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ThetaRay raises $31 million to weed out fraud from money transfers

The startup’s software mimics human decision-making to spot anomalies and detect money laundering

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

ThetaRay's software helps detect anomalies in transactions (YouTube screenshot)
ThetaRay's software helps detect anomalies in transactions (YouTube screenshot)

ThetaRay, a developer of software that mimics human intuitive decision-making to detect financial fraud, said Tuesday it has raised $31 million in a funding round.

The firm’s solution enables global banks, financial institutions and businesses to increase and simplify the volume of international money transfers, speeding up the completion of transactions without fear of them being used for money laundering, terrorist financing, human trafficking and drug trafficking, the company said in a statement. The solution is based on advanced machine learning that can detect signs of money laundering before it is performed.

The funding round was led by Jerusalem-based JVP and Benhamou Global Ventures, which were joined by the Saints fund, and existing investors OurCrowd, Bank Hapoalim Ltd. and California-based fund SBT.

Including the current funding, the company has raised a total of more than $90 million from investors.

Hod Hasharon, Israel-based ThetaRay said it intends to use the capital raised to expand its market in the cross-border payments sector, currently valued at $25 trillion a year.

Today international money transfers take place via the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system, a large messaging network used by banks and other financial institutions to send and receive money transfer instructions. These transfers are expensive in light of the fact that each transfer is not done directly and often uses three to four banks in the process, ThetraRay said in the statement. Thus, there is no way to guarantee that the payments don’t facilitate financial crime such as money laundering, or terror financing and drug trafficking.

The firm’s artificial intelligence-based algorithms monitor the SWIFT traffic and send out alerts for risk indicators to profile and detect anomalies indicating money laundering activity across complex, cross-border transaction paths.

ThetaRay originally developed its technology to fight cybercrime by looking at the overall picture of a firm’s operations and checking for anomalies both inside and outside the firm’s networks. Now the company’s focus is to use its technology for global money transfers.

ThetaRay also said Tuesday that the governments of Nigeria and Ukraine have used the firm’s solutions to fight terrorism and corruption. Other customers are global banks, among them Banco Santander, the company said.

Erel Margalit, JVP founder and chairman and ThetaRay’s chairman, said that the firm was “bringing revolutionary products to the field of cross-border payments, which will allow banks to dramatically increase, their income enabling safe and unrestricted money transfers in both large and small banks.

“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. What Swift did to the banking world 25 years ago, ThetaRay will do to the banking world in the next ten years. Business security and co-operation between countries will be possible when financial cybercriminals are left out of the secure system that ThetaRay has created together with the banks.”

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