- The Washington Times - Wednesday, April 17, 2002

Mantas Inc., a privately held Fairfax company seeing increased demand for its software that helps financial institutions uncover money laundering, plans to announce today that it will receive $17.5 million in venture capital.

The investment will come from Safeguard Scientifics Inc., the Wayne, Pa., firm that is a founding investor in Mantas.

Interest in anti-laundering software has surged since the U.S.A. Patriot Act was steamrolled through Congress last year. That law, a response to the September 11 terrorist attacks, gives broad investigative powers to law enforcement agencies. Another part of the far-reaching law requires brokerages to monitor financial transactions for suspicious financial activity and report suspected money laundering to federal investigators.

Banks already monitor financial transactions, but the law lets Congress extend the monitoring requirement to brokerage firms, broadening the market for Mantas' anti-laundering software.

The mandate is expected to spur sales, and investors are focusing attention on software-developers like Mantas that market applications to financial companies.

"We have unfortunate celebrity because of the evil that touched us," Mantas CEO Simon Moss said.

Mantas' anti-laundering software helps financial institutions monitor all types of transactions, including deposits, wire transfers and ATM withdrawals.

One approach allows financial institutions to establish a pattern of activity to signal a deviation in banking patterns among customers. The software flags deviations, and bank officials determine whether the activity should be reported to the Treasury Department's Financial Crimes Enforcement Network, Mr. Moss said.

The software also tracks transactions so banks and brokerages can determine whether there is any significance to a series of transactions based on the pattern of the banking activity.

The software is unlikely to catch all instances of money laundering, but "we think we add as much transparency as possible," Mr. Moss said.

Financial-services company CitiGroup Inc. is the only customer Mantas has said is using its anti-laundering software. There are others it has not divulged.

The International Monetary Fund estimates that laundered funds make up from 2 percent to 5 percent of global gross domestic product, or at least $600 billion annually.

U.S. financial institutions' spending on anti-laundering software and technology could reach $120 million by the end of the year, said Breffni McGuire, senior analyst at Needham, Mass., financial-industry research firm TowerGroup.

"It was a matter of time before [anti-laundering reporting requirements] would be extended to all financial institutions. What September 11 did was help get these provisions in place," said Ms. McGuire, who estimates that $1 trillion is laundered annually and that 50 percent of that money goes through U.S. financial institutions.

Owing to demand generated by the law, Mantas' anti-laundering software is expected to generate more sales this year than the company's other software, Mr. Moss said. Mantas completed its anti-laundering software in January, though work on it began nine months ago, prior to the September 11 attacks.

Mantas is just 11 months old and has 120 employees. The company also markets financial software to streamline the buying and selling of stocks, and software to help stock traders comply with stock-exchange compliance rules.

Mantas, a privately held company, is a spinoff of Safeguard Scientifics and SRA Ventures LLC, a Fairfax firm.

Getting funding turned out to be easier than expected, said Mr. Moss, who took over as chief executive at Mantas six weeks ago.

"We thought it was going to be hard, but we were pleased with the interest in this firm," he said. "I don't see the need to go back to the market for a very long time."

It is the second round of funding for Mantas, and the company will use the money for its expansion.

"This is a message to the marketplace that we are here to stay," Mr. Moss said.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide