The UAE has launched a blockchain-based trade finance platform aimed at curbing double-financing and misinvoicing.

UAE Trade Direct then intends turning to other key areas of trade finance, such as digitalising bills of lading and e-invoices and, in time, expects to manage letters of credit (L/Cs) and other trade finance instruments provided sufficient partners sign up to the platform.

Partnership

The platform has been under development since UAE telecommunications firm Etisalat formed a partnership in 2017 with Dubai-based technology company Avanza Innovations and First Abu Dhabi Bank. The fintech division of the UAE Central Bank sat on the steering committee that guided the project.

Abu Dhabi Islamic Bank, Commercial Bank International, Commercial Bank of Dubai, Emirates NBD, Mashreq, National Bank of Fujairah and Rakbank have now also joined the consortium.

Four more banks are soon expected to join UAE Trade Connect, which can synchronise with similar digital global initiatives such as Marco Polo and Komgo.

L/C possibilities

Trade finance fraud detection is the platform's initial focus but the consortium aims to develop UAE Trade Connect so it can help curb trade-based money laundering (TBML) and assist with sanctions compliance.

The consortium then aims to introduce e-invoicing, for which it will need to recruit multiple partners. This would enable UAE Trade Connect to manage L/Cs, bills of lading and bank guarantees, which would involve working with ports, customs authorities and governments.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.