‘Tis the season for transaction laundering, and the SaaS platforms to defeat it
Israeli fintech cyber security company EverCompliant has concluded a $9.5 million Series A round, and the money will go towards expanding the company’s global operations – with a new office in Asia in the works – and also further research and development of its products, such as its mobile transaction laundering detector, MerchantView.
Investors from a previous Series A in 2015 worth $3.5 million returned for this one as well: Carmel Ventures, StarFarm Ventures, and Nyca Partners. Additionally, Arbor Ventures’ Melissa Guzy joins the company’s board, with the firm having led this round, calling the company a pioneer in the field and added, “We are excited to be partnering with them to bring their technology to a wider market.”
With this round, the company moves closer towards that “big leap” into the wider global market that Geektime reported on last year when covering that Series A.
EverCompliant CEO Ron Teicher has long warned that as, “Money laundering has morphed into a new digital form,” transaction laundering, more effort is needed to catch these incidents before they are processed by Merchant Service Providers (MSPs). Also, banks need to be made aware of the risks involved with too easily acquiring nominally low-risk merchants, who are, in fact, cleverly disguised illicit entities.
Transaction laundering involves front companies connected to illegal goods merchants to peddle their wares under the guise of legitimate transactions. The “legitimate” item for sale, say, a set of speakers, actually stands in for something that can’t legally be sold, like an unlicensed firearm. The problem arises for the payments service, whether it’s a bank or an independent online platform, which has inadvertently enabled a transaction it is now legally liable for. And, of course, no legitimate financial entity wants to be named in the news or court documents as such.
With so many more real-time e-commerce transactions being carried out, especially at this time of the year around the holidays, Teicher explains that automation is necessary to speed up the analytics process and flag suspicious behavior. This is where companies like EverCompliant, founded in 2007 and based in Tel Aviv, come in. EverCompliant has identified “close to two million unregistered merchants in the US alone, demonstrating that merchant-based fraud is a huge problem for the payment industry since they are often unaware of it until it’s too late.”