Our investment in Strise: overhauling the way we fight financial crime
The way we bank has changed rapidly over the last two or so decades, with technology and innovation meaning that managing money has never been easier. Despite all the change we’ve seen, one critical aspect of the financial sector has been left behind - its approach to spotting and stopping money laundering; a problem which resulted in over $5bn of fines to banks and financial institutions in 2022.
Money laundering not only allows criminals to thrive, but robs countries of taxes that should be spent on services that benefit all their citizens, like health and education. But, as demonstrated by the frequently-evaded sanctions on Russian politicians and state-owned businesses following the invasion of Ukraine, cracking down on money laundering can be incredibly difficult.
Invariably, banks tend to struggle to stay ahead of criminals, and face steep fines for their inadequate anti money laundering (AML) processes. Typically, errors in detecting money laundering arise at the very beginning of a bank’s journey with its client, in the Know Your Customer (KYC) phase.
While KYC sounds like it should be fairly straightforward, it can be incredibly tricky for compliance teams to get these checks right every time. Compliance teams need to be across AML regulations as well as the latest sanctions, but these are constantly shifting goalposts. Meanwhile, the process for gathering and interpreting data on a new customer is slow, expensive, and surprisingly manual. As a result, the process requires more and more people, mistakes get made, financial institutions get fined, and criminals get away with their cash.
Our newest partnership company, Strise, which today announced its $10.8 million Series A, is aiming to change that. Its founders, Marit, Sigve, and Patrick have built a platform that integrates network, AI, and NLP technologies, and thereby enables banks to pull and analyse vital data in realtime.
While compliance teams often rely on static data, through continuous monitoring and entity matching, Strise provides comprehensive, real-time KYC and AML checks, and flags high-risk business changes or newly-sanctioned companies for both human review and automatically, depending on the company’s risk profile. This is a game changer in the fight against money laundering, allowing compliance teams to stay on top of the changing data, regulations, and sanctions that can cause errors.
Meanwhile, its technology brings elements of AI to AML through automated report writing and summaries, accelerating compliance teams’ abilities to quickly understand what the data in front of them actually means and, crucially, which data deserves further examination.
Strise already has a proven track record of saving its customers time and money. Its platform is already part of the KYC and AML processes for a number of major Nordic banks and fintechs, including Nordea, Danske Bank, and Vipps. These customers have fed back that Strise has reduced the time they spend on diligence by 90%, and reduced their costs by 30%.
This latest investment round will drive Strise’s international expansion across key European markets, starting with the UK and expanding its customer base across the financial, insurance, legal, and other industries. Global heavyweight law firm Orrick and professional services company EY (UK) are just two of the first companies to have already joined Strise’s Early Access Program in the UK.
There will also be further growth opportunities for Strise with the passage of the EU’s Digital Services Act, where large marketplaces such as Amazon will need to verify each seller, meaning KYC will encompass everything from partners and suppliers to potential ESG policies of businesses. While there’s still a long way to go in the fight against money laundering and corruption, Strise is giving its customers the infrastructure they need to stay a step ahead and reduce the global impact of financial crime.
