Atlantic Canada Opportunities Agency
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A Step Ahead

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With millions of on-line transactions occurring every day, pinpointing fraudulent banking activity can be like looking for a needle in a haystack. But one Newfoundland-based tech company is providing the tools to help banks do just that.

Established in 2003, Verafin Inc. was the brainchild of three electrical engineering students who were completing graduate work at Memorial University.

“We were building control systems for underground mining vehicles when we were approached by a Memorial alumnus to apply our software to address money laundering and fraud,” explains Brendan Brothers, co-founder and director of product marketing.

Today, the company’s advanced analytic software is installed in more than 1,000 banks and credit unions across North America.

Verafin and its team of almost 200 employees use elements of artificial intelligence and decision-making to locate suspicious activity, find fraudulent transactions as well as transactions between financial institutions that look like money laundering.

Brendan warns that organized crime no longer resembles the bank-robbing and rum-running Mafia of Al Capone’s day.

“Today, organized crime is international, mostly composed of twenty-somethings who are highly-educated and see on-line banking fraud as an easy way to make money,” says Brendan.

“They operate like businesses that have leadership, that have targets. The Internet and the anonymity that it brings is what’s key to their success. Compromising your identity and stealing your banking credentials online is low-risk and high-reward.”

Brendan says the work of tracking on-line bandits can be quite rewarding.

After a bank in Florida implemented their analytics, within weeks they prevented a $40,000 online fraud attempt and then a $100,000 attempt a few weeks later.

Assistance from ACOA’s Atlantic Innovation Fund and Business Development Program has contributed to Verafin’s cutting-edge research and development and then taken it into new markets.

“I think it’s the advice from ACOA’s staff as well as the funding that’s helped us grow,” says Brendan. “The ability to create partnerships and bring in new ideas can be really helpful.”

These days, Verafin is in the process of opening a satellite office in Toronto to help them focus on the enormous U.S. community-banking market. With 10,000 financial institutions using almost 100 different banking platforms, the company has enough work to keep them occupied for the next several years.

Brendan believes Verafin’s behaviour-based, single-platform approach has given the company an advantage over the competition, but continuing to monitor trends and improving their analytics will be what keeps them at the forefront.

In these days of fast-changing technology, staying one step ahead of the bad guys is not just an option—it’s a necessity.

Published April 10, 2014