DESILO Launches European Entity in Luxembourg to Tackle Cross-Institutional Fraud via FHE

Deep-tech firm DESILO has established a new European headquarters in Luxembourg to tackle the escalating crisis of cross-institutional payment fraud. By deploying fully homomorphic encryption (FHE), the firm aims to enable banks to share intelligence and detect sophisticated money laundering schemes without compromising underlying customer data or violating strict GDPR privacy mandates.

What was announced

DESILO has launched DESILO EUROPE S.à r.l. in Luxembourg, specifically targeting the regulatory shift triggered by the EU Anti-Money Laundering Regulation (AMLR). A central focus of the new entity is Article 75 of the AMLR, which takes effect on 10 July 2027. This article provides the first formal legal basis for Partnerships for Information Sharing (PfIS) between financial institutions, allowing them to collaborate on fraud detection.

To facilitate this, DESILO is introducing HOLMES to the European market. HOLMES is a privacy-preserving AI system that utilizes FHE to allow multiple banks to combine and score signals in an encrypted state. The system ensures that the aggregation server never decrypts the participating institutions' data; instead, source data remains with the original holder while fraud candidates are identified mathematically. This approach addresses the sharp rise in authorized push payment (APP) fraud, where funds are moved through multiple mule accounts across various banks before being converted into crypto-assets.

The launch is supported by a public initiative titled "Encrypted Collaboration in Financial Crime Detection," co-hosted with the Luxembourg House of Financial Technology (LHoFT) on Tuesday, 29 September 2026. DESILO EUROPE is currently seeking to validate its technology and governance model through a pilot program with a retail bank supervised by Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF).

"DESILO was built on one conviction: Privacy by Design. The value of data grows when institutions can use it together, but so does the risk of exposure. Privacy therefore cannot depend on organisational policies and access controls alone; it has to be built into the infrastructure itself."

Howard Park, Managing Director of DESILO EUROPE.

The companies involved

DESILO is a deep-tech specialist focused on privacy-preserving artificial intelligence. The company’s core expertise lies in fully homomorphic encryption, a cryptographic method that allows for computation on encrypted data without needing to decrypt it first. By establishing a dedicated European arm, the company is positioning itself as a critical infrastructure provider for the EU's evolving anti-money laundering landscape.

The Luxembourg House of Financial Technology (LHoFT) serves as the primary fintech hub for the Grand Duchy, acting as a bridge between innovative startups and the traditional financial sector. Under the leadership of Acting Chief Executive Officer Alex Panican, the LHoFT provides the ecosystem necessary for firms like DESILO to engage with CSSF-supervised entities. The CSSF is the competent authority responsible for the prudential supervision of the Luxembourg financial sector. Additionally, data driving these initiatives comes from the European Central Bank (ECB) and the European Banking Authority (EBA), the latter of which maintains its headquarters in Paris and oversees the regulatory framework for the European banking sector to ensure a consistent level of regulation and supervision across the EU.

What FF News has reported before

FF News has closely followed the activities of the European Central Bank as it navigates the intersection of traditional finance and new technology. Recent reports include Axiology Joins ECB Pontes Launch and Appia Contact Group to Advance Tokenized Capital Markets, highlighting the bank's role in capital market modernization. We have also covered broader payment trends in the region, such as how Cash Dominates as Most Widely Accepted Payment Method Across the Euro Area. Furthermore, our coverage of major retail players like Revolut, including their securing of a full French banking licence and the launch of a premium airport lounge network, underscores the rapid expansion and increasing complexity of the European banking landscape that DESILO now enters.

What this means

This move puts significant pressure on legacy fraud detection vendors who rely on siloed data analysis. With payment fraud losses in the EEA reaching €4.2 billion in 2024 - a 17% year-on-year increase - the status quo is no longer sustainable. DESILO is betting that the legal permission granted by AMLR Article 75 will be useless without the technical "cover" of FHE. By launching a year before the regulation applies, they are forcing Luxembourg’s retail banks to decide whether they will build their own sharing protocols or adopt a third-party standard. Watch for whether the CSSF grants formal "blessing" to the HOLMES pilot, as this would likely trigger a wave of similar deployments across the Eurozone.