In an era where fintech promises frictionless trade and AI-powered platforms scan contracts in milliseconds, it’s tempting to believe that technology alone can eliminate the risks in international commerce. But as any seasoned trade finance professional knows, technology can only go so far. Fraudsters adapt, jurisdictions differ, and human creativity—so often a force for progress—can be weaponized in ways that software can’t always predict.
At Recovery Advisers, we’ve spent years helping credit insurers, lenders, and exporters recover losses in the most challenging markets. Our experience is a sobering reminder that while innovation plays a critical role, successful international trade still hinges on local knowledge, physical presence, and human insight.
The Many Faces of Fraud in International Trade
While international trade continues to drive global economic growth, it also presents fertile ground for increasingly sophisticated fraud. These are not merely one-off deceptions; they are often calculated schemes that exploit gaps in due diligence, jurisdictional complexity, and the distance between counterparties.
At the front end of the transaction lifecycle, fraudsters may fabricate financials to gain access to credit or insurance, obscure true ownership through complex company structures, or conduct sham sales between related entities to create an illusion of legitimate trade. The use of unofficial communication channels and sudden spikes in trade volume can serve as early red flags—but are often overlooked in the rush to close deals.
At the transaction level, collusion remains one of the most dangerous forms of fraud. In such cases, buyers and sellers may conspire to stage the appearance of legitimate trade while defrauding banks or insurers. This could involve agreeing to “lose” goods in transit, inflating invoice values, or shipping low-value items in place of contracted goods. Particularly in commodity trades, cargo may change ownership multiple times at sea, complicating enforcement and opening the door to substitution fraud.
And then there are repayment-stage schemes: cases where buyers place large orders shortly before declaring bankruptcy, make payments to fraudulent accounts via phishing, or secure financing against non-existent or misrepresented collateral.
These schemes are often sophisticated, well-practiced, and increasingly global in reach. And once the fraud is discovered, it’s usually too late—funds are disbursed, goods are shipped, and legal recovery is mired in cross-border complexity.
The Limits of Digital Due Diligence
In many cases, modern trade depends on digital tools – from automated KYC and blockchain-based ledgers to AI-driven risk assessments, the efficiencies gained are undeniable. But there’s a limit to what algorithms can interpret. Fraud is often designed to blend in, and digital due diligence can be deceived by sophisticated facades.
Take, for example, a transaction involving a buyer that appears well-capitalised, has a clean digital footprint, and uses standard documentation. A platform may flag nothing unusual. But a site visit reveals a skeleton staff, outdated equipment, and a recently changed ownership structure—all potential precursors to walkaway fraud. No software would catch that.
It’s in these moments that real, in-person checks become indispensable.
The Power of Physical Verification
The most effective fraud prevention strategy still begins with simple—but rigorous—questions: Does this company really exist? Are the goods actually available? Is the management who they say they are?
This is where Recovery Advisers’ fieldwork makes a critical difference. Our team has encountered companies operating out of abandoned warehouses, uncovered discrepancies between declared and actual inventories, and interviewed auditors who’ve quietly acknowledged red flags not visible in the financial statements.
These checks, while resource-intensive, offer something algorithms cannot: context. And in international trade, context is often the difference between success and a large write-off.
Structuring for Enforceability – Not Just Efficiency
Equally important as fraud detection is transaction structuring. In the rush to close deals, legal nuances across jurisdictions can often be overlooked. That’s why in 2024 we launched ExpoFin, a solution built to address the very problems we’ve seen repeatedly during claims and recovery work.
ExpoFin combines our legal enforcement expertise with technology to create enforceable, standardised transaction documentation—especially for small to mid-sized trades between €500,000 and €10 million. For many lenders, these deals fall below the threshold where traditional legal support is cost-effective. But the risks remain just as real.
Without proper structuring, even the most promising transaction can collapse. We’ve seen promissory notes referencing bills of lading ruled void, personal guarantees rendered unenforceable, and collateral that—while listed—was impossible to seize under local law. ExpoFin anticipates these issues, ensuring that contracts are not just well-drafted, but enforceable in the real world.
Closing the Trade Finance Gap
One of the industry’s biggest challenges is the trade finance gap, which disproportionately affects SMEs. Smaller deals are often overlooked due to the perceived complexity and cost of due diligence. Yet these companies represent the backbone of global supply chains.
ExpoFin aims to change that—by offering jurisdiction-specific, enforceable documentation at a fixed, predictable cost, delivered within ten working days. Our solution helps lenders justify financing smaller deals while lowering risk exposure. It also empowers exporters to enter unfamiliar markets with greater confidence.
And while ExpoFin uses proprietary software to streamline structuring, its strength lies in its foundation: human insight, drawn from thousands of claims, disputes, and recoveries around the world.
Local Insight, International Impact
No matter how advanced technology becomes, the value of local intelligence cannot be overstated. In many regions, an informal conversation with a local auditor or a quiet check of court filings reveals more than any digital screening. A buyer’s reputation—unknown to the cloud but well-known in the community—can say more than their financials.
Recovery Advisers’ international network, built over 16 years of hands-on work, enables us to uncover these hidden signals. Whether it’s confirming tax compliance, verifying assets, or evaluating the real ownership structure behind a foreign buyer, our team brings clarity where opacity is the norm.
Final thoughts
International trade is based on trust – but trust alone is not a risk strategy. While technology can flag anomalies and streamline processes, it takes human intelligence to validate what matters most—intent, integrity, and enforceability.
At Recovery Advisers and through ExpoFin, we don’t just provide advice—we bring solutions grounded in real-world outcomes. Because preventing fraud and ensuring transaction success isn’t about choosing between humans and technology. It’s about knowing where each has its place.
And when it comes to navigating the complex risks of cross-border trade, human presence still makes all the difference.
