Singapore's banks are hoping to avoid more problems involving commodity trade finance. File Image / Pixabay
The Association of Banks in Singapore (ABS) has published a new set of guidance on commodity financing best practices, the organisation said this week.
A working group of 28 banks developed the document, with the support of the Monetary Authority of Singapore, Enterprise Singapore and the Accounting and Corporate Regulatory Authority, ABS said in a statement on its website.
The code attempts to ensure that banks have sufficient understanding of trader's corporate governance, risk management practices, business and transactions at the macro level, and that on the level of individual transactions they have sufficient transparency and control.
"This is an important step to strengthen Singapore’s stature as a global commodity trading hub," Samuel Tsien, chairman of ABS, said in the statement.
"The Code of Best Practices ensures a more robust and disciplined financing approach to support the growth of Singapore’s thriving commodity trading sector, which comprises a broad spectrum of participants, ranging from boutique firms to leading international commodity groups."
The alleged fraud carried out by Singapore trading firm Hin Leong that emerged this year was the biggest of a string of similar cases in recent years that have left banks increasingly wary of commodity trade finance.