UK’s ThirdFort nabs $20M for tools to help with ID verification, and detect money laundering and payment fraud – TechCrunch

Money laundering has been a hot topic in Britain lately, which is under pressure not only to enact stricter rules to trace the origins of money spent on large assets in the country such as prime real estate – the capital has been called by some as “London Laundromat“ – but also, in view of the sanctions against Russia in recent weeks, to actually enforce these rules.

A London startup called today Third Fortresswhich has built a platform to help professional services firms conduct more thorough due diligence and report when something is suspicious, announces a £15million (about US$20million) funding round, money it will use to further develop its services, in particular to build a payment infrastructure directly into its platform.

The raise, a Series A, was led by Breega, with B2B fintech-focused Element Ventures also investing, along with ComplyAdvantage founders Tessian, Fenergo, R3, Funding Circle and Fidel.

CEO Olly Thornton-Berry said he and Jack Bidgood first came up with the idea for Thirdfort after a friend of theirs lost £25,000 buying a flat in London due to a phishing attack: scammers had some data on the Collected a deal and created a domain similar to that of the law firm the friend used to make the purchase, and used it to write an email posing as the friend’s attorney and asking for the money to be transferred via a link. It wasn’t until weeks later, when the friend was legitimately asked for the same sum, that everyone began to suspect foul play. The friend never recovered this money.

The incident, Thornton-Berry says, highlighted how little information both service companies require from a customer before entering into a business relationship, and how little protection the customer has from more sophisticated fraud attempts.

This led to Thirdfort, which provides a big data toolkit with multiple resources such as data from LexisNexis, ComplyAdvantage, Companies House and more that can be brought together (and selected by the client) to provide various data points about individuals and their sources of money. Thirdfort initially developed tools to meet the needs of companies in the legal and real estate markets.

The product today comes in two parts. First, there is the “Risk Engine” built for its business customers, which can be used both for KYC (Know Your Customer) checks and to help companies comply with anti-money laundering regulations. Around 700 companies are already using the platform, including law firms DAC Beachcroft, Penningtons Manches Cooper and Mishcon de Reya; and real estate companies Knight Frank, Strutt & Parker and Winkworth.

Second, there is an app for consumer customers of these companies, built on top of an open banking infrastructure, to connect these companies to the customer’s bank via the bank’s own banking apps so that payments can be made in a secure manner. This has now been downloaded around 500,000 times.

Similar to alloy In the US (which is a potential competitor if one expands into the other’s market), the disagreement here with Thirdfort is that the work that would have been required to conduct similar identification and provenance research would have been largely drawn-out, largely manual and expensive to operate, if operated at all. Times are changing now, and companies now need to do more of that work.

“A lot more is needed now,” Thornton-Berry said. “They need to do thorough due diligence, look at bank statements, what’s going in and out, ask customers specific questions, check gift funds carefully if the amount is stated as a gift. It’s a whole new kind of workflow that came with the advent of AML.”

And while Thirdfort is now mostly focused on fraud detection — it’s managed to stop around a dozen shady transactions for its clients, Thornton-Barry said — it’s also designed for, and likely will, AML diligence and compliance regulations prevail when these are carried out on a larger scale, particularly in large transactions involving international money.

“For both consumers and professional services, the risk of fraud and the need for compliance pose a massive burden,” Maxence Drummond, a principal at Breega, said in a statement. “Consumers need to be verified for every transaction, and regulated professionals spend too much of their valuable time on customer verification and compliance.

UK’s ThirdFort nabs $20M for tools to help with ID verification, and detect money laundering and payment fraud – TechCrunch Source link UK’s ThirdFort nabs $20M for tools to help with ID verification, and detect money laundering and payment fraud – TechCrunch

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