Is It Possible For Fraudsters To Be Shut Out Of The Trade Finance Industry?

This topic has 2 replies, 3 voices, and was last updated 2 years, 1 month ago by John David.

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July 22, 2022 at 10:52 am #631

Allwyn Anand
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Is it possible for fraudsters to be shut out of the trade finance industry?

July 23, 2022 at 9:44 am #1069

Aashiq Rasool
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Fraud has many faces and is hard to figure out. There are many ways that fraud can happen in international trade. Some of the most common ways to do this are:

1. Multiple financing is when a business finances the same trade with more than one bank in more than one country.
2. Fraudulent documents happen when a company changes or makes up a fake document that doesn’t show what the real trade is.
3. Fraudulent legal entities are when bad people make fake companies to get around financing terrorism.
Vendor impersonation is when a fraudster convinces a company that a supplier has changed bank accounts so that they can get paid themselves.
4.Fraudulent diversion of funds is when money is put into a common case collection account, but then it is taken out and used for something else.

Industry regulators know that fraud is a problem, but they can’t say how big it is. Estimates say it could be as much as 1% of the value of all transactions. Even though the effects are wide-ranging and could be widespread, digitalizing trade may be the key to a future without fraud.

July 24, 2022 at 9:47 am #1073
John David
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Yes. It is possible to shut fraudsters out of the trade finance business completely.

The International Chamber of Commerce (ICC) UK, the Centre for Digital Trade and Innovation, and MonetaGo have put out a white paper called “”Shutting fraudsters out of trade”” to help stop fraud and give advice to banks, trade associations, governments, and regulators.

To improve cross-border payments, banks are encouraged to strengthen the ICC Trade Register, add data authentication to their processes, collect the minimum trade metadata from commercial invoices and title documents, verify the ecosystem, and take part in the G20 roadmap.

Trade associations should make more people aware of how fraud affects businesses and banks. They should also make more people aware of the G20 roadmap to improve cross-border payments.

Adopting existing technologies like Legal Entity Identifiers (LEIs), digital ledgers, invoice number tracking, APIs between revenue departments and banks, and regulators allowing banks to share fraud data will help shut fraudsters out of the system.
- This reply was modified 2 years, 1 month ago by Carin G Hansen.
- This reply was modified 1 year, 10 months ago by Carin G Hansen.
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