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SWIFT partners with MonetaGo to curb trade finance fraud

By Gloria Methri

October 28, 2022

  • Berlin
  • Cross-Border Trade
  • Duplicate Financing
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SWIFTFinancial messaging system SWIFT has joined forces with MonetaGo to launch a Trade Financing Validation Service for its 11,000+ members. MonetaGo’s Secure Financing system aims to prevent duplicate financing in near real-time.

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 again on the system by another lender, the system will flag all duplicates.

During the pilot phase which took place during the second and third quarters of 2022, participating institutions put data such as bills of lading, invoices, purchase orders, and warehouse receipts through MonetaGo’s Secure Financing platform and observed 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, when a duplicate document has been financed, and when the financing of a duplicate document is cancelled.

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.”

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.

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