Financial rules are getting more complicated — from crypto to prediction markets to AI. MCO, which stands for MyComplianceOffice, just secured more than $100 million in growth financing from SL KKR. Joining me is Brian Fahey, CEO of MCO. Brian, great to have you with us today. What does MCO do and how has it grown?
MCO has been around for 18 years. We actually spun out of Fidelity Investments’ offshore development group in Ireland, and we set out to build a compliance platform for automating the end-to-end activities of a capital markets firm. This revolves around three areas — the transactions the capital markets firm is doing, the activities the employees are doing, and the third parties they are interacting with. It is an end-to-end monitoring and surveillance solution that we have been building out for 18 years, adding products and capabilities over time. Its singular difference is being off paper.
You just secured more than $100 million from SL KKR. What are you going to do with that?
We have been building out the products for quite some time and some need more investment to bring them to fully enterprise and global completion. The real key is the opportunity that AI provides on top of this. The compliance world has changed and the LLM models are an amazing new piece of technology. So it is the combination of completing the product set to the last mile and integrating AI in the right places across the whole platform. The funding is about completing that journey and that vision.
What are the biggest compliance challenges firms are facing right now?
It is the breadth of activities they are expected to cover and monitor for regulators. The principles around compliance have stayed steady — protecting end investors, ensuring there is no market manipulation, ensuring there is no abuse of information asymmetry. The biggest impact on firms has been the shift in regulator expectations around proving they are doing all they say they are doing in policies and procedures. That has definitely changed. Technology has played a critical role — there is a desire to turn to technology when things get more complex, to automate and bring down cost while maintaining an effective compliance programme.
Digital assets and prediction markets are growing fast. What do they mean for compliance teams?
A lot of it has to do with information asymmetry and market manipulation — the same core principles. These are transactions you monitor in the same way you monitor money movements for AML. But the specific concern is that people may be using inside information not in the traditional markets where they would normally be monitored, but in prediction markets — to gain advantage from that inside information in a new place. That is really where the extra monitoring and surveillance is needed. And the regulatory environment in crypto is becoming much more defined in the last year or so, which means companies operating in those jurisdictions now need to put policies and procedures in place.
How is AI changing the way compliance teams do their jobs and where do humans still need to stay in charge?
In the compliance and regulatory world, the need is for assurance. When a regulator investigates a firm, they look at policies and procedures and then ask you to demonstrate you are doing what those procedures say. Historically this has been done in a structured, deterministic workflow with full audits and full logging. The challenge with AI for that type of world is that it is probabilistic — it does not give you the same answer every time. And it has a lack of clarity on exactly how it came to the answer. So the ability to audit and log is the challenge. However — in unstructured data, such as electronic communications surveillance covering emails, voice, instant messages, and social media — the LLM-based analysis is very, very powerful. Before, this was managed through lexicon-based rules that created enormous false positives. AI is changing that dramatically, particularly when combined with structured data to look for patterns of insider trading or market abuse. So it works brilliantly in some areas and needs careful handling in others.
Brian, thank you so much for joining us.
Thank you very much.
