Financial technology solutions provider MonetaGo has been selected by the Association of Banks in Singapore (ABS) to deliver the Trade Finance Registry (TFR), an interoperable industry utility that bridges information silos between banks to combat duplicate financing fraud.
The TFR serves as a secure database for records of trade transactions financed across foreign and local banking institutions in Singapore.
It shall also connect to trusted sources of information for validation checks on trade data. The TFR mitigates the risk of duplicate financing by different bank lenders for the same trade transaction, and the falsification of information supplied by borrowers.
The effect shall be greater confidence among banks in the integrity of their clients and trade financing transactions.
Currently, banks rely on due diligence on their customers and transaction checks of the underlying trade flows to make trade financing available to their clients.
However, there are limitations as banks rely on documents that are prone to forgery.
In addition, banks are unable to ascertain if a particular trade has been financed more than once as these checks are restricted to within that particular bank or within their bank network.
The information silos between different banks expose the banking industry to potential fraudulent activities such as duplicate financing or round-tripping, where the same transaction is taken to multiple banks for financing.
Global trade has been growing strongly over the past decades.
As a result of this, demand for financing has also increased substantially.
However, recent discovery of large-scale fraud has exposed issues in the trade finance space, and brought to the fore discussion around the detection and mitigation of trade finance fraud.
To mitigate this issue, and strengthen and enhance the resilience of the trade finance sector in Singapore, ABS launched a selective tendering process to deliver the solution.
In its winning bid, MonetaGo partnered with Singaporean financial technology provider GUUD to propose a natively interoperable solution that connects to the global hash registry of MonetaGo’s Secure Financing solution.
The role of GUUD is to build the User Interface of the TFR to MonetaGo’s system. Banks shall perform queries on the TFR using select document information, which shall be cryptographically hashed to create document fingerprints that are then pushed to MonetaGo’s secure, unified data repository to detect matches in near real-time.
Partial matches that represent suspiciously similar transactions shall be analysed by a comparison service to return a risk classification of the transaction.
The entirety of the solution is delivered within a confidential computing environment, which means data is secure and protected from all parties including the solution provider.
MonetaGo understood that TFR will be used as an industry utility for Singapore banks in their endeavour to mitigate multiple financing risk as well as to ascertain genuineness of trade.
As regulated entities, banks are challenged as to the amount of information they can share, and this presents an important barrier to combating fraudulent activity.
By leveraging cryptographic hashing technology, the TFR solution created by MonetaGo solves for this issue in a regulatorily compliant manner, providing much-needed visibility on what other banks have financed or undertaken payment obligations against without breaching data protection rules.
“The ABS is committed to upholding the integrity of and confidence in Singapore’s trade finance sector, and the TFR provides a very important layer of security to prevent multiple financing on the same trade transactions with multiple banks.
“This leads to greater trust among both financiers and borrowers.
“We are pleased to have selected MonetaGo to develop the TFR, taking advantage of their experience in this niche area and the use of their global hash registry to detect fraud across national borders.”
TFR will be handed over to ABS and its appointed operator after go-live,” says Mrs Ong Ai Boon, director at the Association of Banks in Singapore.
“This successful win of the national industry mandate further cements the recognition of MonetaGo as the world’s foremost provider of trade finance deduplication technology,” says Jesse Chenard, founder and CEO of MonetaGo.
“The MonetaGo-built TFR will significantly improve efficiencies in trade finance in Singapore, mitigating the risk of double financing, and ensuring confidence can be upheld globally in trade fraud mitigation.”
Work to build the TFR is commencing and go-live is targeted for Q4 2022.