Greenlite AI, a San Francisco startup whose compliance software is used by financial institutions and fintechs including Grasshopper Bank and Mercury, has raised $15 million, the company said Wednesday.
Greenlite aims to use the cash to improve its technology and to onboard some of the banks and fintechs on its wait list, CEO Will Lawrence told American Banker. Greylock led the Series A round, with participation from Thomson Reuters Ventures, Canvas Prime and Y Combinator.
Financial crime teams use Greenlite's software to gather information for and assist with sanctions-screening reviews, know-your-customer compliance work and anti-money-laundering investigations.
The compliance team at
The software has reduced the amount of time it takes to do an enhanced due diligence review by close to 70%, Christopher Mastrangelo, chief compliance officer at the bank, said in an interview last year. The bank also uses the software to vet new clients.
Coastal Community Bank has seen similar results. "Using Greenlite saved hours of effort that our enhanced due diligence analysts spent searching and synthesizing information," Andrew Stines, the bank's chief risk officer, said this week. "This resulted in better quality results at a significant cost savings."
Investors seemed drawn to the company's focus on compliance efficiency and efficacy.
"Complex compliance issues are in many ways big data problems, and AI will enable financial institutions to fulfill their regulatory obligations not only more efficiently, but importantly, more effectively," said Tim Mayopoulos, Greenlite angel investor and former CEO of Fannie Mae. "Greenlite is a model for how financial institutions can better protect the financial system by using tools that are better and less expensive than just hiring more people."
Greenlite is not the only company offering AI software that helps banks cope with financial crime-related compliance. In March,
How it works
Greenlite's AI agents gather and synthesize information such as documents and customer profiles to learn more about the customers. The agents also analyze transactions.
A human analyst doing enhanced due diligence on a potential client, for instance, might turn to the internet for more information about that person or business. The analyst might also try to find any data the bank might have within its databases about that potential customer.
Greenlite's generative AI model can collect data from multiple sources, including corporate registries, news articles, company websites and social media channels, and generate summaries.
Using AI to take some of the routine data collection work from investigators can help them decide which alerts truly signify fraud or money laundering and let them focus on the more serious cases.
The same is true for transaction analysis.
"Sometimes when a transaction-monitoring analyst is analyzing customers, they have to go through thousands of cases," Lawrence said. "We want to help them find the most useful information. So what Greenlite is ultimately doing is helping prepare a review, almost like a paralegal prepares a docket of information, for people to use to make really high-quality decisions."
Greenlite offers governance, model validation and expert testing that enables strict adherence to bank regulations like the OCC's 2011-12 guidance on model risk management and NYDFS 504 (which requires New York banks to monitor transactions for signs of money laundering), he said. In-house experts monitor regulatory developments and help modify AI models accordingly.
Lawrence sees the $15 million raise as "validation that we're on the right path here of continuing to build the best AI agent suite for financial services." The cash infusion will let the company continue to improve its technology and to onboard some of the banks and fintechs on its wait list, he said.
Analysts caution that while AI can bring efficiency, it's not a complete answer to compliance, even with humans in the loop.
"There's no AML compliance program, no risk management program that is ever going to fully eradicate the risk of money laundering," said Charles Subrt, fraud and AML practice research director at Datos Insights, in an earlier interview.
"The AML program is about providing intelligence to law enforcement and deterring money laundering. It's not going to find every instance, and so there are going to be isolated instances where these things happen. It's just that, are you putting together a program that ultimately provides a robust enough defense against that?"
