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Shield, a communications compliance platform for financial institutions, raises $20 million • londonbusinessblog.com

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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” related to maintaining electronic communications, in violation of federal securities laws. In addition, the SEC now researches private equity firms about their employees’ use of messaging apps for work purposes, including WhatsApp, Signal, and Telegram, as many of these apps have features that support auto-disappearing messages, potentially violating SEC rules.

To further complicate matters, many companies have now adopted remote work or hybrid work models that allow employees to mix office and home work, making it more difficult for financial institutions to track employee communications.

And it is against that background that communications compliance platform in Tel Aviv and New York Shield aims to address the issues faced by most banks and investment companies, including document management, electronic discovery, oversight and oversight.

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

To meet this rising demand for “more sophisticated” cross-channel surveillance, Shield announced Thursday that it has raised $20 million in a Series B funding round. Previous lender Macquarie Capital led the round alongside UBS Nexta venture capital fund of 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 ramp up development of its communications compliance platform.

“There is an immediate market need for more sophisticated surveillance solutions to enable financial institutions to comply with new regulations and combat financial crime,” said Weitzman. “Understanding that regulators will continue this strict enforcement period and that banks will not stop using communication channels as working from home is now permanent.”

When asked how the company handles users’ data, Weitzman said it operates under the same strict rules as its customers. “Shield does not store user data or access customer data. We take proactive measures to protect data through masking personally identifiable identifier (PII) within communication.”

Shield relies on AI techniques to help companies counter market abuse, bad internal actors and regulatory risks. The startup, which is not the only company using AI, would compete with AI-powered communications monitoring platforms such as Code of Conduct and Relativity in the industry. Shield recently introduced new eDiscovery capabilities that enable users to respond quickly to regulatory questions. The company partnered with the London-based speech and NLP technology company Intelligent voice to bolster its voice monitoring 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 has increased its revenue by 280% year-over-year. The company said it has also increased its customer base by 250% since its previous funding round in January. In addition, Shield opened an R&D facility in Lisbon this year, Weitzman said, adding that the company chose Portugal because it is becoming a major European technology center.

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