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The Future of Trade Finance: Leveraging Technology to overcome Industry Challenges

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Trade finance is at a critical juncture. With an ever-growing $2.5 trillion trade finance gap and over 4 billion pieces of paper circulating in the global trade ecosystem, the industry is ripe for digital transformation. Trade finance is at a critical juncture. With an ever-growing $2.5 trillion trade finance gap and over 4 billion pieces of paper circulating in the global trade ecosystem, the industry is ripe for digital transformation.  Financial institutions and corporates alike must adopt technological advancements to remain competitive and compliant. Though there has been admirable progress in recent years, the industry needs to continue to innovate and not idly wait for someone else to take the initiative. ClearTrade®: Highlighting the imperative for digital transformation in trade finance Cleareye’s platform, ClearTrade®, is designed to transform trade finance operations by addressing key challenges and providing comprehensive solutions.  The platform’s digitisation module is at its core, converting unstructured trade documents into structured datasets using advanced Optical Character Recognition (OCR), Machine Learning (ML), and Natural Language Processing (NLP) algorithms.  This process not only boosts operational efficiency but also significantly reduces the risk of human error. The digitisation of trade documents is crucial for several reasons. Firstly, it streamlines processes such as sanctions screening, Trade Based Money Laundering (TBML) assessments, workability checks, and document examination.  These datasets can be seamlessly integrated into trade back-office systems, enhancing operational efficiency. ClearTrade®’s classification and extraction accuracies exceed 93% and 88%, respectively, setting new standards in the industry. Furthermore, the sanctions screening module within ClearTrade refines the process by categorising nouns in trade documents into corporate entities, vessels, locations, and individuals.  This refinement reduces false positives by up to 70%, optimising productivity and efficiency. The compliance and TBML module integrates a variety of checks, including maritime assessments and high-risk transaction evaluations, aligning with regulatory guidelines to ensure comprehensive risk management. Addressing operational challenges, compliance and ESG Trade finance is a manually intensive industry, burdened by paper and lacking standardisation. Banks face significant operational challenges, including potential losses from human error and a shrinking, highly specialised workforce.  Additionally, the increasing complexity of regulatory landscapes demands heightened vigilance and auditability, making manual compliance screening impractical and costly. Cleareye’s solutions are designed to alleviate these pain points. The ClearTrade® platform automates critical compliance processes, from red flag checks and vessel tracking to Bill of Lading validation.  This automation reduces the operational burden on staff, decreases the required headcount for maintaining compliance, and delivers substantial cost savings. In addition to operational efficiency and compliance, there is a clear need to address ESG compliance in trade finance. While ESG has been an area of focus in recent years, there are better and more efficient ways to approach it. ClearTrade®’s ESG module enables banks to assess transactions from an ESG perspective, track customer trends, and integrate ESG principles into their operations. This pioneering approach sets the stage for enhanced ESG compliance, fostering responsible business practices for both corporates and banks. The platform evaluates transactions based on parameters such as buyer, seller, distribution, and use of proceeds. This enables banks to assess transactions from an ESG perspective and track customer trends effectively.  By integrating ESG principles into their operations, financial institutions can ensure they are conducting ESG-compliant business in trade finance. Cleareye’s innovative approach to ESG compliance in trade finance demonstrates its commitment to promoting sustainable and responsible business practices. The path forward: Collaboration and innovation Since its alliance with J.P. Morgan in September 2022, Cleareye has deepened its integration within the trade finance industry. Collaborations with trade back-office providers like Finastra and Surecomp, and cloud providers such as IBM and Microsoft, have helped shape industry standards and share knowledge. Working with other cloud and technology providers, and major global banks, ensures that multiple industries and perspectives allows for the most comprehensive collaboration to occur.  This strategic approach involves thorough market research and direct engagement with Trade Operations and Compliance teams across different clients.  For example, by understanding the specific requirements of financial institutions, Cleareye can develop solutions that not only address critical customer needs but also maximise efficiency gains and mitigate compliance risks. Case Study: Cleareye’s integration with global banks These innovations are not hypothetical either, there have been multiple concrete examples of ClearTrade®’s impact within major global banks. Specifically, ClearTrade® was used to enhance digitisation, compliance, and automated document examination modules within the bank. The results were transformative and highlighted the real-life efficacy of Cleareye’s solutions in addressing the industry’s challenges. Details of the case study are below: Digitisation Module The Digitisation Module of ClearTrade® ingests trade document images to extract relevant data, eliminating manual entry and rekeying. Additionally, digitisation includes noun extraction from documents and de-duplication, enabling effective sanctions screening for restricted parties, vessels, and high-risk locations. Benefits: Enhanced processing power: The bank future-proofed its trade operations with advanced automation technology, enhancing processing power at a fractional cost compared to legacy systems or hiring additional resources. Competitive advantage: Leveraging the platform’s machine learning capabilities, trained on a large volume of letters of credit (LCs) and documents, resulted in reduced false positives and a lower risk of human error. High confidence data extraction: Achieved document classification and extraction rates of 98% and 93%, respectively, compared to the average of 65% observed in the legacy system, ensuring reliable data extraction at high confidence levels. Cost savings: Realised $1 million in savings on internal tech expenses for data extraction and $300,000 savings for sanctions screening efficiency via reduction of traffic to existing enterprise sanctions screening software. Compliance & TBML Module The ClearTrade® Compliance Module utilises the data extracted from the Digitisation Module and employs a series of red flag checks, vessel tracking, Bill of Lading validation, and other risk control measures to ensure regulatory compliance for each transaction. Benefits: Operational efficiency: Enabled a 70% decrease in the required headcount for upholding global market standards in the bank’s trade operations function. Cost avoidance: Avoided $1 million in costs for internal compliance build. Annual savings: Achieved annual savings of $1.3 million on infrastructure, maintenance, and enhancements for compliance and auto document examination, plus $1 million in

