Duplicate Financing Fraud Faces New Foe That Sheds Light on an Elusive Thief
In trade finance on a global level, there’s a form of fraud known to exist but is hard to quantify because it’s only discovered when someone gets caught.
It’s called duplicate financing fraud and it works like this: Because lenders have their own data systems and don’t share customer info, bad actors have been able to secure duplicate financing in the country of origin, the destination country as well as in a financial center too — all on the same order.
“Say I’ve got a receivable for $1 million,” Jesse Chenard, CEO at MonetaGo, explained in an interview with PYMNTS. “I take it to bank No. 1 over here, take it to bank No. 2 over there, maybe take it to the overseas bank that the shipment is ultimately going to, and they are able to finance it in multiple venues.”
That’s textbook duplicate financing and it happens at both the low end of the trade spectrum in marketplaces and at the higher end in commodities trading scandals.