First AML Secures $21M Series B Funding - New Zealand

The Expanding Digital Economy and the Rise of AML Solutions

A growing proportion of global economic activity is transitioning online, a trend highlighted by recent investments and acquisitions within the digital identity authentication and anti-money laundering (AML) sectors. A notable example is Okta’s acquisition of Auth0 for $6.5 billion. Today, another company in this space, First AML, has announced a new round of funding.

First AML Secures $21 Million in Series B Funding

Led by Blackbird Ventures and Headline, First AML, a New Zealand-based end-to-end due diligence platform, has secured $21 million (approximately $29.2 million NZD) in a Series B funding round. Returning investors Bedrock Capital, Icehouse Ventures, and Pushpay founder Eliot Crowther also participated. This investment brings the company’s total funding to around $30.1 million USD (approximately $42 million USD).

Expansion Plans and Future Growth

Established in 2017, First AML expanded its operations into Australia earlier this year. The newly acquired capital will be utilized to facilitate expansion into additional international markets, beginning with the United Kingdom. Further expansion into Singapore and the United States is also being considered. The company intends to double its workforce, growing from 90 to 180 employees.

Differentiating First AML from Competitors

First AML distinguishes itself from other digital ID authentication companies, such as Jumio, Onfido, and ForgeRock, by concentrating on intricate entities and transactions. This often involves conducting due diligence on multiple organizations and individuals simultaneously. Unlike many KYC (know your customer) startups, First AML’s primary clientele are not traditional banks.

Instead, the company serves a diverse range of financial service providers, accounting firms, legal practices, and real estate agencies.

Addressing a Gap in the Market

“We have deliberately avoided focusing solely on banks, recognizing that a substantial number of medium-sized businesses also require AML compliance,” explained Milan Cooper, co-founder and CEO of First AML, in an interview with TechCrunch. “While banks are often the primary focus, smaller law firms and investment companies also have compliance obligations. These organizations frequently lack the resources to establish robust internal compliance procedures.”

The Genesis of First AML

The founding team of First AML, comprising Milan Cooper, Bion Behdin, and Chris Caigou, initiated the startup based on their firsthand experience as former corporate bankers. They observed the inefficiencies and delays inherent in the AML onboarding process.

Compliance teams often struggled to obtain necessary documentation from multiple stakeholders, frequently requiring follow-up requests due to incorrect submissions. “The KYC process was excessively cumbersome, and the onboarding experience for customers was suboptimal. We identified an opportunity to streamline the process and reduce friction,” Cooper stated.

Automating Compliance with a Proprietary Platform

First AML’s platform is designed to automate a significant portion of the compliance workflow. This includes ID verification, incorporating biometric identification for remote checks, and providing visual tools to clarify company ownership structures.

“We manage the complete KYC process from start to finish, and crucially, we handle complex customer entities like companies and trusts. This is an area where many of our competitors do not offer a comprehensive end-to-end solution,” Cooper clarified. “They may provide identity verification for individuals, whereas we assume responsibility for the entire process, including analyzing the layers of a complex entity to identify beneficial owners and coordinating data collection from multiple stakeholders.”

Applications Across Various Industries

For instance, law firms utilize First AML to conduct KYC checks on prospective clients, which may involve companies with numerous shareholders, directors, and subsidiaries. Investment firms leverage the platform to onboard new investors, including trust structures and other complex organizational forms.

Previously, many of First AML’s clients relied on manual, paper-based processes, often requiring notarized copies of documents like passports or utility bills. First AML’s platform begins by analyzing the structure of an entity, then retrieves data from both public and non-public sources.

Streamlining Data Collection and Verification

“Essentially, we decipher the intricacies of these complex entity structures, which are common in the financial and other sectors, and then the platform facilitates data collection from all relevant stakeholders, including biometric ID verification and document uploads,” Cooper explained.

First AML is also developing a database containing over 350,000 verified entities. If an entity has previously completed onboarding through the platform and is involved in subsequent compliance procedures, First AML can, with their consent, retrieve their prior verifications. This eliminates the need to repeat the full AML process for each transaction. “This is a key differentiator and a significant competitive advantage that will accelerate the KYC process in the future,” Cooper added.

The Impact of Global Transparency Initiatives

Cooper noted that the recent release of the Pandora Papers, an investigative report exposing hidden offshore accounts linked to numerous global leaders, has heightened concerns regarding AML compliance.

“Our assessment is that illicit transactions continue to occur within the global economy, and the Pandora Papers have revealed the extent of money laundering and tax evasion. This underscores the need for robust AML regulations in many countries,” he stated. “Australia lags behind other nations in extending AML rules to sectors like legal, accounting, and real estate. The U.S. is another example where regulations primarily focus on the financial sector, leaving non-financial sectors largely unregulated, increasing pressure on lawmakers to address these issues.”

Investor Confidence and Future Outlook

Samantha Wong, a partner at Blackbird Ventures, stated in a press release, “We are significant users of First AML. This deal is unique because of our deep understanding of the customer’s challenges, our enthusiasm for the product roadmap, and the network effects that emerge as their business expands globally.”