A local anti-money laundering (AML) compliance firm has received strong backing from overseas investors, amid growing scrutiny on global tax havens and money laundering.
First AML founders (from left) Bion Behdin, Milan Cooper, and Chris Caigou. Photo: Supplied
First AML has raised $30 million in its latest funding round, led by Australian-based venture capital firm Blackbird Ventures and US investor Headline.
The company also received renewed commitments from Bedrock Capital, New Zealand-based Icehouse Ventures, and Pushpay founder Eliot Crowther.
First AML launched in 2017 and aims to streamline businesses' compliance with anti-money laundering laws, saving them time and money.
It produces end-to-end due diligence software for financial service providers, real estate agencies, law firms and accountants, which automates the identity verification process of their customers.
The company also provides biometric verification and visual tools to help users understand the ownership of complex company structures.
"The market for AML has grown nearly 20 percent in the past year to US $214 billion - there is a massive global market opportunity for us now," said First AML co-founder and chief executive Milan Cooper.
"With groundbreaking investigations around tax havens and money laundering across multiple countries, the AML compliance regime is now shifting to non-financial businesses globally."
Last month, a global consortium of investigative journalists published a series of leaked documents, known as the Pandora Papers, which exposed the ways in which world leaders, politicians and billionaires hide their wealth to avoid paying tax.
A partner from the venture capital firm Headline, Michael Kent, said most businesses did not have the resources to build their own compliance tools.
"This is especially the case in Europe where new regulations have increased pressure and complexity on non-financial services businesses to comply with ever greater requirements."
Future plans
First AML chief executive Milan Cooper said the capital it had raised would help the company scale up, support global expansion, and develop its products.
It would target the United Kingdom and Singapore, due to the similarities that their regulatory frameworks share with New Zealand, he said.
"Further down the track, North America looks appealing to us as well."
Cooper would not disclose the company's financial performance for the past year, but he said it had tripled its revenue in the past year, and the year before.
First AML had verified "several hundred thousand" New Zealand and Australian entities, and its tools were used by three of the big four accounting firms, Cooper said.
He said the company was still operating at a loss - which is not uncommon for firms in their growth stages.
Last year, the company completed one of New Zealand's largest early stage funding rounds when it successfully raised $8m.
Cooper said the company was very well funded but there was a possibility it could look at a public offering of shares in the future.
NZ firms still in a state of 'inertia' with AML compliance - First AML
In the past year, local authorities had pinged the likes of Sharesies, TSB Bank, Westpac Bank, and derivatives issuers CLSA Premium NZ for having inadequate anti-money laundering processes in place.
In September, the Financial Markets Authority said it was going to take a harder line with financial services providers who were missing the mark.
Cooper said a lot of firms were getting up to speed with their responsibilities but there were still those who were lagging behind.
"There has been some inertia, particularly some real estate, law and accounting firms, where this is a more recent obligation."
Since 2018, non-financial firms have had to comply with AML rules.
"With any change, it takes some time for it to become the new normal," Cooper said.
"There's a challenge for new individuals, who are on-boarding as well, and it's new for them to prove their identity and prove their trust's structures and their company's structures.
"I would say now AML has become quite a common terminology in New Zealand business circles.
"I think we are getting there in terms of that adoption."