, the company this year has forged partnerships with WooCommerce and carmaker Mazda. Mollie launched its SaaS payment platform in March.
Recharge was founded in 2014 by Oisin O’Connor (CEO) and Mike Flynn (CTO). Today, the company powers subscriptions for more than 15,000 merchants serving 50 million subscribers, and has processed more than $10 billion in transactions. In May of last year, the Santa Monica, California-based firm secured a Series B investment of $277 million in growth capital, giving the company a valuation of $2.1 billion.
Here is our look at fintech innovation around the world.
One of the many fascinating conversations I enjoyed at FinovateEurope last week was my chat with Trulioo Chief Technology Officer Hal Lonas. Among the topics we discussed was the way evolving regulations were impacting the business of keeping financial services companies compliant with regard to KYC and AML requirements.
This week we learned that the European parliament is moving closer to embracing another measure to tighten rules with regard to financial services – in this case, cryptocurrency transactions. Members of two parliamentary committees this week approved new rules to ban anonymous cryptocurrency transactions as part of an overall European Union-wide anti-money laundering campaign.
The new regulations will require all transfers of cryptocurrencies, regardless of size, to include information on the source and the beneficiary of the assets involved. This information, which will be made available to regulators, would cover transactions from wallet addresses that are held by private users (“unhosted wallets”). The new requirements, however, would not apply to P2P transfers made without an intervening provider.
“Illicit flows in crypto assets move largely undetected across Europe and the world,” Committee on Economic and Monetary Affairs co-rapporteur Ernest Urtasun explained. “(This) makes them an ideal instrument for ensuring anonymity.”
The new policy has its critics. Supporters such as Urtasun have pointed to the disclosures of the Panama and Pandora Papers as good reasons for bringing additional scrutiny to cryptocurrency transactions. But critics such as Paul Grewal, Chief Legal Officer with Coinbase, suggest that the new regulations are based on a false premise: that cryptocurrencies represent a significant vehicle for illegal activity.
“The truth is that digital assets are in generally a markedly inferior way for criminals to hide their illicit financial activity,” Grewal wrote in a blog post earlier this week. “That’s why, according to the best research available, by far the most popular way to hide illicit financial activity remains cash.”
By contrast, Grewal noted “digital assets and the immutable nature of their blockchain technology actually enhances the ability to detect and deter illicit activity.”
The proposed legislation will now be voted on by the full parliament and national ministers.
April is Financial Literacy Month. Be sure to check out our themed coverage of financial literacy both on the Finovate blog in general and here in Finovate Global in specific all month long.
To this end, we found news of the Memorandum of Understanding recently signed by the Abu Dhabi Global Market Academy (ADGMA) and the National University of Singapore’s Asian Institute of Digital Finance (AIDF) to be especially noteworthy.
The goal of the pact is to help bring thought leadership to the fintech community and bolster the fintech ecosystem in Abu Dhabi “and beyond.” There are three main pillars to the agreement: research and publication, technology development, and knowledge dissemination – each of which contributes differently toward the goal of facilitating knowledge exchange across regions and encouraging research collaboration.
What’s interesting about this initiative is the way it supports financial literacy and education among professionals already in the field of financial services. “We, at AIDF, look forward to the close collaborations with ADGMA in research advancements, the education of skilled professionals, and nurturing of FinTech entrepreneurs,” Duan Jin-Chuan, Executive Director of the Asian Institute of Digital Finance at the National University of Singapore, said. “We see these activities as a vital component in pursing a better future for our countries.”
The ADGM Academy, headquartered in Abu Dhabi, UAE, was established in 2018 to build expertise, financial education, and literacy in the region. The Academy is part of the Abu Dhabi Global Market (ADGM), an international financial center, and features coursework areas including banking and finance, digital and fintech, and entrepreneurship, as well as national, personal, and professional development.
FinovateEurope ended just a few days ago. Of all our events, our London conference often provides the best showcase for international fintech innovation – especially from developing economies and parts of the world not always considered to be fintech hubs in spite of their economies.
Below is a quick run-down of companies in this category that demoed their latest solutions at FinovateEurope last month.
The partnership marks the first time that an Israel-based fintech company has teamed up with a financial institution from the UAE. The collaboration was made possible by the historic Abraham Accords, signed in the fall of 2020, which normalized relations between Israel and the UAE, Bahrain, Sudan, and Morocco.
“Mashreq Bank is our first customer in the UAE,” ThetaRay CEO Mark Gazit said. “We look forward to accelerating collaboration with additional financial institutions in the UAE and the entire Middle East, as part of the continued expansion of ThetaRay’s global reach.”
Making its Finovate debut in 2015, ThetaRay offers banks and financial payment providers the ability to detect anomalies in multiple data sets, regardless of size or source. This makes the company’s cloud-based, SaaS AI analytics platform is especially effective in monitoring cross-border payments, an area that has become increasingly vulnerable to financial crime – including money laundering – in recent years. ThetaRay estimates that the cross-border payments market will grow from $37.15 trillion in 2020 to nearly $40 trillion by 2026, potentially attracting an even greater number of fraudsters and thieves.
“ThetaRay’s technology, underpinned by advanced machine-learning based models complementing rules, sets the foundation for next-generation transaction monitoring,” Mashreq Bank’s Group Head of Compliance and Bank MLRO Scott Ramsay said. “By combining speed and agility with efficiency, it allows banks to effectively thwart financial crime risks in the increasingly complex space of cross-border payments.”
