Nasdaq to buy Canadian financial fraud detection firm Verafin

By Rahul Vaimal, Associate Editor
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The American stock exchange Nasdaq will be acquiring Verafin, a Canada-based leading financial crime management platform for $2.75 billion.

The cloud-based platform Verafin, founded in 2003 aids its users in detecting and reporting financial crimes like money laundering. The provider currently serves its solutions for more than 3,000 banks and credit unions in North America. And with this acquisition Nasdaq targets to widen those services to the largest banks and second-tier institutions, including in Europe.

Adena Friedman
Adena Friedman
President & CEO – Nasdaq

“Financial crime, including money laundering, is among the biggest and most difficult challenges that banks face around the world. Regulators are becoming more demanding of banks, brokerages, FinTechs and other financial intermediaries as the frontline defense against criminals using the financial system to fund their illicit activities.”

According to Nasdaq, in a year about $2 trillion money is being laundered and by 2024 the $12.5 billion worth market which counters the financial crime is projected to grow 17 percent.

The current acquisition is in line with Nasdaq’s strategy which was put forward at the company’s investor day earlier this month that aims to incorporate more software and analytics into the financial industry.

Many of the banks across the world are still using old systems that aren’t very efficient in detecting money laundering and financial fraud, Valerie Bannert Thurner, a senior vice president at Nasdaq, said. “It’s such a big problem, fines are huge and it’s a big worry for CEOs for banks, and it has to be solved better,” she added.

According to the statement from Nasdaq, the deal is expected to be closed by the first quarter of 2021. Even after the merger Verafin’s headquarters will remain in St. John’s and the executive leadership team will continue in the company.

For the acquisition, US-based banking firm Evercore acted as the lead financial adviser for  Nasdaq, along with JPMorgan Chase & Co. Verafin was guided by financial services company William Blair & Co.

Verafin Inc.

The financial crime management firm Verafin Inc. was founded in 2003 under the vision of Jamie King, Raymond Pretty and Brendan Brothers who planned to convert the technology used to build robots for mining into a solution to fight financial crime. Apart from financial fraud the products of the company also help to detect and prevent serious crimes like human trafficking, elder abuse and identity theft.