Flagright, an AI operating system for financial crime compliance, has raised USD 12.5mn for its Series A round to expand explainable AI use cases across compliance operations and aggressively increase its US market presence.

According to the company, the existing technology stack for financial crime compliance is being challenged on two fronts—increased regulation that requires certain industries (payments, banking, brokerage etc.) to move faster and manage higher volumes, and legacy systems too rigid to adapt to AI as it moves from experimentation into operational reality.

To solve both issues, the company is building a unified AI operating system comprising transaction monitoring, watchlist screening, risk scoring, case management, AI forensics and governance workflows, which help fincrime teams operate efficiently with human oversight at the center.

Participants in the round were Infinity Ventures, Sella Direct Ventures, Frontline and Y Combinator.