Sphinx: Transforming Fintech Compliance with AI-Powered KYC and AML Solutions

In the world of financial technology, the challenges surrounding compliance, particularly Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, have been longstanding. Despite advancements in technology, many fintech companies still rely on outdated, rule-based systems that create inefficiencies and friction in the customer onboarding process. Enter Sphinx, an innovative startup founded in 2024, based in San Francisco. Sphinx is on a mission to solve these complex issues by replacing traditional compliance workflows with AI-powered agents that streamline decision-making, saving time, money, and resources for fintech companies.

Who Founded Sphinx and What Drives Their Vision?

Sphinx was founded by Alexandre Berkovic and Chrisjan Wust, two entrepreneurs with extensive experience in machine learning, artificial intelligence, and compliance systems.

• Alexandre Berkovic, the CEO of Sphinx, has an impressive background, having co-founded Adorno AI, where he developed audio generation models for video. With his academic credentials in Design Engineering from Imperial College and Machine Learning from MIT, Alexandre is particularly well-versed in the world of AI and generative models. His expertise in multi-modal AI models has equipped him with the knowledge and insight needed to build Sphinx’s AI-powered solutions.
• Chrisjan Wust, the CTO, co-founded Adorno AI alongside Alexandre. Chrisjan’s previous experience as the Head of Machine Learning at RelyComply – where he scaled the company to 12 million users and secured a deal with Africa’s largest bank – gives him a deep understanding of the problems fintechs face when it comes to compliance. He’s not just an expert in machine learning, but also has a hands-on understanding of the pain points related to KYC and AML.

Their shared vision and complementary skill sets are what drive Sphinx's success. The two met at a barbecue in Cape Town, later reconnected in Portugal, and their partnership eventually led to the birth of Sphinx.

What Problem Does Sphinx Aim to Solve?

The problem Sphinx is addressing is one that has plagued the financial industry for years. For any bank or fintech to onboard a new customer, they are required to conduct a range of background checks, including KYC and AML procedures. These procedures are crucial for ensuring compliance with regulations, preventing fraud, and avoiding financial crimes. However, current compliance systems are often outdated, relying on rule-based technologies that are not only ineffective but also cumbersome.

At Chrisjan’s previous company, RelyComply, he witnessed firsthand the limitations of these systems. The data quality was poor, and the rules were too simplistic, leading to over 100 million false alerts annually. This resulted in several problems:

• Exhaustive manual reviews: Compliance teams were overwhelmed with false alarms, leading to unnecessary manual checks and extensive use of resources.
• Onboarding bottlenecks: The time-consuming nature of these reviews slowed down the onboarding process, creating delays that ultimately frustrated potential customers.
• Lost revenue: Prospective clients, fed up with waiting during the cumbersome process, would often abandon the onboarding process, resulting in lost revenue for the business.

How Does Sphinx Solve These Problems?

Sphinx offers a revolutionary solution by replacing traditional rule-based compliance systems with AI agents that function as a legal team within the KYC and AML process. These AI agents are trained to gather and verify data from every part of the internet, making onboarding decisions in real time, allowing compliance teams to focus on the more critical aspects of their work.

The key capabilities of Sphinx’s AI agents include:

• Adverse media checks: The AI agents scan news, blogs, and other sources for any adverse media coverage related to a customer, which is a key part of KYC compliance.
• PEP screenings: Politically exposed persons (PEPs) are flagged using Sphinx’s agents, ensuring that companies do not onboard individuals who may present a higher risk due to their political connections.
• Sanctions reviews: Sphinx’s AI agents automatically check whether an individual or entity is listed on any global sanctions lists.
• UBO identification: The agents assist in identifying the ultimate beneficial owner (UBO) of a company, a crucial step in preventing money laundering and fraud.

By integrating these AI agents into the client’s existing onboarding workflow, Sphinx significantly reduces the workload for human compliance teams, ensuring that only complex cases requiring human oversight are flagged for manual review.

Why is AI Crucial in Modern Compliance Workflows?

The need for AI in compliance workflows cannot be overstated. Traditional, rule-based systems were never designed to handle the complexities and volume of data required in the modern financial landscape. As the internet continues to evolve and vast amounts of data are generated each day, relying on outdated methods becomes increasingly unfeasible.

AI, on the other hand, is uniquely suited to process and analyze this enormous volume of data. With the help of machine learning, AI agents can continuously learn from new data and improve their accuracy over time. In the case of Sphinx, this means that the AI agents can more effectively and efficiently analyze customer data, check for red flags, and make decisions faster than ever before.

By leveraging AI in compliance processes, Sphinx enables fintechs to:

• Cut down manual reviews: Sphinx’s AI agents handle the repetitive and time-consuming tasks, reducing the need for human intervention by 85%.
• Make faster decisions: With real-time data processing and analysis, the AI agents speed up the decision-making process, reducing bottlenecks and accelerating customer onboarding.
• Ensure accuracy: The agents make decisions based on comprehensive data gathered from multiple sources, improving the accuracy and reliability of KYC and AML checks.

What Makes Sphinx Different from Other Solutions?

While there are other AI-driven compliance solutions on the market, Sphinx stands out for several reasons:

1. End-to-end agentic workflow: Sphinx doesn’t just focus on one aspect of KYC and AML compliance; it provides a comprehensive solution that spans the entire compliance process, from adverse media checks to UBO identification. The AI agents act like a legal team, covering all the bases necessary to make well-informed decisions.
2. Real-time decision-making: The AI agents operate in real time, making instantaneous decisions that integrate directly into clients' existing onboarding processes. This eliminates the delays typically associated with manual reviews.
3. Proof-backed decisions: Unlike traditional rule-based systems that offer limited insight into decision-making processes, Sphinx’s AI agents provide transparency and proof for every decision made. This helps build trust and ensures compliance.
4. Customizable to specific needs: Sphinx is adaptable, allowing fintechs to customize the solution to their specific needs and regulatory requirements, ensuring compliance with local and international laws.

What’s Next for Sphinx?

Since its launch in 2024, Sphinx has already made significant strides in the fintech compliance space. The company is constantly improving its AI agents and expanding its capabilities to cover more areas of the compliance process. As the team grows and the technology evolves, Sphinx aims to become the go-to solution for fintechs looking to modernize their KYC and AML workflows.

With Alexandre Berkovic and Chrisjan Wust at the helm, Sphinx is poised to continue disrupting the compliance landscape, driving efficiency, reducing costs, and helping fintechs stay ahead of the curve when it comes to legal and regulatory compliance.

Conclusion

Sphinx is a shining example of how AI can revolutionize traditional industries. By applying cutting-edge machine learning technology to solve long-standing problems in KYC and AML compliance, Sphinx is transforming the way fintechs approach customer onboarding and compliance. With its powerful AI agents and real-time decision-making capabilities, Sphinx offers a solution that not only addresses the inefficiencies of outdated rule-based systems but also provides a level of accuracy and transparency that builds trust with clients and regulators alike. As the company continues to innovate and scale, it is clear that Sphinx is shaping the future of fintech compliance.