KYC eyes Series A funding, decides against ICO to ‘stay above board’


KYC is looking to raise capital through a Series A funding in Q1 2018, with ICOs being ‘a recipe for disaster’ according to CEO Claus Christensen.

The company, which provides Know Your Customer and Anti-Money Laundering solutions for rapid ID verification, is set to launch a Series A funding round in the first quarter of 2018.

“We have customers, we have traction and something to show, it’s not just a dream. So, we are now at a stage where we would should be shooting for something bigger,” Christensen said.

With offices in Dublin, Hong Kong, and Shanghai, KYC is hoping to expand its presence across Europe, with the end goal of breaking into the US.

“European has much stronger regulators than the US at the moment, so Europe is easier to tackle. We have all the registries from France, Germany, Spain, Luxemburg, Netherlands and Belgium etc. We can sell into these markets, but we firstly need two things. We need to know the local language and we need local people on the ground.

“One big thing for us would be to go to the US, but this is a different proposition. There is different regulatory framework in place there compared to the EU framework.”

ICOs (Initial Coin Offerings) were one of the hottest topics of 2017 because they were seen as an easy way to raise cash and it’s largely unregulated. However, while KYC saw the benefits of quickly raising cash, the company would prefer to stay totally above board according to Christensen.

“Our whole company is based on laws on regulations, circumventing them or doing something slightly dodgy is a recipe for disaster. It could impact us being accepted by any teir-1 banks or teir-1 organisations that we would want to work with in the future.

“We decided against an ICO and choose to the regular route of funding. We are happy to stay totally above board and not even have a hint of greyness, that’s not what we are about. We are about rules and regulations,” he added.

The company is looking exploit the current market conditions and build their business as regulations ‘get stronger’ according to Christensen. In the last few months the implementation deadline for the AML directive for the EU came into place. GDPR is also coming up in May 2018, along with the FinCEN’s new customer due diligence rules.

“That will require beneficial ownership information to be recorded and verified. So, there is a lot happening. Regulations are being thrown out and the political focus of money laundering is identifying. The conditions for a RegTech company are very favourable,” he added.

“We’re at a crucial step now in our history. It took quite a long time to go to the corporate offering and it is challenging because, so many jurisdictions meant there was an awful lot to learn.”

Know Your Customer  

KYC started in 2015 as it saw a gap in the market to identify Chinese customers for a European property investment. So, the company created a mobile app that allowed KYC information across the globe to be sent in and checked atomically. While talking to potential clients, KYC discovered there was a different subset of KYC related problems, which was corporate KYC.

“Our company now concentrates more on the corporate KYC than the induvial. We still do the individual and we have the app for clients to use to identify individual customers,” according to Christensen.

It fully integrated KYC/AML solution automates the KYC process for corporate entities without taking control from your compliance staff.

The solution provides real-time retrieval of company documents and automated processes, large scale automation, which reduces manual transfer errors wherever possible, faster decision making through real-time availability of documents, and is fully integrated with its white label KYC app for individuals.

“Our system automatically provides all the data to the regulators that you have done your research. However, it also goes a crucial step further by identifying the beneficial owners,” he added.

The case management system that KYC has built resolves the whole corporate structure and gives users access to all the beneficial owners automatically. This can all be done without the compliance officer having to wade through a load of documentation.

“What this means for the user is that instead of manually wading through paper, as most of these processes are still paper-based, the system can onboard a cooperate client. Our system saves times, is more economical, and cheaper than the traditional process.”

Given the increasingly complex requirements placed by regulatory authorities on AML and KYC procedures, along with the heavy fines imposed for inadequate compliance, the a majority of RegTech solutions in the market address AML and KYC according to the Global RegTech Review. The report found that over 100 companies around the world provide offerings that makes compliance with AML and KYC regulation more effective and more efficient.

With the pressure on compliance officers mounting and with most firms having old fashioned systems still in place, Christensen believes that RegTech hasn’t peaked yet.

“FinTech was all about challenging the industry and doing stuff for individuals, but RegTech is more back office and doing things for corporates and bigger players. There is a lot of opportunity there. All of the medium and larger size organisations have processes that are so archaic and so behind in terms of technology,” according to Christensen.

Last year, KYC was hand-picked by a panel of industry experts for the RegTech 100, a list of companies that every financial institution should know about in 2018. The RegTech 100 is part of the Global RegTech review – an essential, in-depth analysis of the global RegTech market.

Copyright © 2018 FinTech Global

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