Flagright announced a $4.3 million seed round to enhance its AI-driven compliance solutions and expand its global footprint. The funding round was led by Frontline Ventures, with participation from notable angel investors including Rubin Ritter (former co-CEO of Zalando), André Silva (former global head of cxpansion at Revolut), and other industry leaders. Existing investors such as Y Combinator and Moonfire Ventures also increased their commitments.

AI-powered financial crime is becoming increasingly sophisticated. In a recent case, an employee at a Hong Kong-based institution was deceived into transferring $25 million after being duped by a deepfake video call impersonating their colleagues and chief financial officer. Industry reports suggest that in 2023, deepfake-related scams in the fintech sector increased by 700%.

Flagright is combating these threats by developing cutting-edge AI solutions. Co-founded in 2022 by Baran Ozkan and Madhu Nadig, the company initially focused on real-time transaction monitoring. As AI and large language models (LLMs) advanced, Flagright expanded into a comprehensive AML compliance platform. Today, the company serves over 50 clients across six continents with a team of 35 employees.

“We were really early-stage when the boom in AI came into effect, meaning we could implement AI-native solutions from the very start, something that more established companies running on legacy architecture have found challenging,” Ozkan said. “It is true that bad actors in financial crime are finding new ways of using AI all the time, which is what makes the work Flagright is doing so important. This funding will allow us to further develop our AI agents that will allow financial companies to stay one step ahead.”

Flagright’s AI-native compliance system offers real-time transaction monitoring, dynamic risk scoring, automated case management, and AML screening with 99.99% uptime and real-time data processing. Clients report significant operational improvements, including a 90% reduction in false positives and an 87% decrease in manual monitoring efforts.

“By integrating Flagright’s AI-native compliance platform, we have enhanced our fraud detection and AML monitoring capabilities,” Tom Jennings, CEO at Flagright customer B4B Payments, said. “This allows us to proactively identify and mitigate risks, ensuring a safe and secure environment for our customers while upholding the highest standards of compliance.”

The funding will support the expansion of Flagright’s AI Forensics product line, which already reduces false positives by up to 93%, lowers human errors by 27%, and cuts operational costs by 80%. Future product developments will focus on automating compliance workflows for screening, monitoring, governance, and quality assurance.

Flagright is also scaling globally to meet rising demand. The company recently opened offices in London, New York, and San Francisco, complementing existing locations in Berlin, Singapore, and Bangalore. These expansions provide 24/7 customer support and reinforce Flagright’s position as a leader in AI-driven AML compliance.

“At Frontline Ventures, we invest in companies that are emerging winners in their category and on an IPO path,” Will Prendergast, partner at Frontline Ventures, said. “During our research with financial institutions before Frontline’s initial investment in Flagright, we kept hearing how Flagright had outperformed other companies—we believe they will be the compliance platform category winner, making them a perfect fit for Frontline.”