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The German branch of the International Chamber of Commerce, ICC Germany, in collaboration with financial technology firm MonetaGo, has released a report stating that digitalisation is key to combating global trade fraud.
The report, titled ‘Shutting Fraudsters out of Trade: Second Edition,’ offers enhanced guidelines and actionable solutions to the international business community and incorporates insights from the German financial sector.
The report advocates for the adoption of the Wolfsberg trade finance principles and the BAFT Global Trade Industry Council (GTIC) recommendations.
It also suggests consulting the WTO-ICC Standards Toolkit to optimise the digitalisation of trade processes.
Additionally, the report emphasises the role of industry associations in addressing issues like the authenticity of trade documents, the use of Legal Entity Identifiers (LEIs), and tackling duplicate financing—a problem costing the industry billions.
Current trade and finance mechanisms often rely on manual, paper-based systems, missing out on the benefits of smart technology. This makes it difficult to assess the full extent of fraud, the report cautions.
However, the potential for cost savings is significant. A 2019 Financial Crimes Enforcement Network (FinCEN) note revealed that vendor impersonation alone cost US businesses $9 billion from 2016 to 2019. Bloomberg estimates that trade finance fraud losses for banks in Singapore amounted to $9.26 billion between 2014 and 2020.
“Outdated systems, insufficient market coordination and the reluctance of governments and regulators to allow banks to share data are all part of the problem in the fight against fraud”, says Oliver Wieck, Secretary General, ICC Germany.
“Fighting fraud should be a priority for any government: The impact on economic growth is huge and the technical solutions are available. The same solutions that prevent fraud also help tackle tax evasion. This report calls on businesses and governments to join forces and act now.”
Neil Shonhard, CEO, MonetaGo, said, “Our mission to shut fraudsters out of trade and create a safer, more secure trading environment continues to progress globally. Partnering with ICC Germany is an important step in uniting policymakers and industry to encourage a collaborative effort to take the available steps to de-risk trade finance, both in Germany, in Europe, and around the world.”