Voice of the Industry

Regtech&IDV roundup 2023: global investments and collaborations in the fight against fincrime – part 2, the who

Thursday 23 November 2023 09:30 CET | Editor: Mirela Ciobanu | Voice of the industry

Expanding on the rationale behind funding and M&A activity in regtech and IDV, today we present the technology vendors in the space that have made headlines since the beginning of 2023.


Economic instability, geopolitical conflicts, and a growing need for advanced cyber solutions have spurred the reevaluation of strategies. The surging prevalence of digital identity systems underscores a transformation in how businesses engage with customers, emphasising the significance of reliable solutions for digital security and compliance. Over the next lines, we will be exploring what has happened in terms of investments and collaborations in the fight against fincrime across Europe, the UK, North America, and the rest of the world.


Europe and the UK

In Europe and the UK, the biggest deal noted by The Paypers was Quantexa, a regtech specialist in tackling fincrime and helping banks with compliance via the use of AI-based tools, raising USD 129 mln and Netcraft USD 100 million. Netcraft is a specialist in tackling cyber fraud. With the latest fund, the company will continue to offer and improve its cybercrime detection, disruption, and takedown services. Next in line comes Netherlands-based Fourthline which raised USD 54 million in April 2023. The company uses AI-based services to improve the identification and verification procedure of clients while helping businesses comply with anti-money laundering rules. After its funding round, the company combined its KYC-compliant customer onboarding with Hawk:AI’s transaction monitoring to fight fraud and money laundering and enable business growth. Notably, Germany-based Hawk:AI raised USD 17 million at the beginning of 2023.

At the same time, Estonian crime-fighting Salv bagged USD 4.4 mln to further develop its modular regtech technology and support geographical expansion to new territories, including Poland. The company’s toolset ‘includes its proprietary collaborative crime-fighting platform – Salv Bridge, which uses the collective power of its network to minimise non-compliance and financial crime’. Later, the company joined forces with identity verification provider Veriff to enable access to a real-time financial crime-fighting network, Salv Bridge, to Veriff’s customers. Similarly, Salv’s clients have seamless access to Veriff’s growing suite of identity verification (IDV) solutions.

Among notable regtechs coming out of the Baltics, AMLYZE has had a fruitful 2023: the company raised USD 1 mln and partnered with several tech providers from various areas (identity verification, fraud prevention, Open Banking, etc.) such as Ondato, iDenfy, Salt Edge, Shufti Pro and had several product announcements and upgrades. Fincrime specialists were in high demand. Inscribe secured USD 25 million to increase staffing, and drive development, and progress.

For some companies, tapping into other’s potential and expertise makes more sense than building the solution from the ground up. As such, Seon acquired AML specialist Complytron. Tamas Kadar, co-founder and CEO of Seon comments: ‘Rather than building an AML solution from the ground up, it made perfect sense for us to acquire Complytron’s extensive and innovative algorithms and worldwide databases - as well as the expertise of its talented team. By completing this acquisition, we have increased our total addressable market by approximately USD 6 billion’.

With the increased use of AI and machine learning in regtech, it was no wonder that Resistant AI extended its Series A funding to USD 27 million. The company's machine learning solutions can identify anomalies in transactions and behaviours and ensure a comprehensive insight into each customer. Some of Resistant AI’s customers include Payoneer, Habito, Dun and Bradstreet, Planet42, and ComplyAdvantage. According to Resistant AI, as many as 17% of bank statements, utility bills, and paychecks used for lending applications and other purposes are tampered with around the world. Moreover, the company reports that 15% of registration certificates submitted worldwide when opening bank accounts are counterfeit. In this context, the company argues there is a need for a new approach to tackling financial crime. Particularly worrisome are automated AI-driven attacks that can generate new fraudulent identities at scale.

Another specialist in AI and NLP technologies is Strise which raised EUR 10 million to expand internationally across key European markets, starting with the UK. Currently, Strise’s solutions are used by 70% of the region’s banks, including Nordea, Handelsbanken, and Vipss MobilePay.

Some activity happened also in the court of identity and fraud prevention providers for financial services. Ireland-based identity verification solution provider for SMEs and enterprises ID-Pal announced its expansion into the US market, backed by Enterprise Ireland. ID-Pal offers global coverage of over 6,000 identity documents across 200 jurisdictions and countries. Its strategic partners’ network in the US includes Salesforce, Corporate One, and Melissa.

