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ICC Financial Crime Risk & Policy Group issue 2 Policy Statements

11/06/2019

The ICC has recently issued 2 Policy Statements from the Financial Crime Risk & Policy Group.

How Does Global Trade and Receivables Finance Mitigate against Proliferation Financing?

This paper considers the application of a risk-based approach to assist Financial Institutions (FIs) in identifying high-risk customers and transactions in relation to Proliferation Finance (PF) related to Weapons of Mass Destruction (WMD). 

The paper can be found here Mitigation against Proliferation Financing.pdf

Financial Crime Compliance Checks on the Price of Goods in Trade Transactions – Are Price Checking Controls Plausible?

This paper outlines the various potential methods for checking the price of goods, and their feasibility, demonstrating that there are significant difficulties in implementing effective price checking for Trade Finance transactions:

- Price Checking, beyond a common sense check for manifestly unusual pricing, is extremely challenging for Financial Institutions to carry out when processing trade documentation.

- It is not plausible for a Financial Institution to develop a binary financial crime control for price checking and automated systems have, to date, not proved to be effective.

- Even where publically available pricing information is available (such as for commodities) price checking remains challenging due to the multiple factors which constitute the final price of the underlying commodity in a transaction

The paper can be found here Financial Crime compliance checks on price of goods.pdf


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Our client will open a letter of credit for the import of goods (spare parts). Payment terms will be 90 days after bill of lading date provided that our customer will check the goods whether they are in good order and condition prior to proceeding with the payment, either for the full amount/part of the amount/or not to proceed with payment at all if the goods are not found to be in good order and condition. Please let us have your opinion on the below 2 questions, and on the wording of the clauses which will be added under Additional Conditions of the L/C in order to secure our customer concerning the payment of the L/C: Question 1: The confirming letter which will be presented by the applicant to us (Issuing Bank), whether it should be requested under the DOCUMENTS REQUIRED Field 46A of the credit OR whether it should be considered as a special term that concerns only the payment and should be requested under Additional Conditions of the credit as follows: PAYMENT WILL ONLY BE EFFECTED AT MATURITY (90 DAYS AFTER BILL OF LADING DATE) SUBJECT TO FULFILMENT OF POINTS 1 AND 2 BELOW: 1. UPON PRESENTATION OF COMPLIANT DOCUMENTS AT OUR COUNTERS AND DELIVERY TO APPLICANTS TO CLEAR GOODS FROM CUSTOMS; 2. UPON PRESENTATION BY ΤΗΕ APPLICANT (DIRECTLY TO THE ISSUING BANK) OF A WRITTEN LETTER CONFIRMING, EITHER: (A) THAT THE GOODS RECEIVED ARE IN GOOD ORDER AND CONDITION AND THE ISSUING BANK SHALL PROCEED WITH PAYMENT OF THE FULL INVOICE VALUE AS PRESENTED OR (B) THAT ONLY PART OF THE GOODS RECEIVED ARE IN GOOD ORDER AND CONDITION AND CLEARLY STATING THE AMOUNT TO BE PAID UNDER THE LETTER OF CREDIT, IN FULL SETTLEMENT OF THE LETTER OF CREDIT (WITHOUT FURTHER BENEFICIARY'S CONSENT) AND IRRESPECTIVE OF THE INITIAL VALUE OF THE INVOICE PRESENTED. THE PAYMENT SHALL BE CONSIDERED CONCLUSIVE ON BOTH PARTIES (APPLICANT AND BENEFICIARY) AND ISSUING AND NOMINATED BANK OR (C) GOODS RECEIVED ARE NOT IN GOOD ORDER AND CONDITION AND CLEARLY STATING THAT APPLICANT REJECTS PAYMENT OF ANY AMOUNT UNDER THE LETTER OF CREDIT, WITHOUT THE NEED OF BENEFICIARY'S CONSENT AND IRRESPECTIVE OF THE INITIAL VALUE OF THE INVOICE PRESENTED. THE DOCUMENTS SHALL BE CONSIDERED CONCLUSIVE ON BOTH PARTIES (APPLICANT AND BENEFICIARY) AND ISSUING AND NOMINATED BANK. THE WRITTEN LETTER MAY BE PRESENTED AFTER THE EXPIRY DATE OF THE LETTER OF CREDIT BUT NOT LATER THAN 85 DAYS FROM BILL OF LADING DATE. Question 2: Please clarify whether the above document should be presented within the validity of the L/C (i.e., Shipment date + Presentation Period) or whether it can be presented after the expiry of the L/C (e.g., 85 days after the bill of lading date).