J. P. Morgan invests in financial technology provider Cleareye.ai

J P Morgan invests in financial technology provider Cleareye.ai

LONDON, June 20(Reuters) – J.P. Morgan (JPM.N) has made a strategic investment in Cleareye.ai, a financial technology firm focused on trade finance, the companies said on Tuesday. The parties, which entered into a commercial partnership last September, did not provide the financial terms of the transaction. Trade finance refers to financial products offered by banks and other institutions that seek to facilitate global trade by reducing counterparty risk between importers and exporters. Cleareye.ai operates a platform that it claims can expedite trade finance processes and compliance by analysing documents and data and removing manual checks. In April, Cleareye.ai announced that the U.S. bank would use the company’s software to map data directly to the bank’s back-office system, using the extracted data to manage compliance risks associated with each transaction. JP Morgan’s trade finance business receives nearly 4 million individual documents every year.

Cleareye.ai joins ITFA & the Fintech Committee

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LOS ANGELES, April 26, 2021 /PRNewswire/ — cleareye.ai, a leading fintech platform that transforms banks into hyper-agile organizations, announced that it is joining the ITFA Fintech Committee. cleareye.ai, aiming to make a significant impact in the trade finance ecosystem, finds ITFA the perfect forum to achieving its mission. Cleareye.ai’s “ClearTrade®” is designed to make the trade operations and sanctions screening simpler and less riskier. ClearTrade® is an easy-to-use digital workbench and proprietary rules engine to automate workflow of trade finance screening and compliance processing. The rules engine provides industry leading coverage of ICC rules governing international trade.Cleareye.ai in partnership with ITFA is committed to creating a safe and transparent trade finance industry.Mariya George, Co-Founder and President at cleareye.ai says: “cleareye.ai is excited to join ITFA to help its mission to bring together banks and financial institutions engaged in originating and distributing trade-related risks. Our focus is to help reduce the TBML risks induced by the document-centric process, human-centered review, and dependency on bank personnel. Our AI and NLP breakthroughs allow processing unstructured data accurately at scale and validating against ICC rules, to significantly reduce false positives and missed red flags.” Sarath Sasikumar, Co-Founder and COO at cleareye.ai states: “ITFA is the perfect forum for a Fintech like us who want to make a significant impact on the Trade Finance ecosystem. cleareye.ai is excited to be part of ITFA’s incredible journey and hopes to create exponential value not only to its members but also to the larger Trade Finance Industry. Trade finance undoubtfully is a powerful money-making tool for financial institutions, but it comes with its share of risk associated with a potential for fraud, money laundering, and breaches of regulations. cleareye.ai uses advanced Artificial Intelligence (AI) to improve the effectiveness of Trade Finance Operations and Sanctions Screening processes while increasing productivity by up to 70%. The platform processes trade finance transactions documents, performs automated reconciliation against UCP and ISBP rules, and seamlessly integrates with Sanctions Screenings and TBML systems.” ITFA is committed to the continuous development and growth of the trade finance and forfeiting industries. It acts as a valuable forum for its 300+ members to interact and transact business together profitably and safely. As a part of its mission, ITFA is at the forefront of understanding the emerging changes, challenges, and opportunities in trade finance.