Strategic Consultant
Starting December 1, 2025, Iraq's Central Bank will mandate a Prior Declaration System for imports, enhancing financial transparency and combating fraud. The system links goods with financial transactions before currency transfers, improving customs revenues and modernizing trade. Importers must precisely document and coordinate with banks and customs to comply with new requirements.
The corporate lending and trade finance sectors are evolving due to digitalisation, AI, and global market dynamics, creating opportunities alongside challenges. Institutional investors and private credit funds are gaining prominence, requiring agility and transparency. Financial institutions must enhance digital services to meet client expectations while addressing a looming talent crisis as seasoned professionals retire. AI is transforming operations, and tokenisation may revolutionise trade finance, although standardisation hurdles exist. Adapting to these trends is essential for success.
The recent insolvencies in the trade finance industry, notably the collapses of Stenn and Kimura, have raised serious concerns about the sector's inherent risks, including fraud and poor oversight. Stenn's downfall stemmed from allegations of money laundering, while Kimura's exit was strategic amid market pressures. These events, reminiscent of Greensill's 2021 failure, highlight the need for improved oversight and transparency to safeguard the industry’s future and prevent further crises.
The global trade finance industry is transitioning from paper-based processes to digital systems through digitisation and digitalization. Digitisation converts physical documents into digital formats, while digitalization enhances workflows using technology. This shift improves efficiency, transparency, cost management, and risk assessment, despite challenges like interoperability and cybersecurity risks. Embracing these changes is crucial for future competitiveness.
Indrajit Roy Choudhury 