Nasdaq beefs up security by buying Canada's Verafin

Exchange operator Nasdaq Inc said on Thursday it would buy anti-financial crime software firm Verafin for US$2.75 billion in cash, significantly expanding its reach in the regulatory technology market.

Newfoundland-based Verafin, founded in 2003, provides more than 2,000 financial institutions in North America a cloud-based platform to help detect, investigate and report money laundering and financial fraud.

Nasdaq will aim to provide Verafin's technology to the 250 banks, exchanges, broker-dealers and buy-side organizations, and regulatory authorities, that use its trade surveillance systems, the company said.

With the deal, the exchange group is doubling down on its push into the anti-money laundering software sector and furthering its strategy of repositioning the company as a leading financial technology and data vendor. While Nasdaq is best known for operating exchanges in the United States and globally, it is also a provider of market technology to banks and other financial institutions. It has a strong foothold in the trade surveillance software market, as well as in the trading technology systems sector.

It made its first move in the anti-money laundering software market in September when it launched artificial intelligence technology to help retail and commercial banks automate investigations.

“The problem of detecting money laundering and fraud hasn't been solved very well yet,” Valerie Bannert-thurner, senior vice-president and head of sellside and buy-side solutions, market technology at Nasdaq, said in an interview. “With our acquisition we are doubling down on our belief this as an area that is being disrupted and where we can have a big impact.”