Estonia-based regtech Salv has raised €4m in a seed round extension led by ffVC.
Salv will use the funds to further develop its technology and expand into other countries, including Poland.
Founded in 2018 by former Wise and Skype employees, Salv has raised €7m in venture capital investments so far.
German G+D Ventures and other existing investors, including Fly Ventures, also took part in the latest round.
Salv offers anti-money laundering functionality for financial services firms, such as automatically identifying and prioritising suspicious activity and processing “vast” amounts of data in real-time.
The regtech believes a collaborative approach is key to fighting financial crime and this underpins its products and services.
Salv Bridge is its cross-border intelligence sharing product for fighting financial crime. The product opens a direct line of communication between financial institutions, allowing them to exchange data on potential threats.
Financial crime is a trillion-dollar business and growing rapidly. The UN estimates the amount of money laundered globally in one year can be valued in the range of 2 to 5% of global GDP—or $800b to $2t.
In the UK, authorised push payment fraud is the fastest growing crime. According to UK Finance, cases increased by 42% in 2021, with an estimated £583.2m in losses.
Last year, global AML and other financial crimes surged by 50%. Banks and other financial institutions were fined almost $5b.
Global crises such as COVID, the war in Ukraine and the economic downturn all present new opportunities for criminals—and demand innovative solutions to tackle the problem.
In an interview with FinTech Intel, Taavi Tamkivi, chief executive officer and co-founder of Salv, spoke about the scale of the problem. “It is estimated that only 1% of these crimes are being stopped in the system. So 99% of the money goes through the banking system without being noticed or stopped.
“Unfortunately, the fines [levied against banks] are not working. The fines for banks are going up, but if you look at the profits that banks make, it is a tiny percentage. They are needed, but it really isn’t helping.”
To fight financial crime, global collaboration and the exchange of information in real-time across borders is the best solution, according to Tamkivi.
“In Estonia, where we launched, before the exchange of information the fraud rate was really high. As soon as banks started exchanging information, it was reported that 80% of this fraud stopped.”
Commenting on ffVC’s investment in Salv and the regtech’s potential, Mateusz Zawistowski, managing director of the venture capital firm, said: “For us, an important element was that 21 financial institutions in Europe have already joined the collaborative crime-fighting network and collectively solved almost 7,000 investigations, helping to prevent €6-7m from reaching criminals.
“We see a huge potential for geographical expansion and more financial institutions joining the network to improve their compliance and crime-fighting capabilities.”