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February 2017

Standby Letters of Credit and the Fraud Exception
24/02/2017
In two appeals on the validity of demands under standby letters of credit (SBLCs) and the application of the fraud exception, the Court of Appeal has ruled in each case that: the beneficiaries were entitled to demand payment under the SBLCs; they had not acted fraudulently in issuing the demands; and there was no basis for restraining the relevant banks from paying against the demands...
Asian Development Bank’s Trade Finance Program issues its first guarantee for Myanmar.
23/02/2017
MANILA, PHILIPPINES (16 February 2017) - The Asian Development Bank's (ADB) Trade Finance Program (TFP) has issued its first guarantee for Myanmar, supporting the import of fertilizers from Italy...
The government of Dubai partners with IBM to launch blockchain initiative for trade finance.
10/02/2017
Announced today, the project could prove telling in its impact with shipments and transactions of goods in one of the world's major trading hubs...
Digitisation will help delete fraudsters from the trade finance system
08/02/2017
Below, we reproduce a document that posted to the Blog...

Recent News

Islamic Unfunded Risk Participation Guide 16/08/2023

The above guide, which can be downloaded from the link below, has been kindly provided by Mr...more

Summer 2023 Newsletter added to Member Information section 14/07/2023

News from the ICC Banking Commission meeting of 11 July 2023 - Opinion TA927, TA Briefing 7, ISBP 821, eUCP appendix, Dual Use goods and Price Checking of Goods and Services documents released by ICC...more

Latest Question

Our bank, on behalf of the beneficiary, and acting in the capacity of presenting bank, remitted documents drawn under a documentary credit to the counters of the confirming bank (said documentary remittance being subject to UCP 600). The confirming bank refused the documents citing discrepancies. Their advice of refusal stated the disposal documents to be HOLD. We reverted, instructing them to remit the documents to the issuing bank, subject to UCP 600. The confirming bank acknowledged receipt of our instructions, sending us a FIN MT799, reproduced below. Quote BILL AMT : USD XXX THE ITEM DESCRIBED HEREIN IS FOR YOUR ACCOUNT. PLEASE TAKE NOTE OF OUR INSTRUCTIONS BELOW APPLICANT: A BENEFICIARY: B WE ACKNOWLEDGE RECEIPT OF THE ABOVE-MENTIONED PRESENTATION. AS PER YOUR INSTRUCTIONS WE HAVE FORWARDED THE DOCUMENTS TO THE ISSUING BANK. AFTER RECEIPT OF FURTHER INSTRUCTIONS FROM THE ISSUING BANK, THE MATTER OF SETTLEMENT WILL RECEIVE OUR FURTHER CONSIDERATION. WE USE GREAT CARE IN SELECTING OUR FOREIGN CORRESPONDENTS AND PREFER TO PUT OUR FOREIGN COLLECTIONS THROUGH THEM. IN THE EVENT YOU DESIGNATE A CORRESPONDENT OTHER THAN THE ONE OF OUR OWN SELECTION, WE SHALL FOLLOW YOUR INSTRUCTIONS UPON THE EXPLICIT UNDERSTANDING THAT YOU ASSUME AND CONFIRM ALL THE ACTS OF SUCH CORRESPONDENT OF YOUR OWN CHOOSING AND AGREE TO HOLD US HARMLESS FROM ALL CONSEQUENCES THEREOF. EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS DOCUMENTARY REMITTANCE IS SUBJECT TO THE ICC'S UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (VERSION IN FORCE ON THE DATE OF ISSUANCE OF THIS L/C). Unquote My understanding is that the documents have been remitted by the confirming bank direct to the issuing bank, as opposed to using an intermediary (collecting bank/agent). Is that correct? It may be the case that the confirming bank is trying to tell us that they will route the proceeds / payment to us by using the services of foreign correspondent banks and so the message acts as a type of legal disclaimer i.e., that they are not liable or responsible for any failures or omissions on the part of these correspondent banks. Is my interpretation correct? Is this message for informational purposes only or do we need to take any action / reply to safeguard the interests of our bank and our client (L/C beneficiary)? Please note that in our remittance letter we provided them with settlement instructions / USD nostro correspondent bank details. I trust in the event the issuing bank elects to honour the presentation the confirming bank will arrange for net proceeds to be credited to the nostro account we maintain with our USD correspondent. Please let me know if you believe I have in any way misunderstood or misinterpreted their message. If I have misunderstood, please could you outline for me what the confirming bank is trying to tell us. This is the first time I have come across something like this and I am wondering if it is usual nowadays for certain foreign banks to issue messages with such wording.