German startup Elucidate raises €2.5m to expand its financial crime index

German startup Elucidate raises €2.5m to expand its financial crime index

Published: 24-06-2020 13:02:00 | By: Pie Kamau | hits: 1440 | Tags:

Berlin-based financial crime risk quantification agency Elucidate has raised €2.5 million investment led by Silicon Valley-based 11.2 Capital with other participants in the round including Seed X Liechtenstein, Apex Ventures, Big Start Ventures and SixThirty Ventures. The funding enables Elucidate to further develop the company’s flagship product, the Elucidate FinCrime Index (EFI), and its ability to measure financial crime risk.

Shane Riedel, Co-founder and Chief Executive Officer at Elucidate, believes now is the right time to onboard investors: “Since launching in 2019, Elucidate has expanded data analytics coverage to over 2,500 financial institutions. The work of fully partnering with our Users to enable them to move from basic risk detection to proactive risk prevention, however, requires ongoing investment in data analytics and machine learning capabilities. 11.2 Capital, as well as our other investors, bring both capital and expertise to this transformational objective,” he said.

The EFI, built using probabilistic modelling and machine learning, uses data to score financial crime risk against an objective industry baseline. Unlike most financial crime offerings, which guide Users to manually determine reactions to potential financial crime, the EFI uses data analysis to anticipate and prevent financial crime.

Filipe Garcia, Co-founder and Chief Technology Officer at Elucidate, explains how the platform leverages cutting-edge technology to effectively manage this risk: “We are in a unique position to be able to digitise an antiquated status quo. We apply methods that financial analyst John Moody could only have dreamed of when he started modelling risk a century ago. Applying deep learning in a dataset that is unparalleled in the industry allows us to see financial crime patterns that are not visible to the human eye. The repeatability of our algorithm allows us to set up a de facto financial crime risk baseline in the industry with speed and accuracy,“ he says.

Elucidate is disrupting the financial sector’s traditional financial crime risk management tools by enabling Users to monitor the impact and effectiveness of existing financial crime controls, and to marry commercial and risk strategies. The investors see maximum potential in Elucidate’s ambitions as part of a broader shift towards the application of deep tech in financial services.

Shelley Zhuang, Founder and Managing Partner at 11.2 Capital, noted: “The ability to assess financial crime risk has been a subjective and unstandardized process, whereas Elucidate utilizes a structured framework built upon inherent risk factors, their impact, and enforcement actions to objectively quantify financial crime risk. This allows respondent and correspondent banks, regulatory agencies and regulated entities, trading partners and counterparties to determine financial crime risk on a systemic basis.”