MT760/MT799 Fraud

MT760/MT799 Fraud

Standby Letter of Credit (SBLC)/ Bank Guarantee (BG) is a guarantee of payment issued by a bank on behalf of a client that is used as “payment of last resort” should the client fail to fulfill a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions and are proof of a buyer’s credit quality and repayment abilities. The bank issuing the SBLC performs brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then sends notification to the bank of the party requesting the letter of credit (typically a seller or creditor). A standby letter of credit shows a company’s credit quality and ability to repay loans. Although SBLC/BG is not intended for use as a replacement for immediate cash payment obligation, it helps fulfill business obligations in case the business stops operations, cannot pay its vendors or becomes insolvent.
Small businesses often face difficulty when securing financing. For this reason, Standby Letters of Credit may be especially beneficial for encouraging investors to lend money to such a company. In case of default, investors are assured they will be paid the principal and interest from the bank through which the SBLC/BG is secured. Standby Letters of Credit are issued for use in a wide variety of commercial and financial operations. Standby Letters of Credit are very much alike Documentary Letters of Credit (DLC). The main difference between a Documentary Letter of Credit and a Standby Letter Of Credit being that unlike DLCs, SBLCs only become operative in case the applicant defaults. In case of default, the beneficiary in whose favor the SBLC was issued, can draw on the SBLC and demand payment. Historically, Standby Letters of Credit were developed because the US regulator legally limited US bank’s authority to issue Bank Guarantees. SBLCs are also very similar to Bank Guarantees (BG), which too require that the presentation of stipulated documents be compliant with the terms and conditions of the Bank Guarantee. SBLC’s and Bank Guarantees are different in terms of protection, they both serve the primary purpose of making sure that sellers get paid, but while a Standby Letter of Credit protects the seller, a Bank Guarantee (BG) protects both sides, since it also protects the buyer in case the supplier never ships the goods or ships them in a damaged condition.
When requesting a SBLC, a business owner proves to the bank he is capable of repaying the loan. Collateral may be required to protect the bank in case of default. The bank typically provides a letter to the business owner within one week of receiving documentation. The business owner must pay a SBLC fee for each year that the letter is valid. The fee is typically 1-10% of the SBLC value. If the business owner meets the criteria outlined in the contract before the due date, the business owner can cancel the SBLC without further charges.
Standby Letters of Credit (SBLC) are a very flexible tool, making them a suitable product for securing a wide range of payment scenarios. A financial SBLC, the most common type, is typically used in international trade or other high-value purchase contracts where litigation or other non-payment actions may not be feasible. A financial SBLC guarantees payment to the beneficiary if criteria outlined in the contract are left unfulfilled. For example, an exporter sells goods to an overseas buyer who guarantees payment in 30 days. When the payment does not appear by the deadline, the exporter presents the SBLC to the importer’s bank and receives the payment.
A performance SBLC ensures the time, cost, amount, quality of work and other criteria are fulfilled in a manner acceptable to the client. The bank pays the beneficiary if any of the written obligations are unmet. For example, a contractor guarantees a construction project will be finished in 90 days. If work remains incomplete after the 90-day period, the client can present the SBLC to the contractor’s bank and receive the payment due.

The SBLC should not be confused with the documentary credit which is instead a means of payment since the buyer goes to his bank and asks him to pay the seller at a given moment, ie on a date or to the fulfillment of a condition (delivery for example).

