A London fintech backed by employees of OpenAI and some of the world’s biggest banks has raised $1.6m (£1.2m) to help financial firms navigate mounting regulatory requirements using artificial intelligence.
Relace, founded by a former lawyer and an AI engineer, has secured the pre-seed funding in a round led by Boost Capital, with backing from Ascension, Koro Capital and angel investors from JPMorgan, Barclays, Morgan Stanley, OpenAI and SAP.
The startup has also been selected for the Financial Conduct Authority’s (FCA) Supercharged Sandbox, a programme supported by Anthropic and Nvidia that allows firms to develop and test advanced AI tools for financial services.
Relace was one of 21 companies chosen from 199 applicants for the programme’s second cohort, which runs until the end of 2026.
Its platform uses AI to identify which regulations apply to a financial business, assess whether it is meeting those obligations and flag potential gaps.
The company argues that much of the industry’s compliance work still relies on spreadsheets, lengthy documents and external legal advice, slowing the launch of new products and expansion into overseas markets.
“The challenge is really how regulation is implemented”, co-founder Justin Peimani told City AM.
“If you think about the volume of rules, it has only increased over the last decade, and with AI, cybersecurity, deglobalisation, there’s only more and more rules that are coming”.
Peimani, a New York-qualified lawyer who previously built enterprise software used by major banks, said the shortage of qualified compliance professionals was adding to the pressure.
He argued that technology could help firms make better use of existing staff rather than simply cutting costs.
“The real value comes in risk and in revenue”, he said, adding that one customer had identified 21 previously unknown risks using the platform.
The startup, which has not disclosed its revenue or valuation, said it plans to use its fresh funding to hire engineers, expand its regulatory coverage across the UK, EU, US and Middle East, and build its commercial team.
Relace is already working with Gemcorp Capital, a private credit investor managing around $7bn in assets.
Its chief compliance officer, Patrick Nyamangunda, said work that would typically take weeks had been completed in days across two jurisdictions.
FCA backs AI push into compliance
The funding comes as the FCA faces growing pressure to support innovation and growth in Britain’s financial services industry without weakening consumer protections.
The watchdog has expanded its support for fast-growing firms in recent months, including launching a dedicated Scale-up Unit offering businesses closer access to regulatory officials.
Relace’s work in the Supercharged Sandbox focuses on the FCA’s Consumer Duty rules, which require financial firms to deliver good outcomes for retail customers.
Co-founder Lyubomira Dimitrova, who previously scaled AI infrastructure at identity verification firm Onfido, said access to industry experts had been among the programme’s biggest benefits.
“The mentors have been really good, and the fact that they have managed to create this ecosystem is really important”, she told City AM.
However, the founders acknowledged that convincing financial institutions to trust AI with sensitive regulatory work requires safeguards.
Dimitrova said the platform combines AI with more conventional software methods and provides references for its conclusions, allowing compliance teams to check and amend the results.
“We are not taking away decision-making at any point at all”, she said.
Peimani added that responsibility for meeting regulatory obligations would remain with financial firms, regardless of which technology providers they use.
“The regulator, particularly in this country, is very, very clear that the ultimate responsibility sits with the firm”, he said.