Financial institutions have joined forces with the Singaporean government to launch Trade Finance Compliance (TFC), a new digital service to boost trade security in Singapore.

The new e-service, launched on Singapore’s Networked Trade Platform (NTP), is a result of a joint government-industry partnership between Singapore Customs, the Monetary Authority of Singapore (MAS) and financial institutions.

Backed by the Singaporean government, the NTP is a digital national trade information management system that aims to make trade flowing through Singapore more efficient by bringing the entire trade ecosystem to a single, secure portal.

Now live on the NTP, the TFC service will help tackle trade finance compliance challenges by addressing obstacles faced by financial institutions when financing trade in Asia, such as trade fraud risks and the lack of reliable data to conduct price checks for non-commodity goods.

Using data derived from permits issued by Singapore Customs, the TFC will enable financial institutions to digitally reference such data to upgrade their checks for trade finance compliance.

“This used to be challenging in the past due to the lack of reliable price benchmarks and information on permit requirements,” Sriram Muthukrishnan, head of global transaction services, trade product management at DBS Bank, one of the banks signed up to the service, tells GTR.

“Traders are also able to share data relating to their trades directly with their banking partner, promoting greater transparency and efficiency in flow of information and trade financing,” he adds.

Other banks who have partnered to launch the TFC include BNP Paribas, ICBC, MUFG Bank, OCBC Bank and UOB.

Muthukrishnan explains that enhancing the security of trade finance is a “continued commitment between the government, regulators and banks. With the digitalisation of trade, there has been growing emphasis on measures to mitigate the risk of fraud and money laundering, and fend against increasingly sophisticated ways to conceal financial proceeds from illegal activities,” he says.

He adds that banks play a critical role in sifting out transactions that are susceptible to fraud and money laundering risks. “The TFC service can help banks better manage such risks, while at the same time help corporate customers improve their access to working capital to support their business activities,” he says.

Moving forward Singapore Customs say that industry and government will continue to work closely to digitalise trade processes, and develop new services to be launched for the trading community on the NTP.


Hotbed for trade crimes

After a string of high-profile fraud cases, from the Access World nickel fraud to the Qingdao metals fraud scandal, Asia has become a hotbed for trade crimes.

Speaking to GTR in 2016, MAS added that in particular, Singapore’s status as a trade hub makes it a natural conduit for money laundering, trade finance crimes and terrorist financing activities. It is also viewed as being one of the most advanced in fighting such activities in Asia Pacific, ahead of Hong Kong and Australia.

MAS has made previous attempts to fight money laundering and trade finance crimes; in the wake of the 1MDB scandal, it launched the anti-money laundering (AML) dedicated unit.

The Singaporean government seized US$180mn in assets linked to 1MDB in a money laundering investigation in July 2015. In the previous May, it shut down BSI Bank of Switzerland because of “gross misconduct” concerning 1MDB.

The TFC service rollout also follows the NTP launching Tradeteq’s AI-based credit scoring system, to better assess counterparty risk in trade deals.

The system is being used to leverage various data sources to provide thorough credit reports for users of the NTP, including data on each company in the supply chain as well as each receivable.

As well as helping importers and exporters better assess counterparty risk, the hope is that such an AI-based credit rating system could give financiers confidence to support transactions they would traditionally have perceived as too risky.