Fintech company MonetaGo has partnered with Singapore-based trade technology platform GUUD, a company of vCargo Cloud, to implement its trade finance fraud prevention solution across Asia.

The alliance will bring MonetaGo’s Secure Financing platform into the GUUD ecosystem, which streamlines trade processes including compliance, shipping, financing and payments via a network of trade technology platforms. It currently provides trade finance connectivity and digitised workflow capabilities for Singapore’s Networked Trade Platform (NTP) and Singapore Customs, and includes vCargo Cloud’s CamelONE trade finance platform, which was launched on the NTP in November 2019 with the backing of nine banks.

MonetaGo’s blockchain-based solution runs on R3’s Corda technology, and has been in full production since 2018. The network enables a bank to hash certain elements of an invoice, create a unique fingerprint for it and then publish it to the network. The bank can then apply different states to the invoice, such as whether it has been registered or financed, enabling other lenders to check if a transaction has already been financed by another funder.

In a recent live project, MonetaGo joined forces with Swift in India to enable a group of Indian banks to leverage the Swift messaging infrastructure to pass messages back and forth to MonetaGo’s blockchain in order to cross-reference an invoice before committing to financing it. Since then, the company says it has facilitated over 1 million transactions worth billions of dollars.

This latest development will see MonetaGo plug into GUUD’s platform via an API, giving all financiers in its ecosystem a new tool to combat trade fraud. The alliance has also received the support of SMBC.

“The integration of digital fraud prevention in trade finance across Asia is a critical component of increasing access to capital and SMBC is supporting this effort in various markets,” says Shinichiro Yamazaki, global head of trade innovation at SMBC.

This news comes following a string of trade and commodity finance frauds in Asia, which has left banks wary of providing finance to the sector. Some have looked to consolidate their commodity finance operations and others – notably ABN Amro – have closed that line of business entirely.

Several attempts are being made to tackle the issue, notably a new trade finance registry which is currently being piloted on dltledgers’ technology by a group of banks including Standard Chartered and DBS Bank.

However, the effectiveness of the registry, described as “a secure central database for the banking industry to access records of trade transactions financed across banks in Singapore”, has been questioned by industry players, since it doesn’t involve other counterparties in the ecosystem, and cannot identify instances where financing is only sought once, but the value of cargo is inflated or does not exist in the first place.

Speaking to GTR recently, a Singapore-based source said: “I can’t see how it would work unless the relevant counterparties are directly linked to the registry and can validate themselves. For any system without independent validation from buyers, you cannot guard against fraudulent sales invoices.”

Because MonetaGo’s solution authenticates invoices against national government data sources such as tax and customs databases, and verifies the underlying goods being financed through the transportation information associated with each invoice, it solves for this issue. Moreover, as it is already live rather than in pilot phase it can be used immediately by banks in the GUUD ecosystem to combat double financing as well as other types of trade fraud.

“We look forward to collaborating in our joint pursuit to help businesses work seamlessly and efficiently to secure trade finance, and ultimately put an end to the trade fraud scandals which have hindered the growth of so many for too long,” says Desmond Tay, group CEO of GUUD.

MonetaGo is now looking at further regional expansion opportunities, and has hired Tat Yeen Yap, formerly head of Asian trade finance business transformation at Société Générale, as head of product Apac to support its growth.