Trade finance must digitalize to combat fraud
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Trade finance must digitalize to combat fraud

Better AML controls across traditional financial systems have increased the appeal of international trade as a conduit for fraud.

Illustration: Pixabay

When it comes to global trade, the figures don’t always add up. While the United Nations Comtrade database on international trade valued China’s exports to the US in 2022 at $582.76 billion, the US Bureau of Economic Analysis valued imports from China over the same period at just $537 billion – a $45 billion gap.

The solution to multiple financings could be digitization of all title and trade-related documents and placing them on a central ledger
Ram Arapally, Triterras

Similarly, a policy memo jointly published by Washington-based think tank Global Financial Integrity, the Fedesarrollo research institute in Bogota, Transparency International Kenya, and Uganda’s Advocates Coalition for Development and Environment in January found that in Colombia, the value of palm oil imports reported by trading partners corresponded to just 11% of the total value of palm oil exports reported, suggesting a systemic problem of mis-invoicing.

According to the head of Ireland’s Garda National Economic Crime Bureau (GNECB), Pat Lordan, speaking at the recent European anti-financial crime summit in Dublin, trade-based money laundering is a global problem.

As if to emphasise his point, within days authorities in Italy and Spain arrested 33 people allegedly offering a trade-based money laundering service known as the ‘black market peso exchange’.


Gift this article