1. As a performance standby – backs a commitment to perform other than to pay money/funds and includes an obligation to pay for loses occurring from a default of the buyer in the process of completing an underlying transaction.
2. As an advance-payment standby – supports an obligation to account for an advance payment made by the supplier to the buyer.
3. As a bid-bond or tender-bond standby – backs an obligation of the buyer to execute a contract if the buyer is awarded a bid.
4. As a counter standby – backs the issuance of another, separate standby letter of credit or other undertaking by the supplier of the counter standby.
5. As a financial standby – supports an obligation to pay funds, including any instrument evidencing an obligation to repay borrowed money.
6. As an insurance standby – supports an insurance obligation of the applicant.
7. As a commercial standby – backs the commitment of a buyer to pay for goods or services in the event of non-payment by other methods.
8. As a direct-pay standby – intended to be the primary method of payment. It may or may not be linked to a default in performance or payment.
1. Whether purchased of leased, SBLC / BG is issued for a “term” having validity normally for 1 year and 1 day which may extend up to multiple years depending on the Provider’s own discretion and Provider’s level of comfort with the Beneficiary.
2. Banks will issue an SBLC/BG to any of its customers if they have sufficient cash in their bank account or available balance in their credit line (if they are already availing a credit line from the bank). It’s a complete myth that “Banks Do Not Issue SBLC/BG). This is the “Primary Market” transaction.
3. Providers of SBLC/BG are a part of the “Secondary Market” transactions. SBLC/BG Providers are high net worth corporations or individuals who hold bank accounts at the issuing bank that contain significant cash sums (assets). SBLC/BG Provider would often be a collateral management firm, a hedge fund, or private equity company. SBLC/BG Provider instructs its issuing bank to secure and encumber cash in his own account and authorizes the bank to “cut” (an industry terms meaning to create a financial instrument such as SBLC/BG ). Effectively, the SBLC/BG is “leased” or “sold” to the Beneficiary as a form of investment since the Provider receives a return on his commitment.
4. SBLC/BG is issued under ICC/URDG758 (UPC 600) protocol and is readily accepted by almost all International as well as Private Banks.
5. SBLC/BG is supplied by the Issuing Bank of the Provider to the Beneficiary’s bank account at the Receiving Bank and is transmitted inter-bank via the appropriate SWIFT platform alone (MT-760).
6. The Provider and the Beneficiary agree to enter into a Collateral Transfer Agreement (CTA) which governs the issuance of the SBLC/BG. The SBLC/BG is specifically issued to the Beneficiary for a defined purpose and each contract is bespoke. It is effectively a form of “Securities Lending” and often a derivative of “re-hypothecation”. The fact that there is an underlying agreement (the CTA) has no bearing on the wording or construction of the Guarantee (SBLC/BG). This allows the Beneficiary to use the SBLC/BG to raise credit, to guarantee credit lines and loans or to enter trade positions or buy/sell contracts.
7. SBLC/BG is valuable in the secondary and tertiary markets, and this also creates an environment for Intermediaries to profit on the leasing and selling of SBLC/BG. Unfortunately, this also creates misunderstandings and opportunities for fraud. Scammers keep trying, by imposing their “procedures” which in general, involve rushed deals with no hard copies to follow, advanced payments, and so on.

8. By its own nature and definition, only banks can legally issue SBLC (Stand-By Letters of Credit) or BG (Bank Guarantee). This is not only common sense, but actually regulated by banking laws in most countries since these are debt obligations issued by banks.
9. SBLC/BG must be UCP-600 compliant and hence it must be issued by a licensed bank alone. Otherwise, it will not be UCP-600 compliant, regardless of the wording of the document. If it is not UCP-600 compliant, no bank will ever accept it as collateral or even as a documentary credit. While it is true that URDG-758 changed this from banks to “a bank, other institution or person” may act as a guarantor, the fact is that URDG-758 rules implied that financial stability of the guarantor is obligatory, and that the issuance of said documents shall be governed by the internal legislation of each country. Regardless, most banks will only accept documentary credit from other banks, due to their financial stability and their full compliance with local laws.
10. Banks, in general, will monetize only an “owned/purchased” SBLC/BG. They will not monetize a “leased” SBLC/BG. In contrast to a purchased or owned SBLC where the buyer becomes the official owner of the instrument and in turn would be able to lease the SBLC out to a Third Party, a “leased SBLC” cannot be “leased out” any further.
11. There are private Monetizers who would monetize a “leased” SBLC/BG. Some Monetizers will, however, only accept SBLC/BG with CUSIP or ISIN Numbers. This means they will NOT accept a fresh cut bank guarantee, ONLY seasoned instruments. Seasoned BG’s cost more and generally are only available to be purchased from secondary owners not banks.
12. Although a leased SBLC/BG is not considered an “asset” (a leased SBLC/BG is not trading securities, trading debt instruments, or trading investment funds. There is no public market for the trading of SBLC/BG. All SBLC/BG transactions are private transactions), it can still be monetized, discounted or funded (whereby the SBLC/BG is turned into usable cash) by a resourceful Monetizer. Remember, SBLC/BG is after all a written obligation of the issuing bank to pay a sum on to a beneficiary on behalf of their customer in the event that the customer himself does not pay the beneficiary. The Instrument/ Security remains valid during the term before the Expiry Date. Such resourceful Monetizers possess the capacity to a draw a line of credit against “leased” SBLC/BG and use part of the cash to pay the client his “Non Recourse Monetization Payment” (often 40% to 65% of the value of the Leased Bank Instrument known as “Loan To Value” (LTV). The Monetizer then takes the balance of the money from the Line of Credit and places these funds into Trade / PPP using a proprietary trading platform. This platform is often a group of experienced bank traders who use the Monetizers cash and trade it generating significant profit returns on a weekly or monthly basis. Often the Platform uses normal trading risk protection strategies to ensure the Monetizers funds receive significant protection from all trading downside risk.
13. Most people often confuse the term NOT RATED with the fact that some SBLC/BG issuing entities are not real banks, but private companies offering consulting services, and sometimes, issuing documents that are beyond their legal and financial capacity, hiding themselves behind the excuse that because they are an “offshore bank” or a foreign corporation or because they only deal with foreigners, they do not need to hold a banking license or comply with reserve deposits with the Central Banks of the jurisdictions from where they operate. The reality is, a rating is just an opinion given by one person or company, about the credibility of the bank or institution what the rating is about; but this has almost nothing to do with the truth, that the documents in question are worthless not because of the credit rating of the issuer, but because the issuer is not a bank.

