Shield, a compliance communications platform for financial institutions, raises $20 million

Two months ago the Securities and Exchange Commission (SEC) said it had fined 16 Wall Street firms more than $1.1 billion for “widespread record-keeping errors” regarding the maintenance of electronic communications in violation of federal securities laws. In addition, SEC now researching private equity firms on their employees’ use of messaging apps for work purposes, including WhatsApp, Signal, and Telegram, because many of these apps have features that support messages that disappear automatically, posing potential violations of SEC rules.

To complicate matters, many companies now have received remotely or hybrid work models, allowing employees to combine work from the office and home, making it more difficult for financial institutions to track employee communications.

And against this backdrop, the communications compliance platform based in Tel Aviv and New York Shield wants to address the issues that most banks and investment firms face, including records management, electronic discovery, supervision and monitoring.

Keeping up

Regulators are constantly changing or adding new compliance standards faster than companies can adapt, which can lead to large fines and reputational damage for banks around the world, Shield CEO and co-founder Shiran Weitzman explained to TechCrunch. Another challenge, according to Weitzman, is the difficulty of capturing data transmitted through apps like WhatsApp. The complexity of communication channels and the use of voice and text make it difficult for organizations to follow the “paper” trail.

To address this growing demand for “more advanced” cross-channel surveillance, Shield announced Thursday that it has raised $20 million in a Series B round of funding. Its previous backer Macquarie Capital co-led the round UBS Nexta venture fund from the Swiss bank UBS and existing investors such as Mindset Venture and OurCrowd.

The four-year-old startup said it plans to use the proceeds to expand its global presence and boost development of its communications compliance platform.

“There is an immediate need in the market for more advanced monitoring solutions to enable financial institutions to meet new regulations and fight financial crime,” said Weitzman. “The understanding that regulators will continue in this strict enforcement period and that banks will not stop using communication channels because working from home is now permanent.”

When asked how the company handles user data, Weitzman said it operates under the same strict regulations as its customers. “Shield does not store user data and does not have access to customer data. We take proactive measures to protect data through masking personally identifiable information (PII) within communications.’

Shield relies on AI techniques to help companies counter market abuse, bad insiders and regulatory risk. The startup, which is not the only company using AI, will compete with AI-based communications surveillance platforms such as Behavox and Relativity in industry. Shield recently introduced new e-discovery capabilities allowing users to quickly respond to regulatory inquiries. The company has partnered with London-based speech and NLP technology company Intelligent voice to improve its voice surveillance capabilities, Weitzman noted.

The company’s latest cash injection comes less than a year after Shield raised a $15 million Series A, and the company said it increased sales by 280% year over year. The company said it has also grown its customer base by 250% since its previous funding round in January. In addition, Shield opened a research and development facility in Lisbon this year, Weitzman said, adding that the company chose Portugal because it is to become a major European technology center.

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