This Singapore-based regtech startup is solving the age-old problem of money laundering

In the aftermath of the 2008 financial crisis, while working at JPMorgan Chase, Abhishek Chatterjee witnessed the increasing pressures placed on banks by regulators.

The crisis had led to the enactment of stricter regulations around the world to monitor banks’ activities more closely and ensure accountability.

“What I realized is that regulatory compliance is a critical aspect of a banking business; it’s not just a support function,” says Chatterjee.

The experience inspired him to launch the Singapore-based regulatory technology company Tookitaki in 2014 with co-founder Jeeta Bandopadhyay, in a bid to help financial institutions build sustainable compliance programs.

The price of noncompliance

According to Chatterjee, managing compliance risk is vital for banks to uphold their reputation.

Not adhering to regulatory requirements can also cost these institutions a pretty penny. Banks were hit with US$10 billion worth of fines in a 15-month period through 2019 for various infractions, such as violating money laundering rules and transacting with sanctioned countries.

Abhishek Chatterjee, CEO of Tookitaki / Photo credit: Tookitaki

“Banks overall are not really prepared for how regulations are changing [and] how the data is changing,” explains Chatterjee. “They’re still in a very rule-based mode of looking and applying regulatory changes in the environment.”

Next-generation solutions

Money laundering has been an issue for years. However, financial services firms have mostly focused on looking at simple transactional behaviors, relying heavily on rule-based, if-then systems to flag cases.

This has not been effective, as over 95% of flagged transactions are false positives, which means manpower is still required to identify genuine cases.

Additionally, with rule-based systems, criminals can learn the rules and circumvent them.

With Tookitaki’s Anti-Money Laundering Software (AMLS), this is no longer the case. The solution relies on machine learning algorithms to enable banks to effectively monitor and screen transactions by highlighting unusual behavior.

It is able to learn from each incident how to discover money laundering patterns easily and enable banks to make better, quicker decisions.

This is useful for cases where uncovering fraud is difficult. Human trafficking rings, for instance, may register their victims as self-employed individuals and use them to carry out cash withdrawals and bank transactions in various countries.

“This sort of pattern would be quite different from that of a legitimate business owner,” Chatterjee explains. While the bank may be able to flag the case and inform regulators, it is easy for criminals to shift their activities to another bank that may be unaware of this particular tactic.

AMLS pools all the data it receives from across Tookitaki’s different clients and learns from the different flagged events, building up its database of money laundering scenarios. This enables the software to cover a wide range of bases, helping financial institutions comply with regulations while thwarting criminal activities.

Gaining recognition

AMLS bagged the silver award in the most promising innovation category at the 2019 SG:D Techblazer Awards. The awards are jointly organized by the Infocomm Media Development Authority and SGTech.

Tookitaki at the 2019 SG:D Techblazer Awards / Photo credit: Tookitaki

Tookitaki had previously seen some recognition in the financial space, and is working with the United Overseas Bank to deploy its solutions. But through the media coverage it obtained from winning the award, Tookitaki was able to get its name out into the wider market.

The accolade also served as a stamp of approval, indicating to other businesses that Tookitaki is a trustworthy company that delivers results.

“In the banking business, it’s all about the brand, the comfort, and the confidence people have in you,” Chatterjee says.

The award’s rigorous selection process, which involved giving multiple pitches to different panelists, helped sharpen the team’s pitching skills. These skills have come in handy during talks with potential investors and clients.

Plans for the future

Having secured US$19.2 million in series A funding in 2019, Tookitaki has ambitious plans.

The company is looking to double down on its expansion efforts in North America, where it already has one office, and in Asia Pacific, especially in India and Singapore. It’s also working toward developing more effective solutions to assist financial institutions in regulatory compliance.

“The bad guys out there have more money and are better prepared,” says Chatterjee. “We need to innovate so that we can keep on beating them and really make the world a better place.”

The SG:D Techblazer Awards is Singapore’s highest accolade for tech innovation. It aims to recognize and endorse companies based in the city-state that exemplify the spirit of innovation in the development of tech solutions.

If your company is developing innovative ways of solving problems or doing business, nominate your company for this year’s Techblazer Awards 2020. Visit the website to learn more.