“Artificial intelligence is being embedded in a growing number of front- to back-office processes. This is a key technology trend that benefits banks and their corporate / SME clients. cleareye.ai demonstrates how modern technology enables banks to speed up various key processes whilst redefining client experience at a fraction of the cost,” said André Casterman, Chair Fintech Committee, ITFA. “We have only just begun what will be a very exciting and transformative journey to incorporate the use of artificial intelligence into trade and trade finance. I am very happy that cleareye.ai has seen the potential for their advanced technology in these markets and to welcome them to our community.” Said Sean Edwards, Chair, ITFA. About cleareye.ai cleareye.ai is a game-changing, advanced artificial intelligence (AI) machine learning platform that enables banks to launch tailored products at a rapid pace. Headquartered in Los Angeles with offices in New York, Bahrain, and India, the company works to significantly simplify banking by leveraging advanced AI techniques. Its platform combines the power of Consumer Experience Sensing, Insights generation from Data, and Autonomous Automation powered by Artificial Intelligence. This will transform banks into hyper-agile organizations, that customers want to bank with, and employees feel proud of, that deliver exceptional customer service where customers expect it, drive short-term gains and long-term growth, and generate insights to sustain momentum at a digital scale. It offers products in 3 categories – Regulatory Tech, Growth Tech and Cost Tech. cleareye.ai was founded by leaders in global technology, representing decades of entrepreneurial and digital systems experience across a range of industries. For more information, visit www.cleareye.aiContact: contact@cleareye.ai

14 Important Initiatives Every Tech Leader Should Pursue In 2021

Cleareye Blog Banner, Title is "14 Important Initiatives Every Tech Leader Should Pursue In 2021." by Chandrasekhar Somasekhar, CTO, ClearEye

FORBES Technology Council Featuring Chandrasekhar Somasekhar, Chief Architect cleareye.ai,Mar 18, 2021. — In the tech industry, it’s not only the hardware and software that evolves quickly. Trends in project planning and tracking, productivity, customer experience, and more can quickly come and go. Developers and executives must stay up to date on all the latest skills and practices. If they don’t, they risk falling behind competitors, losing top talent and more. As leaders in the tech industry, the members of Forbes Technology Council have valuable insights on the latest trends. Below are the 14 initiatives they believe every tech executive should pursue in 2021 and why. Curating A System Of Technology Partners Focused innovations from startups can be like tech’s “Big Five” coming up with breakthrough platforms—but an important part of the business process is being able to quickly offer the benefits of these innovations. Bringing together the capabilities of multiple startups, building integrations and extending collaboration can create value for both the businesses and their customers much faster than working in isolation. – Chandrasekhar Somasekhar, cleareye.ai, INC. Learn More

Technology Tackles Fraud and Money Laundering in International Trade

Cleareye Blog Banner, Title is "Technology Tackles Fraud and Money Laundering in International Trade."

