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An important milestone has been achieved in the global fight against fraud and duplicate financing with the live launch of the Trade Financing Validation Service provided by MonetaGo over the global SWIFT network.
This is the first third-party service in trade, available through the SWIFT application programming interface (API) channel.
Following the successful completion of the pilot phase of the Trade Financing Validation Service that saw the participation of 20 institutions across 4 continents, the service can now be accessed by all the 11000+ institutions in the SWIFT network.
The participating institutions included some of the world’s largest trade finance banks, representing lenders in the US, the UK, Europe, Asia, and Australia.
MonetaGo’s Secure Financing system leverages technology to prevent duplicate financing in near real-time.
Neil Shonhard, CEO of MonetaGo, said, “Duplicate financing, through the reuse of the same documents with multiple lenders, is a hidden problem in trade finance. Many such frauds go undetected because financial institutions cannot check with each other if a transaction has been financed.
“There is now a global standardised system to check duplicate financing. Going further, the additional authentication services availed through the same system will provide greater assurance to lenders on the integrity of their financing transactions.”
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.
During the pilot phase, which took place during the second and third quarters of 2022, participating institutions put data from bills of lading (BLs), 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, among other things: what happens when duplicate documents are registered but not yet financed, when a duplicate document has been financed, and when the financing of a duplicate document is cancelled.
With the launch of the system over SWIFT, the trade finance industry now has a natively global solution that is interoperable between markets, institutions, and platforms, enabling financiers to catch and stop cross-border fraud.
The system comprehensively provides protection for all types of trade finance, ranging from documentary trade finance to financing of open account trade that includes receivables finance, payables finance, inventory finance and pre-shipment finance.
This new integrated and interactive service will significantly improve safety in trade finance, mitigating the risk of duplicate financing and ensuring confidence can be upheld globally in fraud mitigation.
Shirish Wadivkar, head of wholesale payments and trade strategy at SWIFT, said, “The Trade Financing Validation Service, provided with MonetaGo, is a great example of how our API platform can be harnessed to provide a single solution to help banks tackle fraud and financial crime at the international level.
Atul Jain, Global Co-Head for Trade Finance and Lending at Deutsche Bank, added, “By using the SWIFT network as a global access channel to validate trade finance transactions, banks, both large and small, can do their part in helping further combat global financial crime.”
Andrew Wilson, global policy director of the International Chamber of Commerce (ICC), said, “Trade is a proven means to create jobs, empower people, and generate the resources for sustainable and inclusive growth. Digitalisation is an opportunity to amplify this many times over.”
Peter Mulroy, FCI’s secretary general, said, “The launch of the MonetaGo Trade Financing Validation Service over SWIFT is an example of where technology, together with the financial services ecosystem, can reduce the risk of multiple financing across the world.”
The Trade Financing Validation Service powered by MonetaGo’s Secure Financing system is now live and can be leveraged by banks across the SWIFT network globally.