After years of investigating trade fraud, our MD, have distilled it down to three core forces that enable it:
1. The constant need for liqudity
2. The inherent problems with paper documents – not just their vulnerability to doctoring, but the dangerous gap they create between reality and what’s on paper
3. Lack of visibility – because no single person ever hold the complete truth
In the context of invoice financing, this plays out when fund managers, driven by the pressure to grow Assets Under Management (AUM) and avoid cash drag, selectively focus on top-line revenue while conveniently ignoring obvious red flags.
The result? A perfect environment for:
• Fake invoices
• Impersonation
• Round-tripping
What makes trade fraud especially prevalent is the ease with which traders can repeatedly round-trip massive invoice volumes without detection.
Most people imagine fraud as a clever scheme to steal a few million. In reality, the boldest fraudsters think much bigger – faking hundreds of millions in plain sight. The scale is so audacious that many asset managers simple dismiss the possibility.
And here’s what’s often most shocking when we investigate: it’s rarely a complex, sophisticated scheme. It’s usually breathtakingly simple – so simple that you’re left wondering how so many smart, experienced professionals, blinded by AUM targets, missed what was right in front of them.