Manila: The Asian Development Bank (ADB) on Tuesday launched its first Trade Finance Scorecard, a new tool to address market gaps stemming from the unintended consequences of global measures to fight money-laundering and terrorism.
“Preventing criminals and terrorists from exploiting the global financial system is critically important,” said ADB’s Head of Trade and Supply Chain Finance, Steven Beck.
“But these regulations can also undermine jobs and growth at small businesses and developing countries. This new scorecard will open a channel of dialogue among stakeholders to help prevent crime and terrorism while financing growth and job creation,” Xinhua news agency reported quoting Beck.
The ADB said the Trade Finance Scorecard focuses on issues related to the interpretation, implementation, and compliance with regulations designed to curb money laundering and the financing of terrorism in the context of correspondent banking and trade financing.
“The scores are assigned on two levels. Firstly, at a macro level, to identify characteristics of effective regulation that could be strengthened. Secondly, at a micro transactional level, to highlight specific challenges that can be addressed in the shorter term,” the ADB said.
The ADB added: Elements of effective regulation outlined in the first level are scored out of 10 on seven criteria: consistency (4), risk alignment (3), design (2), stakeholder communication (5), technology and data (5), enforcement (4), and quality control (3). These criteria are used to assess five working-level issues in the second level.
The ADB said the scorecard is based on feedback from industry leaders and regulators and will complement existing tools such as the Financial Action Task Force’s recommendations against money laundering and terrorist financing.
“The scores are illustrative and directional,” said Beck, stressing the need to have “better ways of addressing these issues, and we see the scorecard as the start of a process of engagement on this difficult subject.”
ADB’s Trade Finance Program (TFP) closes market gaps by providing guarantees and loans to over 200 partner banks to support trade, helping companies across Asia to engage in import and export activities.
In 2017, TFP supported $4.5 billion in trade through 3,505 transactions. Its financial support is complemented by regular workshops and seminars to increase knowledge and expertise in trade finance products, anti-money laundering, and risk management.