MonetaGo provides global solution to duplicate financing fraud in trade finance

MonetaGo, a financial technology solutions provider, today announced a new platform to combat financing fraud in trade finance on a global level.

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.

In order 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 easily and securely access MonetaGo’s finance validation service 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.

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,” said Tom James, Founder and CEO at TradeFlow Capital Management.

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.

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.”