Banking Government News

OECD, Saudi suggest blockchain business passport to ease SME financial compliance

SME employment

On Wednesday, a proposal was made for a Global Value Chain (GVC) Passport, a tool to verify a firm is financially compliant without having to repeat the process in numerous countries. The idea is to make cross border trade easier for all companies but especially SMEs. 

The GVC Passport proposal was outlined by the B20 group and ‘Business at OECD’ (BIAC). Saudi Arabia currently leads the G20 and Business Twenty (B20) is the G20 dialogue with the business community. 

The report that accompanies the announcement says: “A GVC Passport could provide an authenticated, authoritative, verifiable financial fingerprint of a given entity, enabling it to operate within GVCs without the need to reproduce the same documentation on multiple occasions, nor undergoing duplicative verifications.” 

While the GVC Passport concept is targeted at all firms, the paper highlights the disproportionate impact of compliance on small and medium sized businesses (SMEs) given their limited resources. At the same time, it recognizes SME contributions towards providing jobs and their role in a COVID-19 economic revival.

“In many countries, excessive and overly complex regulation creates legal uncertainty, and the variety of rules imposes cumulative burden on firms, exacerbated by inconsistent cross-border implementation of policies, regulation and compliance regimes; generating, at best, the dispersion of effort and, at its worst, negative unintended consequences,” says the report.

The paper emphasizes that the intention isn’t to add yet another compliance obligation, but to leverage any certifications already received. That’s where blockchain comes in, where it can be used to create a verifiable credential.

“The GVC passport on Financial Compliance is a concept with the potential to benefit the entire global business community by increasing access to service and goods, improving transparency, reducing tax evasion, expanding data gathering and enabling faster adoption of digital tools and technology,” said Gianluca Riccio, Vice Chair of Business at OECD Finance Committee.

Meanwhile, numerous private sector projects aim to accredit firms for supplier procurement such as Trust Your Supplier and True Supplier from Accenture. The difference is those are for pitching for business, whereas the GVC Passport is targeting compliance.


Image Copyright: OECD