Trade Finance Scorecard: Regulation and Market Feedback

Key Points

Preventing criminals and terrorists from using the global financial system is critically important.

Implementing global regulation across jurisdictions with multiple stakeholders is a challenge, which can have unintended negative consequences.

ADB’s 2017 Trade Finance Gaps, Growth and Jobs Study identified unintended consequences from anti-money laundering and combating the financing of terrorism (AML/CFT) regulation as an important contributor to global market gaps for small and medium-sized enterprises financing, including in developing countries.

The Trade Finance Scorecard: Regulation and Market Regulation is the start of a work in progress. It offers unique features complementary to other efforts to address unintended consequences:

• Rather than rating entities associated with creating and implementing AML/CFT regulation, it scores related issues.
• Complementing the Financial Action Task Force and Financial Stability Board work in this area, the Scorecard offers a new diagnostic tool to identify and overcome unintended consequences of AML/CFT regulations, including their interpretation and implementation.
• It provides a new channel facilitated by ADB through which stakeholders can engage to resolve issues.

The Scorecard is not an end in itself, but the beginning of a process. The next step is a workshop with stakeholders to address issues.