Silicon Valley wires a fortune to UK start-up

A Silicon Valley investor in the likes of Facebook and Spotify has put $40m (£24m) into a UK start-up it thinks can fill the gap left by banks in the international money transfer market.

The online-only international transfer service WorldRemit has raised the sum from the venture capital firm Accel Partners, whose other investments include Dropbox and Rovio, the maker of Angry Birds.

WorldRemit offers online remittance services, the process of transferring money to relatives or friends in foreign countries. As well as cutting costs by eliminating the branch networks of traditional operators such as Western Union, WorldRemit's account-to-account transfers minimise the money laundering risks associated with handling cash.

The company was founded in 2009 by Ismail Ahmed, who previously helped the UN crack down on money laundering among East African money transfer firms.

Harry Nelis, at Accel Partners, said: "We are excited to be partnering with a team with the deep industry expertise that has enabled them to build the robust technology and strong compliance needed for a secure, trusted and world-class remittance business."

Accel's investment, one of the largest-ever initial funding rounds for a European start-up, follows UK banks' decision to wind-up remittance services due to money laundering concerns.

HSBC closed all of its remittance services in 2012 after it was fined $1.9bn by the US authorities for money laundering at its Mexican subsidiary. Barclays, the last major bank offering remittance services, announced last year that it was closing 250 money-service businesses.

Mr Ahmed predicts this withdrawal will lead to a boom in digital services such as his. Last year WorldRemit processed 1.3 million transactions, a number Mr Ahmed expects to quadruple this year.

Accel's investment will be used to expand WorldRemit beyond the 35 markets it currently operates in.