Fraud detection software maker with major Ottawa presence sold to T.O. company

Andrew Simpson
Andrew Simpson is chief operating officer of fraud detection software maker software maker Alessa. File photo

A global leader in fraud-detection software with a major R&D facility in Ottawa has been sold to a Toronto-based firm.

Tier1 Financial Solutions said this week it has acquired Alessa, a branch of another Toronto-based company called CaseWare International. Financial terms of the transaction were not disclosed.

Launched about 10 years ago, Alessa specializes in artificial intelligence software that aims to thwart financial crimes such as money-laundering. Nearly 200 customers in about 20 countries ​– including banks, credit unions, money-transfer businesses, insurance companies and casinos ​– use its products to vet potential clients and flag suspicious transactions and spending patterns that could signal criminal activity.

Alessa does most of its research and development at an office on Isabella Street in central Ottawa and employs about 35 people in the National Capital Region. 

Chief operating officer Andrew Simpson says joining forces with Tier1 – which makes client management software for the capital market and investment banking industries – will give Alessa more financial backing and instant access to new customers. Tier1 says its software has nearly 20,000 users worldwide. 

'A pretty hot space'

“The space that we’re in is a pretty hot space,” says Simpson, who will remain based in Ottawa in his current role and report to Tier1 chief executive Jiro Okochi. “It presents an opportunity for us to even be more bullish in the space and more aggressive with going after customers.”

Alessa’s subscription-based software can detect high-risk activity early on before it becomes an issue that costs businesses money or exposes them to legal liability, Simpson says. For example, the system can immediately alert a bank manager if someone who is attempting to open a new account is on a terrorist watchlist and could be using the account to finance illegal activities.

Okochi says those capabilities dovetail nicely with Tier1’s own platform, which helps make sure customers around the world comply with a myriad of financial regulations when completing complex transactions. 

The New Jersey-based executive, who took over as CEO on Jan. 1, says the firm was still doing many of its financial checks manually and was seeking a way to automate those processes. One of Tier1’s investors, Boston’s Wavecrest Growth Partners, found out about its potential M&A partner through investment banking firm Portico Capital, which served as Alessa’s adviser on the transaction. The entire deal came together via virtual meetings in less than two months.

“We were looking for opportunities to find the right partner instead of trying to build something on our own and seeing if it will work,” Okochi says.

Alessa will now operate under the Tier1 brand. Simpson says its R&D operations in Ottawa will continue to grow, pointing to the capital region’s abundance of highly skilled talent and world-class universities as key factors in its success.

“Ottawa is a great place to live,” he says. “At the same time, there's lots of really great talent.”