They are relatively easy to fake. Frequently get lost. And can add huge amounts of time to any journey. Yet paper documents still rule in the $25 trillion global cargo trade with four billion of them in circulation at any one time.
It is a system that has barely changed since the nineteenth century. But that dependence on bits of paper being flown from one party to another has become a vulnerability for companies which move and finance the world’s resources around the globe.
In one high profile case, banks including ING Groep NV discovered in 2020 that they had been given falsified bills of lading — shipping documents that designate a cargo’s details and assign ownership — in return for issuing credit to Singapore’s Agritrade Resources. In another dispute, HSBC Holdings Plc and other banks have spent three years in legal wrangling to recover around $3.5 billion from collapsed fuel trader Hin Leong, which is accused by prosecutors of using “forged or fabricated documentation,” when applying for credit.
The International Chamber of Commerce estimates that at least 1% of transactions in the global trade financing market, or around $50 billion per year, are fraudulent. Banks, traders and other parties have lost at least $9 billion through falsified documents in the commodities industry alone over the past decade, according to data compiled by Bloomberg.
“It’s the easiest type of fraud to commit,” said Neil Shonhard, chief executive officer of anti-fraud platform MonetaGo, “either falsifying a document or sending duplicates to banks ‘A’ ‘B’ and ‘C’ without them speaking to each other.”
The ICC said in a 2022 report, co-authore