Fraud and money laundering is an ongoing problem in the United States, and it is getting worse as the years go on. A report released by the US Government Accountability Office (GAO) suggests that tougher regulations in the financial sector have caused organized crime groups to increasingly turn to trade as a means to hide payments.  The umbrella term for money laundering via trade transaction is Trade Based Money Laundering (TBML) and it is one of the primary means of cleaning money used by criminal organizations. It is believed that over-invoicing for shipments of goods is one of the primary means of TBML.  Statistics show that there has been a consistent decrease in bulk cash seizures in the United States. While some may think this is good news, the lowered numbers actually suggests that this may be due to the increased use of international funds transfers and wires across borders as part of TBML schemes.  The volume of TBML is difficult to determine. However, Global Integrity, estimates it may be worth as much as $2.2 trillion annually. The large volume of trade and the complexities of the transactions work against the limited resources of customs agencies making this an attractive avenue for criminals.  The problem is a global one and includes cash smuggling and use of shell companies for wire and transfer of goods. China’s shell companies are also known to play a prominent role in the wiring and transferring of goods. Narcotics trafficking, financial fraud and money laundering are all prevalent TBML activities.  Identifying Vulnerabilities The GAO has identified open account trading as being a target of primary vulnerability. These are transactions that are handled but not financed by the bank.  Although banks take measures to report suspicious activity, they have limited visibility to the underlying reasons behind the activity. And with open account trading accounting for 80% of international trade processed through financial institutions, the measures they are currently taking are clearly not enough.  While banks apply due diligence checks and carry out standard money laundering procedures, they do not review documents such as invoices, bills of lading or customs declarations in open account transactions. This makes detecting TBML activity nearly impossible. In fact, of the reports of suspicious activity banks filed in 2019, only .2% were related to TBML.  These banks follow Anti-Money Laundering (AML) compliance guidelines that gather intelligence but they never pull the information together into a meaningful understanding of the risk that is posed. Therefore, many suspicious transactions go unchallenged.  Technology Can Help Although things look bleak, there is hope in the form of technological advances. Blockchain tools are being used to provide more visible, tamper proof information across the supply chain. Automated and digitized document review is being integrated as well.  Banks are slow to adapt to these systems, probably due to the cost of replacing legacy IT systems. However, a change is happening slowly but surely.  There is also some progress on the government level as a proof-of-concept study was conducted by the US Customs and Border Protection in 2018 trialing the use of blockchain technology in the process of document submission for cargo entry.  However, in order for technology to succeed, it must be accompanied by an information exchange between different authorities, particularly across national borders. So far, there has been little being done to facilitate these exchanges.  Experts suggest that a shared digital platform could help provide customs official with information on trade transactions in real time. It’s a doable solution but it requires getting the right institutions on board as far as implementation and funding.  The cleareye.ai Solution cleareye.ai has a technological solution that can work to minimize TBML and simplify banking.  They offer a Trade Finance Compliance & Screening tool that makes Trade Finance Operations and Sanctions Screening less risky.  cleareye.ai provides a digital platform that processes transaction documents, performs automated reconciliation against UCP and ISBP rules, and seamlessly integrates with Sanctions Screening and TBLM systems. Its AI capabilities increases productivity by 70%, its flexibility makes it easy for banks to customize systems in adhering to UCP and ISBP rules and it eliminates false positives and false negatives to minimize compliance check errors.  cleareye.ai also has a Fraud Monitoring & Detection Platform. The platform is powered by advanced analytics and machine learning and whittles down false positives in SAR created by AML products. Their learning algorithms use large pools of data and advanced computer patterns to detect patterns that might go unnoticed by data scientists. The technology eliminates problems that may come up when businesses work with a foreign supplier. It cuts down on fraudulent correspondence, data theft, executive and attorney representation, smurfing, mule, triage, micro-segmentation, nested accounts and more.  TBML has become a huge problem all over the world. Fortunately, there are technological solutions available. It is hopeful that these will be successful in reducing cases of fraud and money laundering in today’s trade space. 