With a high focus on data privacy and identity solutions reliable for the decentralized web, Truvity bagged EUR 8 mln investment to push self-sovereign identity (SSI) into the mainstream. Truvity CEO and co-founder, Konstantin Mashukov, shared, ‘we encourage ambitious innovators, pioneering companies, curious researchers, and SSI enthusiasts to try our platform. Start building applications with Instant Trust under the hood powered by SSI technologies, bringing advantages for businesses, government, and citizens. Initial access will be free of charge for early adopters, and we are ready to provide all the necessary support.’

To reduce online banking fraud and fight cybercrime, cyber fraud startup ThreatFabric closed EUR 11.5 mln seed round and Cleafy raised EUR 10 mln. ThreatFabric’s background in fraud-based threat intelligence allows it to define attack paths proactively through continuous threat modelling. Cleafy’s platform provides transaction risk and behavioural analysis, malware and BOT detection, device telemetry, device ID, collective intelligence, and behavioural biometrics.

In the UK, we noticed Lloyds's investment of GBP 10 mln in Yoti's digital ID solution to develop its app-based identity verification software, which will be launching later in 2023. Furthermore, IDPartner raised USD 3.1 mln to create a product that allows individuals to control their digital identities and choose a preferred identity verification partner from a network of trusted providers, including banks and other financial service firms, and OneID secured GBP 1 million in new funding to enhance the digital experience of UK citizens by enabling banks to offer identity verification services to their customers.

When it comes to detecting individuals that have criminal records, PEPs, sanctions screening, and managing the entire regulatory risk value chain on a global scale we found sanctions screening fintech GSS which raised USD 45 million, and Corlytics acquiring Clausematch. Furthermore, Themis raised GPB 3.1 million to continue building its systems that can identify people who are on international sanctions lists, have political exposure and influence, or simply have adverse media about them, and Suade committed USD 20 million to expand its footprint in the US and Canada. With the uplift of real-time payments, Visa invested in Form3 to reduce fraud in real-time account-to-account (A2A) payments, which includes building on Form3’s single API connectivity. Form3 is an account-to-account platform, founded in 2016, set out to revolutionise the world of payment processing with an always-on, cloud-native, Payments-as-a-Service platform. In July 2023, Form3 completed testing and certification for the Federal Reserve's FedNow Service, a real-time instant payment offering.


The US and the rest of the world

In 2023, the United States emerged as a hotbed of technological innovation within the realms of regtech and identity verification (IDV). The surge in investments was catalysed by advancements in AI technology, the nation's pivotal role in international trade, and a heightened focus on sanctions screening amidst geopolitical turmoil in regions like Israel and Ukraine. Unparalleled funding rounds set the US apart from Europe, showcasing significant investments and strategic partnerships that redefined the landscape of regtech and IDV solutions.

Compared to Europe, the US has seen the biggest funding rounds in 2023. We had Nasdaq completing a USD 10.5 billion acquisition of Adenza and IDV provider Socure entering a USD 95 mln three-year credit facility with JP Morgan, Silicon Valley Bank, and KeyBanc Capital Markets.

The acquisition of Adenza, a risk management, regulatory reporting, and capital markets software provider, further expands Nasdaq’s capabilities to support the world’s financial institutions with solutions designed to manage risk and compliance. As the deal synergies are achieved, Adenza’s financial profile is anticipated to enhance Nasdaq’s organic revenue growth rate and improve the company’s operating margins.

Not to miss is also ID.me raising USD 132 mln. Led by CEO Blake Hall, ID.me is an identity company that empowers consumers to access online services and benefits while controlling their personal data. Its technology meets the federal standards for consumer authentication set by the Commerce Department and is approved as a NIST 800-63-3 IAL2 / AAL2 credential service provider by the Kantara Initiative. More than 100 million members can use their ID.me Wallet to verify their identity across 30 states, 14 federal agencies, and over 500 name-brand retailers.

Other successful identity companies raising capital to increase revenue, improve customer acquisition, enhance cybersecurity, mitigate fraud, and eliminate the costs of legacy identity verification solutions include Prove Identity (USD 40 mln), Strata Identity (USD 26 mln), and Deduce (USD 9 mln). Interestingly, Deduce’s solution aims to prevent AI-generated identity fraud. With the launch of generative AI accelerated across industries, fraudsters can leverage artificial intelligence and stolen PII to create credible digital and online identities, as well as authenticate those identities with deep fake biometric tools and develop online transactional histories. Moreover, cybercriminals have the possibility to use automation to design a virtual suite of Super Synthetic identities that cannot be distinguished from legitimate ones easily. For this matter, Deduce is set to leverage a multi-contextual activity-backed type of intelligence that can optimise the way organisations and firms identify Super Synthetic identities during the process of account opening, as well as ‘sleeper’ identities that were already onboarded.

