Surecomp’s Cryptographic Fingerprints to Combat Duplicate Trade Financing Fraud

On Tuesday, April 12, when a solution was reported by Surecomp to further decrease the risks of duplicate trade financing fraud, the company encountered a type of fraud that had been difficult to escape from -and this has driven a few banks to cease the trade finance business altogether.

Duplicate trade financing is a fraudulent activity where the troublemakers approach two banks to fund the same invoice, exploiting data protection guidelines that keep the two banks in obscurity.

Surecomp President and CEO Guy Perry stated, “The risk cost of providing funds in this business has increased decisively, to the degree that a few banks have already left this business.”

Fighting a Rising Type of Fraud

Increasingly more fraudsters have been taking advantage of the shortcoming to the tune of millions of dollars as there is not a definite solution accessible to banks previously. 

Perry explained, “Hence, it is an entryway that everyone knows about.”

It is an issue that has reduced the banks’ passion to deliver trade financing so much that it has taken steps to extend an existing stressing trade finance gap - the interest of corporates for trade finance that is not fulfilled or reviewed by banks. What’s more, small- to medium-sized businesses (SMBs) will be affected first as the trade finance gap is a great deal for exporters.  

Perry explained, “If the expense of running a business increases, then generally the micro and [SMB] businesses will face an adverse situation first, as they operate with poor negotiating power and an extremely terrible or nonexistent credit rating.”

Comparing Invoices While Protecting Customer Data

Surecomp’s endeavor enables banks to work on a cryptographic fingerprint of invoices and other documents that are funded.

Perry stated, “This arrangement will help banks safeguard their client information at any time and never share this information with the third party outside the bank. ”

Instead, Perry further added, a cryptographic fingerprint is generated, and only this is imparted to a database operated by Surecomp. If the database detects the same fingerprints, then both the banks will be sent a notification.
Perry added, “This could efficiently prevent assigning funds twice for the same invoice.”

Related Read: Trade Finance & SMEs - Reasons Why SMEs Opt For Trade Finance

Watching for Green, Red, or Amber

This arrangement should be executed by banks which are indulged in providing trade finance services to businesses - financing invoices, purchase orders, warehouse receipts, bills of lading, and many more - Perry said.

To put the arrangement towards operation, the banks are required to install a small app that will further produce cryptographic fingerprints. In Surecomp's fundamental subscription plan, this arrangement charges no costs from the banks.

For each bank utilizing the arrangement, the only process change is to review the results of the fingerprint check. If anything dubious is found, the arrangement empowers the two banks to have a solid communication channel.

“If it is Green, the banks are free to continue their standard credit process,” Perry explained. “If it is Red, they need to stop the transaction. In case it is an Amber, a thorough review is required.”

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