Trade Finance in a Post-Covid World

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2020 was a challenging year, and it wreaked havoc on the state of trade finance. The COVID pandemic, fraud scandals, and allegations were just part of what put the market in such dire straits. But 2021 is providing a new beginning, and with that the volume of trade finance is expected to grow. This article highlights how 2020 affected trade finance and the predictions for 2021 and beyond. Understanding Trade Finance Trade finance encompasses the financial instruments and products used by companies to facilitate financial trade and commerce to make transactions feasible. It includes activities such as credit lending, forfeiting, export credit, financing, and factoring. The process involves several parties including the buyer and seller, the trade financier, export credit agencies, and insurers. Some of the documents involved in the process are a Letter of Credit, Bill of Lading, Bill of Exchange, Packing List, Commercial invoice, Certificate of Origin, and the list goes on. To provide some context, in the early days of international trade, exporters were never sure when importers would pay them for their goods. Exporters tried to reduce the risk of not being paid while importers worried about making payments in advance since there were no guarantees that the seller would actually ship the goods. Trade finance was created to eliminate these risks by accelerating payments to exporters and assuring importers that goods would be shipped. Letters of Credit would be received by the exporter’s bank acting as a type of credit insurance payment once shipment documents are presented. Another option of trade finance is for the exporter’s bank to give the exporter a business loan while processing the payment made by the importer. This keeps the supply of goods active while the exporter waits for the importer’s payment. The loan is recovered by the trade financier once the bank receives the payment. The Effects of the Coronavirus We can’t really talk about 2020 without mentioning the coronavirus pandemic. When the pandemic first hit, the travel restrictions put in place brought global trade and trade finance almost to a standstill. Once trade started moving again, it was still hampered by confusion due to varying restrictions in place throughout the world. Although loan support was provided by governments, software issues got in the way, making it difficult for companies to get the funding they needed. Export credit agencies rolled out billions of dollars in support at a considerable risk. Supply chain programs surged to cover supply issues but many were met with distrust due to questionable disclosure rules and the conduct of buyers and providers. However, there were some initiatives that were successful, chief among them being the Debt Suspension Initiative. Launched in April of 2020, the DSI was established to help countries in need of support, so they could boost their credit profile and borrow at a lower rate. The Initiative has been extended to June 2021 and, along with hope on the horizon in the form of a vaccine, experts are hoping that financial activity will get back to pre-crisis level by mid-2021. Advances in Trade Finance Tech Trade finance is a powerful money-making tool for financial institutions, but it comes with its share of risk when it comes to potential for fraud, money laundering, and breaches to regulations. 2020 certainly saw its share of these illicit activities. 2021 will be seeing advancements in technology designed to deal with these issues. One example is cleareye.ai’s Intelligent Trade Screening Platform. cleareye.ai uses advanced Artificial Intelligence (AI) to improve the effectiveness of Trade Finance Operations and Sanctions Screening processes while increasing productivity by 70%. The platform processes trade finance transactions documents, performs automated reconciliation against UCP and ISBP rules, and seamlessly integrates with Sanctions Screenings and TBML (Trade Based Money Laundering) systems. It is user friendly, intuitive, and it will ensure Trade Finance Compliance across the board. 2020 has shaken the world of trade finance, but it has also taught us valuable lessons that will pay off in the new year. Advanced technology will work to minimize fraud and promote growth, while the introduction of the vaccine means increased hope all around. Here’s to a brighter financial future.  

Cleareye.ai Collaborates with Microsoft for AI Platform

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Yahoo! Finance, Feb. 9, 2020– cleareye.ai, a leading fintech platform that transforms banks into hyper-agile organizations, today announced it is collaborating with Microsoft. cleareye.ai’s enterprise-ready platform will use Microsoft technology to power its products, starting with the PPP Loan Forgiveness Processing Engine, which will be powered by Microsoft Azure. This offering is a Microsoft Azure Artificial Intelligence (AI) powered document automation and rules reconciliation solution. It is designed for lenders who process forgiveness applications as part of the Small Business Administration’s Paycheck Protection Program (PPP), that provides direct incentives to small businesses to keep workers on the payroll during the COVID-19 pandemic. Learn More

Cleareye.ai: Simplify Banking

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siliconindia–Banks are struggling to adapt to the new normal in the post COVID era. With more customers shifting their focus to digital channels, it has become essential for banks to address this demand spike. Further, operationally they are struggling with regulatory compliance and risk management as model issues have emerged in every aspect of a bank’s operations. To this end, banks need to rightly digitize their legacy platforms by addressing the challenges of information silos that make data-intensive AI solutions ineffective, complex mash-up of banking platforms, ever evolving regulatory mandates and compliance needs, to name a few. Also, the situation highlights the requirement of an efficient partner who has the experience and expertise to transform banks’ operations. Learn More

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