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UAE bank taps Israeli fintech firm ThetaRay for fraud detection tools

Mashreq Bank to use Hod Hasharon-based company’s tech to secure cross-border payments between financial institutions

Ricky Ben-David is The Times of Israel’s Tech Israel editor and reporter.

Illustrative. Downtown Abu Dhabi at sunset. (Mohamad Kaddoura via iStock by Getty Images)
Illustrative. Downtown Abu Dhabi at sunset. (Mohamad Kaddoura via iStock by Getty Images)

The United Arab Emirates’ oldest private banking institution, Mashreq Bank PSC, has tapped Israeli fintech company ThetaRay, a developer of software that mimics human intuitive decision-making to detect financial fraud, to secure cross-border payment transfers with other financial institutions, the company said Monday.

Founded in 2013, ThetaRay says its 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 solution is based on advanced machine learning that can detect signs of money laundering before it is performed.

Hod Hasharon-based ThetaRay has said its clients include government authorities and global banks and financial institutions. Mashreq Bank is the Israeli company’s first client in the UAE, it said.

In October, ThetaRay won a fintech competition for Israeli companies at the Abu Dhabi Global Market (ADGM).

“We look forward to accelerating collaboration with additional financial institutions in the UAE and the entire Middle East, as part of the continued expansion of ThetaRay’s global reach,” said ThetaRay CEO Mark Gazit in a statement.

ThetaRay is tapping into a cross-border payment market that is expected to grow from $37.15 trillion in 2020 to $39.9 trillion by 2026

Scott Ramsay, group head of Compliance and Bank MLRO (Money Laundering Reporting Officer) of Mashreq Bank, said “ThetaRay’s technology, underpinned by advanced machine learning-based models complementing rules, sets the foundation for next-generation transaction monitoring.”

The bank is a leading regional financial institution with footprints across the Middle East and offices in Europe, Asia, Africa, and the US.

“By combining speed and agility with efficiency, it allows banks to effectively thwart financial crime risks in the increasingly complex space of cross-border payments,” added Ramsay.

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 as each transfer is not done directly and often uses three to four banks in the process, ThetraRay has explained. 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.

The Israeli company raised $31 million last year in an investment round led by Jerusalem-based JVP and Benhamou Global Ventures, which were joined by the Saints fund, and existing investors OurCrowd, Bank Hapoalim, and California-based fund SBT.

ThetaRay has raised a total of more than $90 million from investors.

Shoshanna Solomon contributed to this report.

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