Photo of Jarmo Nurmi, Corporate Treasurer.

Beneficiary account validation API helps to mitigate risk of fraud

The challenge

Wärtsilä had concerns when managing changes to supplier master data for payments. It was looking for a more efficient and automated way of validating bank accounts and catching possible fraud attempts before making payments to the many suppliers in their global network.

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Large corporates are often the target of scam invoices and change requests. The perpetrators send requests pretending to be a legitimate business that is changing bank or bank account number or send an illegitimate invoice to a large company on the chance that it will be paid without scrutiny. Wärtsilä was looking for a solution to mitigate the risk of such an event happening to them.

The solution

A new beneficiary account validation application programming interface (API) solution has been created and is now live. The new solution gives Wärtsilä an easy way to validate the beneficiary bank account information is correct before making payments, reducing the risk of fraud, and replacing manual checking processes. The new beneficiary account validation solution uses highly innovative API technology.

APIs enable two applications to directly communicate with each other and exchange data. The beneficiary account validation service works by connecting Wärtsilä’s system directly with its bank’s system, enabling the two to talk via an API and share data related to bank account validation.

Using APIs in this way to validate the authenticity of the account numbers of payment beneficiaries (a confirmation of payee service) is not only a first of its kind in the Nordics but the first time this technology has been used anywhere in the world to solve this challenge.

Best practice and innovation

With beneficiary account validation, before making a payment to a foreign supplier’s account, Wärtsilä sends a query to its bank to validate information about the account the counterparty is using to receive the payment. The bank then passes on the query to the counterparty’s account holding bank via SWIFT messaging to request verification and confirmation that the account number is correct and genuine. The content of the API query is automatically transferred into a SWIFT message, which is then delivered to the beneficiary’s bank.

Beneficiary account validation adds a new commercial API offering to the bank’s growing list of premium APIs that move beyond PSD2 compliance requirements. The bank is continuing to use the opportunity created by open banking to lead the drive to develop new premium APIs targeted to solving company pain points in their processes.

“As a premium API, beneficiary account validation does not come with a user interface but is integrated by the API between us and our bank. This allows us to automate our processes and integrate the API in a tailored way that is suited to our needs,” explains Jarmo Nurmi, Corporate Treasurer.

As more and more banks adopt SWIFT gpi, it is hoped the entire validation process will become even more automated, providing an efficient and reliable service for combatting invoice fraud globally.

The beneficiary account validation API is a new and unique digitised solution that meets an extremely important need of companies to support their payment validation processes and decrease their chances of becoming targets for fraudsters. By supporting fraud prevention in a direct and automated manner, the solution also enables companies to improve efficiencies and focus their resources in other areas of the business. Beneficiary account validation uses the latest API technology to give help to companies in a difficult and time-consuming area.

Key benefits

• Mitigates the risk of fraud.
• Removes manual processes.
• Increased automation.
• Resources freed up for more value-added tasks.

The Adam Smith Awards is the industry benchmark for best practice and innovation in corporate treasury. The 2021 Awards attracted a record-breaking 309 nominations spanning 40 countries. To find out more please visit: https://treasurytoday.com/adam-smith-awards.