Nonsensical Broker Terms
· LOI (Letter of Intent - improper term)
· NCND
· Performance Bond
BCL and RWA issues
California Management does not issue BCL or provide POF prior to acceptance of offer and contract signing. To do otherwise is foolhardy and makes no business sense. Business confidentiality is paramount, as a full service consultancy California Management can undertake no action to endanger its principals or clients, providing loose access to California Management banking is such an action. No serious buyer gives an untested vendor access to banking confidentials.
In general only brokers, not principal suppliers seem to request BCL's. This
seems to be to gain a sense of comfort. However, at most a BCL will only
indicate some degree of financial capacity. Buyer trying to provide premature
proof of RWA via a BCL does not guarantee purchase, period. It says "I have
money to buy something", it does not say "I will buy something from you."
BCL's never prove RWA for reasons detailed below, therefore requiring them is a
waste of time and generally a deal killer.
A serious Seller is concerned about one thing only, closing a sale. Where the
Buyer's funds come from, at what stage in a transaction Buyer might choose to
fund a certain account, and other matters are simply not the Seller's concern as
long as the Buyer is able to perform as required. A LC 100% guaranteed by the
bank at the appropriate stage of transaction is the most appropriate method of
demonstrating RWA, such an irrevocable payment is useless until the documents
passing title to the Buyer are produced. No money - no product, no product
documents - no money.
This is the most secure and safe protocol protecting Buyers and Sellers
globally. Even if a Buyer decides foolishly to issue a full BCL this does not
fully prove the Buyer is RWA, the only serious thing that proves a Buyer is RWA
is to deposit a credit payment instrument.
In both domestic and international sales the BCL is never seriously used between
principals and, in fact, proves nothing anyway. The BCL has some limited use
between subsidiaries of the same corporation and certain other esoteric uses
that need not concern us here.
Brokers who request a BCL need to consider that few serious Buyers will issue a
financial statement of such confidentiality in today's international area rife
with fraud, identity theft, piracy, and other financial threats to fortune,
life, and limb. The intermediary who foolhardily insists on a BCL consistently
condemns his deal to collapse. In a world of rampant fraud no serious buyer
allows soft probes into their banking. No serious deals ensue when conducted
using non-ICC approved pseudo protocols involving LOI, NCND Agreements, BCL
letters, and the like.
LIST OF NONSENSICAL BROKERS TERMS
Terms that do not exist in real banking world nor real international deal, only appear most frequently in the internet.
Bank Hard Copy
Bank Invoice
Bank/Corporate Pay Order
Banking Co-ordinates
Blocked Funds Letters
CIF ASWP
Clean, Cleared Funds of Non-Criminal Origin Conditional Swift/Wire
Cutting House
Exit Buyer
Fed approved
For value received, we, the undersigned officers of ….. Fresh Cut
ICC 3034/3039 Format
ICC 600
ICC NCND
Instruments free of liens and encumbrances International Banking Hours/Days
Irrevocable, Confirmable, Assignable, Divisible, Transferable KTT
London Short Form
Master Cutter/Trader
One Year and One Day
Prime Bank
Prime Bank Debentures, Guarantees or Notes Proof of Funds Letters
Roll Program
Rolls and Extensions
RWA Ready Willing and Able
Seasoned
Soft Probe
Subject to the laws of U.S.A., Switzerland, England and etc. Tier 1 Banks
Under Penalty of Perjury
Window Time
LOI (Letter of Intent - improper term)
Letters of Intent have no weight whatsoever in international trade rules. Anything backed by a LOI has no binding power because the LOI has no place in legally binding international trade protocols. One can seek clarification on this point from the ICC directly.
In general, the issuer of an LOI has no liability since under international
law, such Intent can't be legally binding. This is the case even after contracts
are issued. A LOI expresses an "Intent", nothing more. One can intend to
purchase today and change one's mind tomorrow. Letters of Intent have certain
binding or non binding legal applications in domestic trade under various laws
of various countries.
In the international trading arena the Letter of Intent, however, means nothing.
A Letter of Intent proves exactly that, Intent. It reflects an understanding of
the intent of one or more parties to act. Intent can change in seconds. There is
nothing binding about intent. A letter of intent is a simple enquiry, no more
and no less. There is no standard application of the LOI with the BCL in
International sales transactions.
International legally binding rules of contract stipulate the very first
document in the transaction is the Quotation. This is followed by an actual
offer. The offer may in some contexts be a legally binding contract, in other
contexts the offer is followed up by a formal sales contract supported with
"consideration", amongst the consideration due is monetary remuneration.
NCND
In the international trade arena NCND Agreements are not binding and impossible to enforce. It is impossible to prove circumvention took place between two parties without considerable legal resources and NCND agreements simply aren't recognized. They can be adjucated in local courts but how will you sue someone for a breech halfway around the world while not even being able to rigorously provide proof that a transaction occurred as result of the breech?
There is no need for a Buyer and direct Supplier, or a Buyer and the
intermediaries, agents and brokers alike, between the Buyer and Supplier, to
sign a NCND. In fact requesting a NCND is a red flag illustrating possible
unprofessionalism, and ignorance of international trading procedures and laws.
