Combatting Duplicate Financing Frauds to Secure Trade Finance Platforms
The International Chamber of Commerce (ICC) United Kingdom has introduced a new initiative that seeks to bolster the financial sector in the UK against risks associated with duplicate financing fraud. The Centre for Digital Trade and Innovation (C4DTI), under its ‘Shutting Fraudsters out of Trade’ stream of projects, is spearheading this project in partnership with MonetaGo.
Duplicate financing fraud occurs when a perpetrator obtains financing for the same transaction multiple times from different banks without the knowledge of any of them. To address this issue, the ICC United Kingdom initiative will use its convening capabilities to ensure that the banks are able to cross-check and detect such frauds.
UK banks have agreed to take part in a project to prevent duplicate financing frauds by the end of 2023. This would make the UK the first G7 economy to tackle the issue, and potentially save hundreds of millions of pounds in funding that can be used to facilitate legitimate trade transactions.
As current regulations impede banks from sharing information on deals they finance, fraudsters are taking advantage and causing losses to the financial services community globally. Collaborative and innovative approaches will be necessary to tackle this issue, as existing AI and KYC tools are insufficient. With a global trade finance gap of $1.7 trillion, it is essential that each penny goes to real businesses.
Chris Southworth, secretary general of ICC United Kingdom claimed that, in the next five years, technology will have a major impact on the finance sector in the UK, with MLETR reforms allowing for unprecedented progress. He believes this will bring about a revolution in the finance sector.
Furthermore, he noted that not every innovation requires a long time to be effective, citing the example of eliminating duplicate financing fraud, a project carried out in partnership with MonetaGo, and which will have a notable effect in the near future.
ICC United Kingdom is in an ideal situation to help accelerate the termination of duplicate financing fraud and, in doing so, ensure that by 2023, all financing in the UK goes to legitimate businesses.
To fight against frauds like duplicate financing, ICC United Kingdom has partnered with the financial technology provider MonetaGo. Since 2018, its service has been in use, processing multiple transactions in Asia and instantly blocking any duplicate financing in receivables reduction and invoice financing.This fraud prevention tool is available on SWIFT’s API Gateway service and provides access to the MonetaGo service. It’s based on international standards and is connected to a diverse range of financing platforms.