Fintechs are under pressure to stop Russian sanctions evasion

Seon, a London-based fintech firm that helps firms combat online fraud, raises $94 million under the leadership of IVP to help develop tools to prevent Russia from evading sanctions (Ryan Browne/CNBC).

LONDON — Seon is a fintech company that helps companies like Revolut combat online fraud. It has raised $94 million to help them develop new tools to prevent Russia from evading sanctions.

The new cash was raised by IVP, a Silicon Valley investment firm. IVP has previously supported the likes of Netflix as well as Twitter . Seon has also welcomed Michael Miao, an IVP partner.

Creandum, an existing investor in Spotify, and PortfoLion were also investors. Numerous angel investors, including Emilie Choi, Chief Operating Officer at Coinbase, and Daniel Dines, Chief Executive at UiPath, also participated.

Seon has customers such as Revolut, Afterpay, and NUbank. Its technology was designed to help firms of all sizes combat fraud.

The software analyses the email address and phone number of a consumer to create a digital footprint. It then uses machine learning to determine if they are genuine or not.

The Seon team Seon

According to two sources familiar with the matter who preferred anonymity to discuss private information, the firm’s current value is $500 million.

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Stopping Russian sanction evasion

Seon’s CEO, co-founder, and chief executive officer is Tamas Kadar, Seon’s CEO, co-founder, and chief executive officer. He said that his company has experienced a heightened demand for tools to root out transactions from sanctioned entities and individuals, as well as “politically exposed people” during Russia’s invasion of Ukraine.

A portion of the cash will go to combat the potential use of fintech apps to launder money and evade sanctions.

Kadar stated to CNBC that they are currently working on an app to meet the needs of their clients.

Due to increased pressure from Russian sanctions evasion, Fintechs are under greater scrutiny . This is especially because of concerns about how their controls might be less strict than banks. PayPal announced that it had removed over 4 million accounts in February after determining they were ” illegitimate.”

Seon is also developing a function to verify online businesses and determine if shareholders are on any sanction lists.

These tools could be used to determine if someone is “just creating shell corporations to launder money” or “as an identity to hide assets,” Kadar stated. Seon said that he has “prioritized” this feature for the next quarter.

According to Charles Delingpole (CEO of ComplyAdvantage and early investor in Seon), Russia’s war on Ukraine has made it “arguably the most difficult time for international financial institutions,” he said.

Delingpole stated that the pandemic saw an increase in online activity and away from branches. “This allowed fraudsters to gain more opportunities to continue their fraud,” Delingpole said to CNBC.

U.S. expansion

These funds will also be used to help Seon expand in the United States as well as Latin America and Asia.

CNBC’s Bence Jendruszak, Seon’s chief operating officer, stated that “We’re going to be scaling down the massively.” Online fraud is a major problem in the U.S.

The company opened two new offices last year in Austin, Texas, and Jakarta, Indonesia. It also quadrupled its workforce, which now stands at 200. Seon anticipates roughly doubling its headcount over the next twelve months.

According to the company, its annual recurring revenues nearly tripled by 2021 and its customer base more than doubled, from 100 to 250.

After completing their university studies, Kadar and Jendruszak started Seon in Budapest in 2017. Kadar moved the company’s headquarters from Budapest to the U.K. in 2017. Seon competes against a variety of start-ups, including the Israeli company Riskified as well as the U.S.-based Arkose Labs.

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