Fintech Digest: UAE, Singapore Pilot First-Of-Its-Kind Cross-Border Trade Finance Projectby Fintechnews Africa 14 November 2021
The Monetary Authority of Singapore (MAS) and Abu Dhabi’s Financial Services Regulatory Authority (FSRA) have completed a first-of-its-kind digital cross-border trade finance document transfer (Fintech Futures).
This makes the initiative the world’s first cross-border digital trade financing pilot, a statement said.
A ‘TradeTrust’ framework developed by Infocomm Media Development Authority (IMDA) in Singapore facilitated the pilot transfer between MAS and Abu Dhabi Global Market’s (ADGM) regulatory body FSRA.
DBS Bank, Emirates NBD and Standard Chartered also worked on the project as commercial partners.
Legally, the pilot was backed by a UN affiliate-developed Model Law on Electronic Transferable Records (MLETR). Both jurisdictions have adopted the model law, which legally recognises electronic transferable records locally and between borders.
Why it matters: Trade financing supports nearly 50% of international trade in some form, responsible for US$9 trillion worth of trade. Of this, global factoring and receivables finance is responsible for US$3 trillion worth of international trade.
However, cross-border trade finance, and trade-based money laundering and fraud, remain key issues for the industry to contend with, the statement pointed out. In this context, digitisation can help authenticate cross-border trade finance more securely and cost-effectively. The TradeTrust platform, for instance, is interoperable, and allows exchange of documents in real time, while providing digital proof of authenticity, origin and ownership.
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