ThetaRay launches anti-money laundering AI and analytics for the cloud

ThetaRay today announced that its AI-based anti-money laundering (AML) analytics will be available on public and private clouds, including Azure, Google, and AWS.

ThetaRay’s AML platform uses unsupervised machine learning to monitor financial transactions, integrating data and triaging alerts in real time. And its new cloud-agnostic version aims to increase the speed at which the cybersecurity company’s clients — banks and fintech firms — can detect potential threats.

Major money-manipulating moves

Under a decades-old treaty called The United Nations Convention against Transnational Organized Crime, nearly 200 countries have pledged to help each other prosecute individuals involved in money laundering schemes. Many domestic financial institutions also take precautions, including closely monitoring clients’ activity for red flags, requiring deposits to stay in a client’s account for a minimum number of days before being transferred, and recording each transaction in detail.

Now that nefarious actors can pass money through the internet via cryptocurrencies and digital currency exchanger services to conceal its illegal origins, AML efforts have become even more complicated. Whether complicated means difficult is controversial, however. Internet service providers make anonymity a gamble, and some industry leaders say cryptocurrencies identify and prevent illegal activities better than traditional payment systems do.

Either way, big data and AI mechanisms can make it easier for financial institutions to protect themselves. AML software became popular in the early 2000s for customer transactions, identity management, and regulatory compliance. In recent years, providers like ThetaRay, Unit21, C3, and Splunk have developed increasingly intelligent solutions to analyze laundered money’s first two stages: placement (where it’s deposited into a bank) and layering (which involves transferring money before integrating and extracting it).

Cross-border calculations in the cloud

Cloud-based systems became particularly important to banks during the COVID-19 pandemic as they scrambled to understand more data in less time. ThetaRay says its new service is the only cloud-based AML offering that analyzes SWIFT traffic, risk indicators, and client data to detect anomalies indicating “money laundering, terrorism financing, and other criminal activities across complex, cross-border transaction paths.”

According to ThetaRay, its platform also helps users reduce operational costs and increase revenue by relying on its “artificial intuition” proprietary machine learning technology that interprets supervised and unsupervised data with fewer false positives.

Traditional on-premise AML solutions present several challenges that can make them a poor fit for payments between people in different countries. They require months to put into production and are inefficient for organizations with limited internal resources. ThetaRay’s cloud alternative starts up quickly and does not require additional hardware.

Company CEO Mark Gazit claims customers are choosing cloud-based solutions for their stability and security. “Our fully scalable cloud service … empowers the payments ecosystem to enjoy the long-term operational benefits of secure cross-border transactions without having to worry about the maintenance of additional infrastructure,” Gazit said.

ThetaRay rises

ThetaRay was founded in 2013 as the brainchild of Tel-Aviv University computer science professor Amir Averbuch and Yale math professor Ronald Coifman. Just one year later, it raised $10 million — its first of multiple rounds — from investors like General Electric to expand in the U.S.

When VentureBeat interviewed Gazit in 2018, he said “Human beings are not enough to look at all this data, and we’re lucky to have tens of years of academic research to analyze all those … transactions.”

At that time, ThetaRay claimed it had a 100% money laundering detection rate across more than 200 million transactions and that it had flagged novel fraud patterns in millions of ATM sessions across the globe. These numbers will certainly rise with ThetaRay’s shift to cloud AML as it seeks to help more organizations tackle tricky transactions.