First AML raises $30m as Pandora Papers pressure lawmakers

The Pandora Papers "brought to the forefront there remains a lot of dirty money being laundered through the financial sector - but also through law firms, accounting firms and real estate firms as facilitators," First AML cofounder and CEO Milan Cooper says. Photo / Supplied

First AML, the Auckland maker of a platform for vetting potential customer's compliance with anti-money laundering laws, has raised $30 million in an oversubscribed Series B round.

Co-founder and CEO Milan Cooper put the success of the raise, in part, down to the Pandora Papers shining a spotlight on illicit behaviour.

"It brought to the forefront there remains a lot of dirty money being laundered through the financial sector - but also through law firms, accounting firms and real estate firms as facilitators," Cooper told the Herald.

"And it highlighted the need for good compliance tools and processes to ensure you're not onboarding dodgy criminals."

The Pandora Papers came on top of a rising fraud linked to the Covid boom in remote working.

First AML was founded in 2017 by Cooper - a one-time patent lawyer turned Bain consultant and Air NZ strategy manager (middle) - with ex-corporate bankers Bion Behdin (left) and Chris Caigou. Photo / File

Where another NZ compliance startup, APLYiD, earlier this week raised $7m for its technology for screening individual people as customers, First AML's service is for screening companies before they are taken on as clients.

For example, Australasian VC firm Blackbird Ventures - which lead the $30m round as it chipped in half the funds - was already a First AML customer, using the Kiwi firm's platform to screen startups for AML compliance. First AML's client roster also includes Grant Thornton, Bayleys, Colliers and Lowndes Jordan.

The $30m round was supported by a new investor, Headline - a venture capital firm that's headquartered in San Francisco but has offices in Europe and Asia.

Cooper says First AML choose Headline as one of the participants in the over-subscribed round for its contacts in Singapore and the UK - both target markets for expansion.

The raise was also supported by existing investors including Icehouse Ventures and Pushpay co-founder Eliot Crowther - who, along with fellow Pushpay alumnus Chris Heaslip is on First AML's board).

First AML raised $8m in a Series A round last year. Including seed funding, the startup has now secured a total $44m from investors since it was founded in 2017 by Cooper- a one-time patent lawyer turned Bain consultant and Air NZ strategy manager - with ex-corporate bankers Bion Behdin and Chris Caigou.

The latest funds are earmarked for product development, plus a hiring drive to take staff numbers from 90 today to 180 over the next few months.

Cooper won't give financials, but says First AML's revenue has tripled over the past 12 months.

And he sees expanding opportunities over the next few years as two notable laggards - Australia and the US - update their anti-money laundering legislation to widen from the financial sector to the likes of law, accounting and real estate firms. Across the Tasman, a Senate inquiry into tightening AML laws is underway.

As in its home market, First AML's primary target won't be multinationals, but smaller players who don't necessarily have an in-house team to handle compliance issues with customer onboarding.

"That's our sweet spot," Cooper says. The cofounder says while FirstAML has in-house teams above it, and various contenders in the consumer-focused "KYC" (know your customer) space below it, it has no direct competition in the business-to-business segment.

Lured in the age of coronavirus

Since September last year, First AML has boosted staff numbers from 40 to 90 (with 75 in NZ and 15 in Australia).

Cooper now wants to double again to 190.

Can that be done, with the existing tech skills squeeze being tightened by Covid restrictions?

"The hiring has been challenging, particularly with product and engineering professionals," Cooper says.

First AML has been able to boost staff numbers from 40 to 90 over the past year, despite what its CEO calls a "challenging" tech skills squeeze. It's now looking to double its complement again to 180. Photo / Supplied

"The closed border has obviously restricted the flow of engineering talent into New Zealand, which, which has been difficult.

"But at the same time, we're really pleased with some of the quality of candidates we've been able to attract," he says.

"Particularly, we've made a couple of key hires: Alex Henderson, vice president engineering, who came out of Pushpay, and, and Leonie Wise, director of product, who also came out of Pushpay.

"So with we've been able to secure some top talent despite the challenges."

Pushpay alumni have not only supplied funds, advice from the boardroom and helped to fill roles. Cooper also sees Pushpay as a role model. He wants to emulate its drive to a $1 billion valuation. But not quite in every respect, or at least not yet. For now, Cooper says an IPO is not on the table.