Identity and trust systems for SME trade finance2 The sandbox trialled digital ways of proving identity in supply chains and trade deals. Global trade relies heavily on trust between participants, but generating such trust has traditionally required extensive verification and identity-authentication processes. These processes – which play an essential role in regulatory compliance, fraud prevention and financial stability – can also pose operational challenges in cross-border commerce. Identity and trust challenges include: –KYC/AML compliance measures: Financial institutions must implement robust know-your- customer (KYC) and anti-money-laundering (AML) verification processes to prevent financial crimes and ensure system integrity. While these safeguards serve crucial regulatory purposes, they require the collection, verification and storage of vast amounts of trade-related documentation. Trade finance approvals can be delayed by weeks or months, and financial institutions often perform redundant checks on the same entities to fulfil similar requirements in different jurisdictions. –Identity silos and inefficient verification: Traders must repeatedly submit similar documentation to different institutions across jurisdictions. Despite the accumulation of vast repositories of trade-related data, regulators and financial institutions lack trusted mechanisms to share verified identity attributes. This fragmentation increases costs, extends timelines and can pose security risks at multiple junctures in trade transactions. –Limited trust infrastructure between new counterparties: Without standardized ways to verify the legitimacy of unfamiliar trading partners, companies often restrict business to established relationships or require trusted intermediaries to vouch for unknown entities. This limitation particularly affects SMEs attempting to enter new markets or establish relationships with larger buyers. Emerging technologies can help balance the need for regulatory oversight with traders’ demands for more efficient systems to verify identity and build trust. Traditional solutions are largely centralized, and such structures require participants to place significant trust in a single authority. Centralization is increasingly ill-suited to the distributed, global nature of modern trade networks wherein participants span multiple jurisdictions and operate under diverse regulatory frameworks. Empeiria participated in the sandbox to address a fundamental trust challenge in trade finance: how can lenders verify that goods actually exist and meet stated specifications without conducting expensive physical inspections? Before providing access to capital, lenders need verification processes to lower the risks of trade finance, especially when working with newly established businesses, cross-border entities or unfamiliar SMEs. The core problem Empeiria addressed was the absence of portable, tamper-resistant verification systems that could accompany trade goods through complex supply chains. Empeiria’s tools used blockchain-based verified credentials to provide lenders with trusted information about products and inspections. Such credentialling could transform how banks assess collateral and make financing decisions. Empeiria collaborated with the FSRA to align its decentralized identity infrastructure with UAE trade and regulatory frameworks. The testing evaluated whether decentralized identifiers (DIDs) and verifiable credentials (VCs) could be legally recognized in trade-related workflows.2.1 Empeiria: Verifiable data and digital product passports Advancing Digital Trade: Insights from the UAE TradeTech Regulatory Sandbox 13

Advancing Digital Trade 2025