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Swift and MonetaGo tackle trade finance fraud

Swift and MonetaGo tackle trade finance fraud

Swift has teamed up with vendor MonetaGo to launch a trade financing validation service for the messaging network's 11,000+ members.

MonetaGo’s Secure Financing system promises to prevent duplicate financing in near real-time. Digital fingerprints of the documents used in trade finance are created by using a hashing algorithm, and these fingerprints are registered in a global hash registry which acts as a secure unified repository.

If the same document is registered on the system by more than one lender, the system will flag all duplicates after the first unique instance is registered.

Following a pilot involving 20 institutions spanning four continents, the technology is now being made available to banks across the Swift network through its API channel.

During the pilot phase, participating institutions put data from bills of lading, invoices, purchase orders and warehouse receipts through the Secure Financing platform, observing the results of the duplicate financing checks which were delivered in almost instantaneously.

Lenders were able to see, inter alia, what happens when duplicate documents are registered but not yet financed, when a duplicate document has been financed, and when financing of a duplicate document is cancelled.

Yoshisuke Maeda, GM, global transaction banking department, Mizuho Bank, says: “For too long, trade finance fraud has led to the reduction of financing available to legitimate borrowers, hindering the much needed flow of capital to businesses on the road to recovery.

“The universal, standardised utility being made available by Swift and MonetaGo represents an important opportunity to reverse the recent trend of banks curtailing their trade finance activities.”

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