“Mashreq’s advanced digital transformation program has continued to deliver outstanding service to customers throughout the nine months ending 30th September 2021,” Group CEO Ahmed Abdelaal said. He highlighted the role of digital platforms in supporting the bank’s growth, and embraced the “development of a diverse, inclusive, and enabling working environment” courtesy of Mashreq’s adoption of a “work from anywhere culture.”
FinovateEurope 2022 is just one month away. If you are an innovative fintech company with new technology to show, then there’s no better time than now and no better forum than FinovateEurope. To learn more about how to demo your latest innovation at FinovateEurope 2022 in London, March 22 and 23, visit our FinovateEurope hub today!
Here is our look at fintech innovation around the world.
Thailand’s central bank will let banks increase the amount they are allowed to invest in fintech – but investing digital assets was excluded from the new higher funding limits.
“China-backed and Africa-focused” is a way to describe much of the investment that has poured into sub-Saharan Africa in recent years. This week’s news that African-based fintech platform OPay is in the process of raising $400 million in new funding – giving the firm a valuation of $1.5 billion – is the latest example of this trend.
OPay is a mobile money platform launched in Nigeria by popular internet search engine Opera back in 2018. The funding report, which was published in The Information, noted that the capital would be used to fuel the company’s geographic expansion, having gone live in Egypt earlier this year. With Chinese investors maintaining a majority stake in the company, OPay had raised more than $170 million to date from investors including Sequoia Capital, IDG Capital, Source Code, GSR Ventures, Meituan-Dianping, and parent company Opera.
The company said that it processed $1.4 billion in payments in October alone, a sum that increased to $2 billion by December. Much of this can likely be attributed to COVID-19. In a country where cash is still king, the onset of the global pandemic made in-person, cash-based transactions problematic. Digital payment options like those provided by OPay have soared in popularity; Forbes took a look at the boom in Africa’s mobile money business back in December, noting investments in sub-Saharan payment innovators like Paystack (also of Nigeria) and Chipper Cash, a San Francisco based P2P payments company that serves customers in seven African countries.
That said, OPay is looking to leverage its pedigree as a payments solution to offer additional products including debit and credit cards. Earlier this month, OPay launched its USSD withdrawal service to make it easier for Nigerians to access cash at OPay merchant stores – without needing a debit card. Also this month, the company introduced version 4.0 of its super app. OPay 4.0 now makes it easier for users to connect with friends and family, add contacts, make quick payments for frequently used services, and more.
Interestingly, OPay is the most successful of the ventures Opera has tried to spin off. These efforts include ORide, a bicycle-sharing service that was shut down after the Nigerian government banned the business; a similarly shuttered bus-booking solution, OBus; a logistics delivery service OExpress; a B2B e-commerce platform OTrade; and a food delivery service called OFood.
Here is our look at fintech innovation around the world.
In a round featuring new investors Saints Fund and Eric Benhamou of Benhamou Global Ventures, cross-border transaction monitoring solution provider ThetaRay has raised $31 million in new funding. Led by JVP and BGV Funds, the investment round also featured participation from current investors OurCrowd, Bank Hapoalim, SBT, and others. The funding takes the Israel-based company’s total capital to more than $90 million and will be used to help ThetaRay bring its cloud-based, transaction monitoring solution to new markets.
“We are on the verge of a real revolution in securing the global financial system,” ThetaRay CEO Mark Gazit said. “During this period, when the cross-border payment network has become the lifeblood of the world trade infrastructure, ThetaRay is here to instill certainty and reduce risks in secure, cross-border payments.”
ThetaRay’s announcement comes as the governments of both Nigeria and the Ukraine have implemented ThetaRay’s technology to protect cross-border payments from financial crime. The cross-border payments market, estimated at $25 trillion a year, increasingly has been targeted by financial criminals in the post-COVID environment. Unfortunately, the response to this threat has involved tightened controls and enforcement that have resulted in challenges – from slow service to outright blockages – for many of those businesses and banks that need to make legitimate cross-border payments.
To this end, ThetaRay’s SaaS offering analyzes SWIFT traffic, risk indicators, and data from clients, payers, and payees to spot patterns and anomalies that are indicative of suspicious activity – including money laundering and terrorist financing. The technology leverages a proprietary approach to machine learning called “artificial intuition” which simulates the decision-making aptitude of human instinct and subjectivity. Referred to as the “fourth generation of AI,” artificial intuition is being applied to help financial institutions spot large-scale, more sophisticated cybercrime strategies by analyzing the various parameters of the massive number of individual transactions that may make up a given fraud attempt.
“This revolution will enable many organizations and people around the world to transfer money faster, more securely, and with far fewer fees and stops along the way,” JVP founder and chairman Erel Margalit said. “What Swift did to the banking world 25 years ago, ThetaRay will do to the banking world in the next ten years.”
Founded in 2013 and making its Finovate debut two years later at FinovateFall, ThetaRay launched its cloud-based, anti-money laundering (AML) solution for cross-border payments last month. Also in April, the company appointed former Fundtech/Finastra Payments executive Dagan Osovlansky as its new Chief Product Officer. ThetaRay also won the Transaction Security Innovation Award this spring from the FinTech Breakthrough Awards program.
