The world of trade finance has repeatedly been the victim of duplicate financing fraud. In such cases, firms may secure financing in the country of origin, the destination country and a financial center – all on the same trade. A global approach is therefore needed to comprehensively mitigate risk. “Duplicate financing occurs for many reasons. A unified solution used by lenders to combat this type of financing fraud in international trade is the most effective way to help resolve this problem,” said Mark Borton, Head of Trade & Working Capital Finance Product and Asia Transactional & Trade, National Australia Bank. “The MonetaGo Secure Financing Platform appears to be a simple utility that lenders worldwide could potentially use to greatly improve the trade finance experience.”
As banks and financiers embrace digitization, they are provided with new opportunities to share information while at the same time maintaining the privacy and security of client information. MonetaGo’s approach is key to breaking down information barriers among and between banks, platforms, and regional solutions. “Information silos between lenders results in duplicate financing fraud as they often have little insight into whether the client has submitted transactions for financing to other lenders,” said Ed Aldorino, Head of GTB Asia, Lloyds Banking Group. “The integrity of the entire trade finance landscape is vital for the flow of trade finance, and that’s why we were excited to participate in testing of the platform with MonetaGo. The easy-to-understand platform enables us to prevent double financing fraud around the world in ways which were not possible before and we look forward to the impact it will have on the markets we serve.”
To deliver a secure and standardized solution at a global scale, MonetaGo is partnering with SWIFT on a proof of concept. The POC will enable MonetaGo to leverage SWIFT’s proven and robust API-enabled infrastructure, ensuring users can be confident about connectivity management, authentication, security, interoperability and network reach. If the pilot proves a success, more than 11,000 institutions connected to SWIFT will be able to access MonetaGo’s finance validation service easily and securely in a trusted and globally standardized way.
“Finance fraud in cross-border trade cannot be fully mitigated with local registries, so it makes perfect sense to leverage SWIFT’s global reach to help institutions around the world to solve this problem. By bringing global API standards, identity and security, SWIFT can help to mitigate against the growing challenge of digital islands. We are working with MonetaGo to pilot the solution that will provide our community of financial institutions with an important tool to combat financing fraud at the international level,” said Louise Taylor-Digby, Global Head of Trade Strategy, SWIFT.
Last December, MonetaGo was awarded the Monetary Authority of Singapore’s Financial Sector Technology and Innovation (FSTI) Proof of Concept (POC) grant. The FSTI POC grant provides funding support for experimentation, development, and dissemination of nascent innovative technologies in the financial services sector. In the POC, MonetaGo with 25 organizations, experimented on ways to detect and prevent instances of duplicate financing relating to Invoices, Purchase Orders, Warehouse Receipts, and Bills of Lading across different financial institutions, without the need for financial institutions to share commercially sensitive information with each other. The POC was conducted over a 6-month period which concluded on June 30, 2021. Learnings from this POC can be found on MonetaGo’s website.
Following positive results and feedback, the registry is now being deployed and customer onboarding has commenced. The core components of this new platform have been years in the making and resulted from MonetaGo’s longstanding experience in the space having operated the most successful trade registry over the past few years with more than 1.8 million financings already processed. The next natural step in the evolution is to provide connectivity on an international level which is where partnering with SWIFT will be of value. Leveraging the SWIFT API channel for standardization and distribution of the solution would expand its reach and effectiveness.
“Interoperability between disparate, local registries built on different technology platforms requires common standards and specifications to achieve results,” said Shinichiro Yamazaki, Global Head, Trade Innovation Unit, Global Trade Finance Department, Sumitomo Mitsui Banking Corporation. “We were pleased to have participated in the testing and development of a system that is simple and capable of preventing fraud on a global scale”.
Importantly, the platform is not only being offered to banks and traditional financiers, but also to Non-Bank Financial Institutions (NBFIs) and non-bank lenders including fintechs and trade finance funds which provide customers in many sectors with trade financing solutions. “MonetaGo’s Secure Financing solution can mitigate fraud not only for bank financiers but alternative lenders also; this is exactly what the trade finance ecosystem needs. For too long, financiers of all types lacked the ability to communicate effectively and efficiently to prevent duplicate financing fraud, and it’s exciting to see this innovative fintech pioneering the way ensuring confidence can be upheld globally in trade fraud mitigation,’’ Tom James, CEO/Founder, TradeFlow.
Deduplication is done by identifying whether financing transactions are using the same documents. By registering a unique “Document Fingerprint” which is created by cryptographic hashing, the registry does not store actual customer or transaction data. The registry can thus be agnostic to the locality of the lender and there are no issues with sharing the information across parties or borders as the fingerprints cannot be reversed-engineered to reveal the data that created them. The system can then indicate the status of a registered document as “financed”, letting an enquirer on the platform know that a lender has already provided financing against that document. ''Unfortunately, lenders do not have a robust solution today that performs automated detection of duplicate financing fraud, due to various reasons including confidentiality for sharing of transaction data between lenders," said André Casterman, Board Member and Chair Fintech Committee at ITFA. “Thankfully, MonetaGo’s Secure Financing platform provides a unique document fingerprint that protects the privacy of the lenders and applicants’ data, while also performing a deduplication check and preventing fraud.”
MonetaGo’s solution adopts ISO 20022 standards and makes it easy for its users to implement the appropriate database schemas. “World technology providers need to migrate away from digital islands with limited scale to interoperable, platform agnostic standards in order to reach the next level of mass digital transformation and realize its inherent benefits. It is inspiring to see MonetaGo embrace two critical standards that will enable the effective and efficient engagement of lenders and their customers’ trade and supply chain systems in the future - GLEIF and ITFA DNI. Not only is MonetaGo enabling critical use cases for customers but is doing so leveraging cutting-edge techniques to minimize friction. Interoperability beyond its own walls is the future we are all working towards achieving.” said Oswald Kuyler, Managing Director of the Digital Standards Initiative, International Chamber of Commerce."
Ultimately, those that stand the most to benefit are not only the banks and lenders, but trade finance end users and customers. To mitigate the risk of loss due to trade finance fraud and to manage operational costs, financiers globally have been offboarding clients, resulting in trade finance needs not being met. Almost half of all Small to Medium Size Enterprises (SMEs) are unable to access appropriate financing. This problem also affects Mid to Large Cap corporations as well as Multinational Companies who all are facing significant liquidity challenges in many different sectors. "Duplicate financing fraud occurs far too often, impacting accessibility to affordable trade finance for millions of businesses around the world,” said Jesse Chenard, CEO, MonetaGo. “The integrity of the entire trade finance landscape is vital for the flow of trade finance as it plays a crucial role in the economy. We’re proud to work with international organizations to provide a global, standardized utility that seeks to help prevent domestic and cross-border duplicate financing fraud, providing all with a fair opportunity in trade finance."
Organizations that are interested in implementing the Secure Financing platform can begin the onboarding process through SecureFinancing.org as the system has been greenlighted to move to production.
MonetaGo provides enterprise solutions for financial operations. The MonetaGo product suite is compliant with existing regulations and designed to improve the efficiency and security of financial products.
Built to support multiple technologies and interoperate seamlessly with existing financial infrastructure, financiers can integrate MonetaGo's products with minimal disruption and cost.
For more information, visit www.monetago.com.