ITFA’s FCCi Launch a New Paper “The Conquest of Military Dual-Use Goods Detection in Trade Finance”

We are delighted to share a new paper on Military Dual-Use (MDU) goods classification published by ITFA’s Financial Crime Compliance initiative (FCCi).

The paper is entitled “The Conquest of Military Dual-Use Goods Detection in Trade Finance”, and builds on the FCC Initiative survey that we reported on in February. It was authored by Byron McKinney and Edward R. Stoltenberg.

The recent impacts of export controls and goods classification are a driving force towards the ongoing digitization of trade finance workflows. Today’s trade finance environment consists mainly of legacy technology reliant upon screening processes that tend to include list-based methodologies, manual reviews, or a combination thereof.

In the fast-paced trade finance environment, list-based methods have limited scalability, consistency, and efficacy. Institutions, therefore, need to adapt to the specific and growing jurisdictional complexities of import and export goods’ classification requirements. One option is to utilize recent advances in technology which can help fill complex knowledge gaps, improve detection methods, and promote collaborative efforts across the supply chain.

How an institution decides to proceed when strengthening MDU detection processes should be carefully evaluated based on risk appetite, cost, data availability and condition of its technology stack. This criterion could be aligned to the institution’s core values and regulatory requirements. Advances in technology, through the implementation and use of machine learning techniques to better manage content, reduce manual review and reuse an institution’s historical data, can break current dependencies on list-based screening techniques.

The paper will be presented during the FCC Initiative seminar taking place on July 8th at BPL in London. We look forward to welcoming you there. In the meantime, please don’t hesitate to engage with co-chairs of the FCC Initiative, Ben Arber and Graham Baldock.

The views expressed by the authors in this publication do not represent their employers or any agency. Any content should not be interpreted in any capacity as regulatory guidance, recommendations, or interpretations of law. Such expressed views are to be considered individual opinions and perspectives.