14. For political reasons, most Eurozone regulated banks avoid, as much as they can, to work with banks of certain countries. Trying to monetize an instrument issued by a Latin American country, or even China is almost impossible!! Even Europe is not free of that problem; for example, while the list of embargo banks from Russia and Ukraine is very small, most Eurozone regulated banks prefer to not accept as collateral instruments issued by any Russian or Ukraine based banks, they say it is to reduce their risks as much as possible, and to avoid working with banks that while not currently on the embargo list, can be included in said list at any time. Some other countries have strong, reliable and highly praised banks with excellent credit ratings, like Azerbaijan, yet almost no Eurozone regulated bank wants to work with instruments issued by them; this limits the ability of most monetizers to work with instruments from banks of these countries regardless of the credit rating of the bank.
15. To determine if a borrower is worthy of an SBLC/BG, many banks will undertake a credit analysis. Credit analyses focus on the ability of the organization to meet its debt obligations, focusing on default risk. Lenders will generally work through the five C’s to determine credit risk: the applicant’s credit history, capacity to repay, its’ capital, the loan’s conditions, and associated collateral. This form of due diligence can revolve around liquidity and solvency ratios. Liquidity measures the ease with which an individual or company can meet its financial obligations with the current assets available to them, while solvency measures its ability to repay long-term debts. Specific liquidity ratios a credit analyst may use to determine short-term vitality are current ratio, quick ratio or acid test, and cash ratio. Solvency ratios might entail the interest coverage ratio.
While trying to buy or lease SBLC or BG, one must understand the importance of the following:

Stand By Letter of Credit (SBLC) Bank Guarantee (BG) Letter of Credit (LC) = MT760
SBLC is a Stand By Letter of Credit which is used for international trading purposes. SBLC is the Singapore form of the well known as Bank Guarantee(BG) Document Letter of Credit (LC). The Swift code is MT760.
SBLC (and BG) could be used to enhance client’s ability to apply for a line of credit with client’s bank, furthermore, it could be used as collateral when client’s bank is asking for additional comfort for Project fund purpose. SBLC, we deal in are genuine 100% cash-backed and therefore usable as collateral. Our issuers only use top World Banks where are guarantees worldwide acceptance of client’s SBLC.
The SBLC is generally issued for 90 days and 180 days, anyway it is able to extend up to 1 year 1 day once the issued SBLC is transferred to client’s bank via the Swift protocol of MT760.
Absolutely, Leasing of an SBLC comes at a cost. Financing client’s project by using SBLC, the client should prepare the fee to the consultants facilitating the process. To successfully apply for SBLC the most points are awareness as following list:
* 1. The good project presentation is required
* 2. The great bank funding the client’s project based on the supporting collateral of an issued SBLC is most importance.
* 3. Settlement the leasing fee by cash for the leasing of SBLC is required
Once the leasing fee is paid, the contract is signed, and the bank instrument is processing within 7 bank’s working days. could provide BG’s, SBLC’s and DLC, which could be blocked or delivered via SWIFT. Typical projects we have had successful applications for are:
* – Construction and Development
* – Resorts -Building or Upgrading
* – Growing a Company
* – Import –Export Business
Legal Disclaimer
We have often times been asked to do things that are unethical, immoral, deceptive, fraudulent, or illegal. We would like to make it VERY clear that we would NOT participate in any transaction that we feel “uneasy” with or that our legal counsel tells us is against the laws (or even closes to breaking the law). So,all illegal processes would be declined…
If client is a developer that is seeking for financing or funding to develop a real estate project, we could assist client. Client as the developer can “lease” an instrument from us (really this is not a lease, this is an issuance on client’s behalf) and the instrument might or might not be able to be used as collateral for a loan for client’s project. It heavily depends on how we issue the instrument. In some scenarios we (or one of our many partners) will allow for an instrument to be issued on client’s behalf that may have the ability to be “cashed” or “called” on-demand (usually this is done as collateral for a loan). This would be a fully cash-backed SBLC (drafted with “site draft”), would be fully unencumbered, and shall be issued to client’s benefit (or benefit of the lender). In this case, we would require some sort of collateral or joint venture. Please kindly contact us for more details. Other scenarios the SBLC shall be issued for “Credit Enhancement” purposes (in these scenarios the instrument would not be able to be cashed or called), however client would not be allowed to use this to deceive or defraud a bank. If client is asked about the origination of the instrument we demand that client is honest and upright with the bank or lender.
Program Highlights
* – Both Proof of Funds and SBLC services Available
* – USD 500K to 50 Million
* – Terms from 90 days to 12 months, discounts for longer term usage
* – You have access to all paperwork in less than 72 hours after confirmation
* – Brokers protected and paid for referrals!
* – No Credit Check or Financial Statements Required
* – Standard bank Verification of Deposit provided for all accounts
* – Bank accounts opened and confirmed in writing by bank officers
* – SWIFT MT799, MT760, MT720, and MT999 confirmation options available
* – Corporate envelope SWIFT MT798 and MT710 services available

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