SWIFT and MonetaGo team up to fight finance fraud

Fintech company MonetaGo will provide the service on the SWIFT messaging network

SWIFT and MonetaGo have partnered to launch the Trade Financing Validation Service, to combat fraud and duplicate financing. 

Fintech company MonetaGo will provide the service on the SWIFT messaging network. 

MonetaGo’s Secure Financing system uses technology to prevent duplicate financing in near real-time. 

Digital fingerprints of documents used in trade finance are created by using a hashing algorithm and stored in a global hash registry. 

If the same document is registered on the system by more than one lender, the system will flag all duplicates. 

Shirish Wadivkar, head of wholesale payments and trade strategy at SWIFT, commented: “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.” 

The launch comes after the completion of the pilot phase that involved 20 financial institutions across four continents, including some of the world’s largest trade finance banks, representing lenders in the US, the UK, Europe, Asia and Australia. 

The pilot phase took place during the second and third quarters of 2022. 

Neil Shonhard, chief executive officer of MonetaGo, explained why duplicate financing is such an issue: “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.” 

Participating institutions put data from invoices, purchase orders and warehouse receipts through the secure financing platform, observing the results of the duplicate financing checks.  

This enables lenders to see what happens when duplicate documents are registered but not yet financed, when a duplicate document has been financed and when a financing of a duplicate document is cancelled. 

Steven Beck, head of trade and supply chain finance at The Asian Development Bank, which participated in the pilot phase, said: “In recent years, the operating environment for trade finance has been characterised by uncertainty, which has led to an ever-widening trade finance gap. 

“An initiative such as this, which further enables trust into the market, using standards to simplify engagement across banks large and small, is to be welcomed, as it will enable the global banking community to move up the curve to ensure global supply chains are resilient and robust.” 

With the launch over SWIFT, the trade finance industry now has a global solution that will help to prevent cross-border fraud, according to MonetaGo.  

The solution will help to protect documentary trade finance, financing of open account trade and pre-shipment finance. 

The service can now be accessed by all the 11,000+ institutions in the SWIFT network. 

Image: MonetaGo 

Josh Poyser Josh Poyser is an editor at FinTech Intel. He has written about fintech for several years and appeared at FinTech Connect 2023 on the 'Unlocking Success: The Art of Fintech PR' panel.