Deal focus: Financial crime pays for Silent Eight

About USD 3trn is laundered annually, and only 1% of dirty money is currently being stopped. As of 2020, the cost of financial crime compliance was USD 214bn and projected to grow 19% a year. Terrorist financing and the trafficking of drugs, weapons, wildlife, and human beings represents the eighth largest GDP in the world. So why are so few cybersecurity start-ups tackling this problem?

According to Paul Santos, a managing partner at Singapore-based Wavemaker Partners SEA, this is a space that requires high conviction among investors and entrepreneurs alike. Solutions are hard to find, and when they come together, they can take a long time to sell. What’s more, it’s difficult to function as a local operation, forcing poorly resourced newcomers into instant global competition.

“Imagine trying to decide if each transaction you see is money laundering or not. It’s a high stakes problem for banks to solve, and there are a thousand and one considerations to be able to execute it,” Santos said. “There’s no way a generalist platform will be able to solve it.”

Wavemaker exercised its conviction in financial crime technology this week by participating in a USD 40m Series B round for Singapore and Poland-based Silent Eight. US-based TYH Ventures led the round, which also received support from Standard Chartered Bank's SC Ventures, HSBC Ventures, and Poland’s OTB Ventures among others.

Founded in 2013 by three Polish programmers, mathematicians, and due diligence consultants, Silent Eight has been dual headquartered from the start. Poland is seen as a deep well of sector technical talent, while Singapore offers the credible corporate profile and access to global clients. “It's an obvious combination but in this case, we think it's a powerful one,” Santos added.

Core operations involve the use of artificial intelligence (AI) to investigate suspicious transactions, beneficiaries, and customers in real-time for financial institutions. This work is considered the most time-consuming part of a bank’s due diligence process, drawing from multiple data sources and user interfaces and costing significant time and resources.

Silent Eight says its technology can scan any kind of structured or unstructured data sources in formats ranging from reputable databases to online news articles. There is a significant focus on customisation, with the service designed to build on financial institutions’ existing knowledge. This is said to guarantee that AI is proprietary and tailored to meet client policy requirements.

The company claims to be deployed in more than 150 markets. Standard Chartered was its first major customer and contributed to a USD 6.2m seed round in 2019 alongside OTB and Wavemaker. HSBC signed up to a multi-year partnership last year.

The fresh capital will be used primarily to build out the technology offering and expand the customer base. Some 150 additional data scientists, developers, and engineers are also expected to be hired within the year.

“The reason we won over Standard Chartered as customers and later as investors is because the solution works,” Santos said. “Our pipeline is full. We raised this round to be able to execute on the contracts we expect to close. This company could skyrocket over the next couple of years. There’s no one out there quite like them.”

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• Topics
• Southeast Asia
• Technology
• Financials
• Support services
• Early-stage
• Singapore
• Wavemaker Partners
• Sequoia Capital
• Standard Chartered
• HSBC
• Cybersecurity
• Financial Services
• Fintech
• artificial intelligence