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How To Avoid Letter Of Credit Fraud?

2008/10/29 9:57:00 41931

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UCP500 fourth provision: in L / C business, the parties concerned deal with documents, not goods, services, or other acts involved in the documents.

In other words, as long as the documents are in line with the terms stipulated in the letter of credit, that is to say, the documents must be identical and the documents are identical. The issuing bank must perform its obligations and responsibilities of payment.

This is reflected in the terms of commitment in the letter of credit issued by banks in all countries, namely, the 78 item in the SWIFT format.

This clause fully reflects the seriousness of the letter of credit, but it is also a fraudulent tool used by some lawless people, and there are numerous cases of fraud.

From the point of view that international fraudsters have never stopped using this provision for fraud, I think this should be one of the UCP500's shortcomings.

Fortunately, the ICC has also attached great importance to this matter. In view of the increasingly rampant fraud in the use of letter of credit, the guidance given by the Council is that the applicant can apply for a stop order to the court in his locality when he has enough evidence to prove the fraud of the parties concerned, especially the beneficiary of the letter of credit.

This does play a positive role in protecting the interests of the issuing bank and the applicant.

In spite of this, the swindlers are still not willing to take care of them, and continue to plot fraud by changing patterns, and their means are becoming more and more obvious and concealed.

The author describes the following three characteristics of fraudsters' fraudulent practices:

特點之一利用偽造單據

A year ago, when I was a deputy manager of the International Department of a state-owned bank, I opened a 2 million dollar sight letter of credit for the applicant Z company, which was a foreign company N, to import 5000 tons of tinplate and the port of loading as the port of hotheka.

The relationship between buyers and sellers has been very harmonious, and the author has provided international settlement services for many times.

However, this time, a full set of documents arrived by the negotiating bank in less than a month after the opening of the certificate.

The set of documents has been made perfectly and without any discrepancy. N's documents are inconsistent with each other, and Z is happy to accept it every time.

This did not arouse the author's vigilance, but the occupation habit prompted the author to contact the carrier mentioned in the bill of lading and found that the set of bills of lading was forged. The author was deeply disturbed at this point and could not help asking myself how the N company could act like this. After consulting with the carrier, the author issued a formal letter to the issuing bank of the direction, which mainly proved that the ship had been overhauled at a port in Japan for a month and had never arrived at the port of hodka, so the set of bills of lading was forged.

I immediately fax the certificate to the negotiating bank for advice, and at the same time, Z also sent a fax to N company, and pointed out that if we insist on the payment of the issuing bank, the Z company will be forced to apply to the court for a stop order according to the letter of proof. Then, the negotiating bank will return the full set of documents to the issuing bank on request.

At this point, a case of attempted fraud was brought to an end.

It goes without saying that N used to use counterfeit bills of lading to try to cheat Z company.

The L / C business is centered on the various documents stipulated in the letter of credit, and the bill of lading is the core of all other documents. As long as the bill of lading is forged, it can be asserted that other documents can only be forged or fraudulent.

特點之二利用偽劣商品

In 93s, the domestic I bank opened a letter of credit with a value of US $1 million, which was set up by its client M company, which was designated by the M company's joint venture company S as an overseas supplier, T company. The T company commissioned its bank to open a sight letter of credit in the beneficiary of M company.

When the I Bank received the full set of documents, it carefully examined and found no discrepancies. Therefore, it requested the M company to handle the long-term acceptance procedures; the M company believed that the T company was introduced by the S company and should be reliable. Therefore, it did a check in to the I bank without checking the documents. After that, the I bank issued a acceptance message to the negotiating bank.

However, what disappointed the M company is that when the goods were picked up at the port, it was found that all the containers were industrial waste. The M company sought the I bank's countermeasures, but I bank had no chance to return it, and had to pay the full amount at the maturity date, because there was no such guidance issued by the International Chamber of Commerce as mentioned earlier.

In this case, the T company put the industrial waste into containers and muddled off to get the so - called clean bill of lading, thus achieving the purpose of defrauding the forward payment of the I bank acceptance letter of credit and the despicable purpose of swindling huge sums of money.

特點之三利用承運船只

A friend of mine was cheated in 98 years, to some extent, it can explain this kind of hoax.

After he paid a bank for the payment of US $2 million 300 thousand at sight letter of credit for exporters to a Southeast Asian country, he waited for the vessel to arrive at the port of shipment.

After the voyage was over, the ship was still not seen to arrive at the port, so that the ship's movements at the port of destination asked the ship's exact information. The shipper claimed that it had actually been shipped and sent the relevant materials such as shipping records to the fax office. The bank had to seek help from the issuing bank, and the issuing bank could not help it, because the bank only took care of the documents, regardless of the goods. In desperation, it could only entrust a lawyer to the port of shipment for field investigation and verification, but the result showed that all export procedures were lawful and effective, that is, the documents were not forged. Finally, the insurance companies were asked to settle their claims, and they were also declined. The reason was that there was no insurance against theft and non delivery. But it's reasonable.

The case had to be ignored.

The loss is so heavy that friends are grieved.

The carrier's trail is still a mystery. The author has no reason to say that the exporter in this case is a practical liar. However, he always feels a bit odd. He does not rule out the following possibility: first, make sure that the documents are safe and clear, and make sure that the issuing bank can not identify any discrepancies. After obtaining the payment of the issuing bank, the carrier will be immediately informed of the port of destination.

Considering the three characteristics of the above letter of credit fraud, it is easy to see that no matter what fraudulent means the fraudsters use, in the final analysis, it is by means of the UCP500 fourth clause, that is, the payment of the issuing bank by fraudulent documents which are in conformity with the letter of credit. If there is any discrepancy, there will be discrepancies between the issuing bank and the issuing bank, so the purpose of fraud is likely to fail.

Therefore, I take this opportunity to appeal to our banks and enterprises to not take lightly or neglect their duties in the import business, and we should always pay attention to guarding against and resisting the possibility and risks of being cheated.