UK strengthens finance industry against duplicate financing fraud

By Puja Sharma

Duplicate financing is defined as fraud by which fraudsters get the same transaction financed multiple times. Today, a fraudster can go to multiple banks and have the same trade financed, without the banks having the ability to cross-check. Regulation around confidentiality hinders banks from sharing information on deals they have financed with other banks

The International Chamber of Commerce United Kingdom (ICC United Kingdom) has announced a new initiative to strengthen the UK finance industry against the impacts of duplicate financing fraud. The Centre for Digital Trade and Innovation (C4DTI)-the led initiative will leverage ICC United Kingdom’s convening capabilities to deliver this flagship project under the C4DTI’s Shutting fraudsters out of trade workstream in partnership with MonetaGo.

Duplicate financing is defined as fraud by which fraudsters get the same transaction financed multiple times. Today, a fraudster can go to multiple banks and have the same trade financed, without the banks having the ability to cross-check. Regulation around confidentiality hinders banks from sharing information on deals they have financed with other banks, creating a grey area that fraudsters leverage to finance the same transaction multiple times. It is a fraud typology impossible to detect via existing siloed AI and KYC tools and requires an innovative and collaborative ecosystem approach. Duplicate financing has therefore syphoned billions of dollars from the financial services community globally.

By the end of 2023, UK banks will be able to ensure that a transaction has not been financed multiple times in the banking community. Although some details remain confidential, the majority of trade banks in the UK have agreed to take part in the project, with more expected to join in due course. This would make the UK the first G7 economy to tackle this issue, saving hundreds of millions of pounds in lost funding that can be better spent facilitating real trade transactions. In the context of a global trade finance gap of $1.7t, the penny must go to legitimate businesses.

“Technological innovation will change the game in finance over the next five years, with the UK taking a leading charge in MLETR legislative reforms. This will unlock much-needed innovation which will revolutionise finance,” said Chris Southworth, Secretary General of ICC United Kingdom.

“Not all innovations require years to deliver value, and eliminating duplicate financing fraud, in partnership with MonetaGo, is a great example of an existing solution that will have a significant impact in the short term. ICC United Kingdom is uniquely positioned to help accelerate the elimination of duplicate financing fraud, with the aim that every financed Pound makes its way to a business raising finance legitimately by the end of 2023.”

To combat duplicate financing fraud, ICC United Kingdom has partnered with financial technology provider MonetaGo. The firm’s service has been live since 2018, processing millions of transactions in Asia and actively preventing duplicate financing in receivables discounting and invoice finance. The service is available on SWIFT’s new API Gateway service offering, enabling its 11,000+ member financial institutions to access the MonetaGo service. Built from the ground up on international standards, this fraud prevention utility connects to a wide array of financing platforms.