AI-Driven Innovations in Blockchain-Based Trade Finance BBLC Practice Questions (Page 9)

Questions 41–45

1. 41application · medium

   A trade finance platform uses blockchain-based smart contracts to automate letter of credit (LC) execution. The compliance team wants to reduce manual review of shipping documents and ensure that only compliant transactions trigger payment. Which approach best leverages AI to enhance the smart contract's automation?

   • AReplace the smart contract with an AI model that decides payment approval based on the overall relationship history with the buyer, removing the need for predefined contract conditions.
   • BImplement a machine learning model that monitors the blockchain network for anomalies and flags suspicious transactions for manual review by the compliance team.
   • CUse an AI-powered document processing system to extract and validate key fields from bills of lading and invoices, then feed the results into the smart contract's condition checks before payment is released.
   • DIntegrate an AI model that analyzes historical trade data to predict the likelihood of default for each LC applicant and adjusts the collateral requirement dynamically.
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2. 42expert · hard

   A bank's trade finance division is using AI for credit risk assessment. The AI model uses both on-chain transaction data and off-chain data such as social media and utility payments. The bank must comply with fair lending regulations that prohibit discrimination based on protected attributes. Which practice is most important to ensure compliance?

   • ARely on the blockchain's immutability to prove that the AI model's decisions were not tampered with, which is sufficient for compliance.
   • BRemove all demographic data from the training dataset to ensure the model cannot discriminate.
   • CRegularly audit the AI model for bias by analyzing its decisions across different demographic groups, and use blockchain to record the audit results.
   • DUse a black-box AI model to avoid any appearance of bias, since the model's complexity makes it impossible to prove discrimination.
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4. 43application · medium

   A company uses smart contracts to execute trade payments when shipment milestones are met. They want to reduce false payment delays caused by incorrect or incomplete shipping data. Which enhancement should they consider?

   • AIncrease the number of confirmation signatures required from shipping partners.
   • BIntegrate an AI oracle that validates and cleans incoming IoT and shipping data before it triggers the smart contract.
   • CUse a random time delay before executing payments to allow for data corrections.
   • DHardcode the expected shipment dates into the smart contract to avoid reliance on external data.
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5. 44application · medium

   A trade finance bank is using AI to monitor transactions for AML compliance. The bank wants to ensure that the AI's monitoring activities are transparent and can be reviewed by regulators. Which practice is most important?

   • ALog all AI decisions, including the reasons for flagging or not flagging a transaction, and store these logs on the blockchain for tamper-evident auditability.
   • BUse AI to automatically block suspicious transactions and only record the block on the blockchain, without any human review.
   • CUse a black-box AI model to avoid revealing the bank's fraud detection strategies to criminals.
   • DStore only the final compliance status (e.g., 'cleared' or 'flagged') on the blockchain, without details, to protect privacy.
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6. 45application · medium

   A trade finance company wants to improve its working capital management by predicting when customers will pay their invoices. They have historical payment data and want to integrate these predictions into their blockchain-based invoicing system. What is the primary benefit of this integration?

   • AIt guarantees that all invoices will be paid on time.
   • BIt enables proactive cash flow planning and early identification of potential late payments.
   • CIt automatically enforces payment terms through smart contracts without human intervention.
   • DIt eliminates the need for credit checks on new customers.
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