Another notable activity in the identity providers sphere is identity verification fintech Alloy deciding to launch in the UK as part of their EMEA growth and global expansion, opening an office in the London office, and announcing key hires. The company was founded in 2015 and has worked with companies like Carta, Ramp, and Brex. In 2022, Alloy raised USD 52 mln for global expansion, and it seems that they are keeping their promise.

Other cybersec providers for the financial industry that raised money include Blockaid (USD 33 mln), cybersecurity platform SpecterOps (USD 25 mln), and Darwinium (USD 18 mln). With this funding, the total investment in Darwinium stands at USD 26 million. This financial support will facilitate the expansion of Darwinium's edge-based solution into global markets. Because sometimes deploying multiple solutions throughout the customer journey, results in user friction and information fragmentation that favours fraudsters, Darwinium aims to orchestrate multiple capabilities to create dynamic user journeys while minimising risk.

A special development in the fight against fraud is Oscilar, which emerged from stealth to fight transaction fraud with AI. Oscilar is entirely self-funded, backed by USD 20 million that co-founder Neha Narkhede and the company’s other co-founder, Sachin Kulkarni, themselves contributed. Narkhede says they opted not to take outside funding so that they could ‘quickly build and scale the company’ as it launches publicly.

Successful US regtechs that got funding include Quantifind which raised USD 23 mln to expand its footprint in international markets and enhance its solutions for financial crimes investigation. Quantifind's AI-powered automation uncovers relevant risk signals from disparate and unstructured data to help risk specialists investigate people and organisations faster and more accurately. Quantifind also supports nonprofits by lending its intelligence software to the Polaris Financial Intelligence Unit against human trafficking and the United for Wildlife taskforce. Another regtech that got funding to enable banks, financial advisors, and insurers to protect their most valued and at-risk clients – usually ones who are older adults – against outside threats and even their own financial mistakes is Carefull which raised USD 16.5 mln.

Despite most of the action in regtech and IDV funding happening mostly in the US and Europe in 2023, there are prolific technology providers in other parts of the world. We have from Israel - ThetaRay that raised USD 57 million and from Africa - Costanoa Ventures and Norrsken22 backing Smile Identity with USD 20 mln. Smile Identity will use the funding to expand its product and engineering team, accelerating the development and specialisation of its AI-powered biometrics, document verification, anti-fraud and compliance solutions tailored for African markets. The company is growing its existing teams in East, West, and Southern Africa and completing its Pan-African reach with plans to enter Francophone and Arab-speaking markets through localised sales and support. In addition, the company will continue working closely with regulators and ID authorities to build consumer consent standards into software, enforce African data protection laws, and share data on fraud and financial inclusion trends.

In Asia, Fintellix was acquired by private equity firm Stellex Capital Management. Fintellix is a provider of digital and regulatory solutions covering data management, multi-country regulatory reporting, credit risk and loan loss calculations, and supervisory technology to the banking and financial services industry across India, the US, the UK, the Middle East, Africa, Australia, Singapore, Hongkong, and South-East Asia.

The year 2023 marked a pivotal period for technology, particularly in the US and globally, reshaping regtech, ID verification, and cybersecurity. The surge in investments and pioneering advancements underscored a commitment to combat financial malpractices and address evolving challenges. This transformative year symbolised a global convergence towards more sophisticated, inclusive, and robust technological strategies in the financial sector.


We trust that you found our two-part series on regtech M&A insightful and engaging. If you have any thoughts or additional insights to share, we'd love to hear from you. Your input helps enrich our understanding of the ever-evolving landscape of regtech and M&A in the tech industry.


About Mirela Ciobanu

Mirela Ciobanu is Lead Editor at The Paypers, specialising in the Banking and Fintech domain. With a keen eye for industry trends, she is constantly on the lookout for the latest developments in digital assets, regtech, payment innovation, and fraud prevention. Mirela is particularly passionate about crypto, blockchain, DeFi, and fincrime investigations, and is a strong advocate for online data privacy and protection. As a skilled writer, Mirela strives to deliver accurate and informative insights to her readers, always in pursuit of the most compelling version of the truth. Connect with Mirela on LinkedIn or reach out via email at mirelac@thepaypers.com.

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Keywords: identity fraud, regtech, merger, acquisition, funding, AI, machine learning, KYC, AML
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime