Banking News

CIMB Singapore, iTrust complete blockchain trade finance transaction

cargo trade finance

Today, CIMB Bank’s Singapore Branch said it completed a trade finance transaction using iTrust’s blockchain and internet of things (IoT) platform. The transaction involves the financing of dairy products imported into China with an expected cash flow of up to $100 million a year. It marks the launch of iTrust’s platform into production.

iTrust’s platform uses IoT to enable real-time monitoring of the cargo in transit and the warehouse. The data collected by IoT devices is tracked using blockchain, along with other trade financing documents. The goal is to provide involved parties with a secure and immutable source of data to eliminate fraud and facilitate credit.

In trade finance, the bill of lading is an important document to release payments. In the legacy system, the bill of lading is transferred to the cargo buyer by e-mail or other physical means. This makes it relatively easy to forge the document. It is harder to commit fraud by digitally signing the document and storing it or a hashed version (like a fingerprint) on a blockchain.

Another source of fraud relates to physical cargo. One example is multiple warehouse receipts were issued for the same pallet of goods. And the fraudulent warehouse receipts were then used to raise finance. This happens even though the financier gets a third party to go and check that the warehouse receipts match the goods. But someone else owns the original receipts and later takes the products. Recently ANZ was caught out with fraudulent receipts for 30,000 tons of nickel with a value of $286 million at the time.

One of iTrust’s features is IoT devices which can be attached to cargo to trace it, including in the warehouse.

While blockchain and IoT probably won’t eliminate fraud, it will make it far harder.

“This blockchain trade financing with iTrust will present an opportunity for CIMB Singapore to support our customers more efficiently and cost-effectively. It mitigates fraud risk, and alerts us of any unauthorized movement of the financed cargo,” said Mak Lye Mun, CEO of CIMB Bank Berhad, Singapore Branch.

Based out of Singapore, iTrust is backed by blockchain-based secure digital ecosystem (SDE) provider 1Citadel and IoT solutions provider Ascent. iTrust’s team comprises of top executives from these two companies.

“With iTrust, we have used blockchain-based IoT to provide insight of the physical world into a blockchain digital platform,” said Lim Chee Kean, CEO and co-founder of iTrust.

The blockchain technology that underpins iTrust is Coin Sciences’ MultiChain.

There are numerous blockchain trade finance initiatives active across the globe. Some of the biggest international ones are the Marco Polo Network, we.trade, komgo and Voltron.

A few weeks ago, China Construction Bank released the second version of its blockchain trade finance platform dubbed as BCTrade2.0. The platform is live and has processed about 360 billion yuan ($50 billion) of transactions to date.