Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
SWIFT to trial trade finance anti-fraud blockchain MonetaGo
Ledger Insights | Sep 13, 2021
Today MonetaGo announced an international proof of concept (PoC) with SWIFT for its blockchain fraud mitigation solution for trade finance. In 2018 MonetaGo launched a similar domestic solution in India, in which SWIFT India is a partner.
The solution uses APIs and aims to prevent fraudulent trade finance through the double financing of invoices, purchase orders, bills of lading and warehouse receipts.
See: An Analysis of Bitcoin’s Use in Illicit Finance
In the first half of this year, MonetaGo ran a PoC in Singapore with 25 organizations that included the International Chamber of Commerce (ICC), ITFA, Citi, HSBC, SMBC, Stanchart, Bolero and blockchain platforms Tradeix (Marco Polo) and Contour.
MonetaGo proposes that interconnecting multiple domestic anti-fraud platforms is overly complex and an international platform is the answer. If the SWIFT PoC proves successful, it could enable connectivity to SWIFT’s 11,000 members and beyond.
“Finance fraud in cross-border trade cannot be fully mitigated with local registries, so it makes perfect sense to leverage SWIFT’s global reach to help institutions around the world to solve this problem,” said Louise Taylor-Digby, Global Head of Trade Strategy, SWIFT.
“By bringing global API standards, identity and security, SWIFT can help to mitigate against the growing challenge of digital islands.”
The big problem
2020 wasn’t just a bad year because of the pandemic. Multiple substantial trade finance frauds came to light, several of them in Singapore, the major international trade hub. And in many cases, the alleged fraud involved double financing.
Hin Leong Trading collapsed with $3.85 million in debt. Its founder has been charged with “instigating” someone to forge a document saying it transferred 1.05 million barrels of gasoil, and the paper was used for a $56 million trade financing.
See: High tech meets high finance: The real revolution on Wall Street
Agritrade collapsed with $1.5 billion in debt. ING has alleged that Agritrade issued “overlapping” bills of lading to secure trade finance multiple times for the same goods. And allegedly, Commerzbank believes that shipments of coal it financed don’t actually exist.
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