How regulations impact FinCrime compliance & US RegTech funding grew by 15% in Q2

How new regulations and tech are shaping financial crime compliance

The landscape of financial crime compliance is rapidly transforming. Amidst political upheavals and technological advancements, the cost of compliance has become an integral part of business operations.

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Research highlight

US RegTech funding grew by 15% in Q2 driven by deals over $100m

Key US RegTech investment stats in Q2 2024:

? US RegTech investments grew by 15% as larger deals increase due to increasing regulatory complexity and heightened regulations ? The average deal size in the US RegTech market increased to from $23m to $27m for the quarter ? Norm AI, an emerging leader in AI-powered regulatory compliance, announced its arrival to the US RegTech market with a Series A funding round of $27m

The US RegTech market experienced a positive shift for investments in Q2 2024, with fewer but larger deals compared to previous periods. In Q2 2023, the market saw $2.3bn across 100 deals, with $1.5bn coming from deals over $100m. By Q1 2024, the total fell to $1.4bn (36% decline) across 78 deals, with $782m attributed to deals which were $100m or over. In Q2 2024, despite a smaller number of deals (59), the total capital invested rose to $1.6bn (15% change), with $1bn from deals over $100m and $600m from deals under $100m. The average deal value in Q2 2023 was $23m, which increased to $27m in Q2 2024, reflecting the market's move towards fewer but higher-value transactions.

This shift towards fewer but larger deals could be driven by the increasing regulatory complexity and heightened compliance requirements in the US, prompting larger financial institutions to invest more heavily in RegTech solutions. This makes the space attractive for investors. Additionally, the consolidation of the sector, where well-established RegTech firms are absorbing smaller players, may explain the rise in high-value deals, while the decrease in overall deal volume reflects a more selective investment environment.

Norm Ai, an emerging leader in AI-powered regulatory compliance, announced its arrival with a $27m Series A funding round led by Coatue, with participation from Bain Capital Ventures, Blackstone Innovations Investments, Citi Ventures, and others. Over the past 11 months, Norm Ai has raised over $38m from institutions managing more than $5.75tn in assets. Norm Ai has developed the first platform that translates government regulations into computer code, enabling companies to automate compliance analyses efficiently and accurately using Regulatory AI Agents. These AI-powered agents convert regulations into executable programs, allowing businesses to ensure compliance with greater speed and precision. Already deployed by Fortune 100 companies, Norm Ai is transforming how industries like insurance and asset management handle regulatory assessments, reducing the time spent on compliance from days to minutes. This new funding will help Norm Ai expand its platform and further integrate AI into compliance processes, positioning the company as a pioneer in the RegTech space.

RegTech news

• Why the CrowdStrike outage highlights a need for modern insurance management systems - On July 19, 2024, cybersecurity giant?CrowdStrike?issued a routine software update. However, this time things went terribly wrong. Jeff Heine, Chief Revenue Officer of?Novidea?delved into why this calamity underscores the need for modern, sophisticated insurance management systems. Read the full story here.
• Wordwatch report unveils legacy risks in compliance management - New research from Wordwatch has exposed significant vulnerabilities in the compliance archiving systems of regulated organisations in the UK. Read the full story here.
• How the US Executive Order on AI sets the stage for future regulations - The recent executive order on AI issued by the Biden Administration has marked a significant stride in shaping the national AI landscape. Read the full story here.

Regulation news

• New UK Bill to safeguard cryptocurrency owners with enhanced legal protection -?The UK Government has announced an innovative step forward in the realm of cryptocurrency with the introduction of the Property (Digital Assets etc) Bill, which is set to transform Bitcoin and other digital assets into recognised personal property. Read the full story here.
• CDP report unveils the crucial role of ESG ratings amid regulatory overhauls - With 94% of investors relying on ESG ratings at least monthly, the significance of these tools has soared, according to a report from CDP. Read the full story here.
• How the PSR’s new fraud cap could change the game for APP scam victims - The PSR has announced a significant update in the fight against APP scams, revealing a forthcoming adjustment to the reimbursement cap for victims. Read the full story here.

RegTech Deal news

• Flagright welcomes First Digital as customer to enhance AML FinTech compliance - RegTech firm Flagright has welcomed First Digital Trust, known as First Digital, as its newest customer.? Read the full story here.
• AI compliance leader Datricks lands $15m funding from SAP and Team8 - Datricks, an AI-powered financial integrity and compliance software startup, has successfully secured $15m in its latest Series A funding round. Read the full story here.
• Asset Reality partners with Taxbit to enhance digital asset seizure and disposal - Asset Reality and Taxbit, two prominent players in the digital asset management and compliance sector, have recently joined forces in a strategic partnership. Read the full story here.

CyberTech news

• Darkhive raises $21m in Series A for advanced UAS security solutions - Darkhive, a trailblazer in defense technology, has announced the close of a $21m Series A funding round spearheaded by Ten Eleven Ventures. Read the full story here.
• P0 Security secures $15m investment for pioneering cloud governance solution - P0 Security, a pioneer in cloud identity security, has recently secured $15m in a Series A funding round. Read the full story here.
• Galileo introduces GIVE and GScore to enhance real-time fraud prevention - Galileo Financial Technologies, a subsidiary of SoFi Technologies, has introduced Galileo Instant Verification Engine (GIVE) and Transaction Risk GScore, coming as a response to the increasing need for advanced security measures in financial transactions. Read the full story here.

Other RegTech news

• How UBO verification can safeguard against financial crimes - In UBO refers to an individual who, although not always officially recorded, holds significant control or ownership of a business entity, generally marked by owning 25% or more of the company. Read the full story here.
• How FullCircl’s SmartBroker revolutionized broker growth in just one year - FullCircl marked a significant milestone, celebrating the first anniversary of its SmartBroker facility, a game-changer for British Insurance Brokers’ Association (BIBA) members. Read the full story here.
• The end of Excel for ESG: Transitioning to specialised reporting tools - In the evolving landscape of corporate governance, sustainability reporting has transitioned from a regulatory requirement to a cornerstone of strategic business planning. Read the full story here.