Singapore’s anti-fraud trade finance registry is aiming for expansion across Asia, according to the head of trade at founding partner DBS Bank.
The trade finance registry initiative was launched by the Association of Banks in Singapore (ABS) in 2020 to tackle the risks of double financing fraud in the aftermath of a series of high-profile company collapses and accusations of fraud in the city-state’s commodity trade sector.
The platform has become a “huge success” since going live in June 2023, said DBS Bank’s managing director and group head of transaction banking product management, Sriram Muthukrishnan.
The lender jointly led the project with Standard Chartered, initially bringing together a total of 14 international financial institutions along with ABS and government innovation agency Enterprise Singapore.
The number of participants has since grown to more than 40, Muthukrishnan said. The banks are “seeing value in it” after the system has “highlighted a number of cases of potential duplicate financing frauds”, he told GTR.
The goal now is to “scale it further” and “go beyond Singapore into other locations”, Muthukrishnan said, with the Asean Secretariat having already shown interest in the platform.
“We have been talking to a number of banks and a number of regulators across the region, so going beyond Singapore into other locations is now the next job to be done. I think those discussions are progressing quite well.”
The project leaders are also exploring ways to expand the platform by “pushing in many more kinds of transactions” and “adding more use cases to it”, DBS’s trade head said, such as “leveraging it to also provide proof of provenance, as an example”.
“But the original use case, which was basically to avoid duplicate financing and fraud, works extremely well, and all this is being done without breaching data confidentiality rules,” Muthukrishnan said.
The trade finance registry serves as a secure database for records of trade transactions financed across foreign and local banking institutions in Singapore, allowing lenders to check whether a borrower has attempted to obtain finance more than once for a single trade transaction.
Using the technology, initially developed by financial technology provider MonetaGo, banks can perform queries on select document information, which is hashed to create electronic fingerprints.
These fingerprints are then shared to a secure, unified data repository to detect double financing attempts in near-real time.
Under the trade finance registry umbrella, ABS has also since launched a real-time verification system for bills of lading (BLs). This tool lets lenders submit data from trade documents to the registry, which will then match that data with information from shipping companies to verify whether a BL is legitimate.
However, market sources in Singapore have previously told GTR that the registry’s effectiveness has been limited because the relatively low number of transactions being submitted into the system means it may not detect duplicate financing.
Some large lenders have not been routinely using the registry as part of their compliance processes, several of the sources said.