Please read this information detailing on our Anti Fraud advisory.
Performance Bond
A "Performance Bond"(PB) could be applied in a deal where delivery is based on "Ex Ship" as defined under Incoterms 2000.
Where the “assurances” given apply to "Bond" with the goods, until such goods arrive in the contracted condition into the possession of the End Buyer, in his port of discharge. In an "Ex ship" deal the goods and not the documents must arrive before delivery is said to have occurred.
Once the deal is "At sight" 100% against presentation of documents FCA/FOB/CIF, this must be a Performance Guarantee, since such seller cannot deal the possession of goods (phisical), the Performance in this case being "Delivery” is only applied to the securing of the title or leading delivery documents to the goods being offered, and to do so in a certain time frame as per it’s guarantee.
S.W.I.F.T. Standards 2008 FAQ
The Society for Worldwide Interbank Financial Telecommunication ("SWIFT")
operates a worldwide financial messaging network. Messages are securely and
reliably exchanged between banks and other financial institutions. SWIFT also
markets software and services to financial institutions, much of it for use on
the SWIFTNet Network, and ISO 9362 bank identifier codes are popularly known as
"SWIFT codes".
The majority of international interbank messages use the SWIFT network. As of
December 2007 SWIFT linked 8,332 financial institutions in 208 countries.[1]
SWIFT does not facilitate funds transfer. Financial institutions would need a
corresponding banking relationship for financial transactions.[clarify] Not all
financial institutions have banking business relationships, but rather
peripheral. Each financial institution, to exchange banking transactions, must
have a banking relationship by either being a bank or affiliating itself with
one (or more) so as to enjoy those particular business features.
SWIFT is a cooperative society under Belgian law and it is owned by its member
financial institutions. SWIFT has offices around the world. SWIFT headquarters
are located in La Hulpe, Belgium, near Brussels.
It was founded in Brussels in 1973, supported by 239 banks in 15 countries. It
started to establish common standards (See SWIFT Standards) for financial
transactions and a shared data processing system and worldwide communications
network. Fundamental operating procedures, rules for liability etc., were
established in 1975 and the first message was sent in 1977.
S.W.I.F.T. is a registered mark of Society for Worldwide Interbank Financial
Telecommunication.
· Cat. 7: Documentary Credits and Guarantees
· MT 103
· SWIFT UCP 600 Usage Guidelines
Cat. 7: Documentary Credits and Guarantees
SWIFT currently offers two sets of its traditional standards in thetrade services area - standards for documentary collections and cashletters (MT 4xx) and standards for documentary credits and guarantees(MT 7xx).
MT 103
Single Customer Credit Transfer
Note: This kind of message is not recommended for purchase commodities due to
there is no secure for buyers.
Format
| Status | Tag | Field Name | Content/Options | No. |
| M | 20 | Sender's Reference | 16x | 1 |
| -----> | ||||
| O | 13C | Time Indication | /8c/4!n1!s4!n | 2 |
| -----| | ||||
| M | 23B | Bank Operation Code | 4!c | 3 |
| -----> | ||||
| O | 23E | Instruction Code | 4!c[/30x] | 4 |
| -----| | ||||
| O | 26T | Transaction Type Code | 3!c | 5 |
| M | 32A | Value Date/Currency/Interbank Settled Amount | 6!n3!a15d | 6 |
| O | 33B | Currency/Instructed Amount | 3!a15d | 7 |
| O | 36 | Exchange Rate | 12d | 8 |
| M | 50a | Ordering Customer | A, K or F | 9 |
| O | 51A | Sending Institution (IFT only) | [/x] c |
10 |
| O | 52a | Ordering Institution | A or D | 11 |
| O | 53a | Sender's Correspondent | A, B or D | 12 |
| O | 54a | Receiver's Correspondent | A, B or D | 13 |
| O | 55a | Third Reimbursement Institution | A, B or D | 14 |
| O | 56a | Intermediary Institution | A, C or D | 15 |
| O | 57a | Account With Institution | A, B, C or D | 16 |
| M | 59a | Beneficiary Customer | A or | 17 |
| O | 70 | Remittance Information | 4*35x | 18 |
| M | 71A | Details of Charges | 3!a | 19 |
| -----> | ||||
| O | 71F | Sender's Charges | 3!a15d | 20 |
| -----| | ||||
| O | 71G | Receiver's Charges | 3!a15d | 21 |
| O | 72 | Sender to Receiver Information | 6*35x | 22 |
| O | 77B | Regulatory Reporting | 3*35x | 23 |
| O | 77T | Envelope Contents | 9000z | 24 |
SWIFT UCP 600 Usage Guidelines
During its 24-25 October 2006 meeting, the ICC Commission on Banking
Technique and Practice approved new UCP 600 rules for documentary credits. These
rules will take effect on 1 July 2007. With the purpose to remain aligned with
the new UCP 600 from this date onward, the 'SWIFT UCP 600 Guidelines' provide
guidance to banks on how to use today’s category 7 standards in compliance with
UCP 600.
Traditionally, SWIFT groups all its MT standards changes in one annual standards
release, usually in October or November. In 2007, this will be on 27 October. In
other words, the 1 July 2007 effective date of the UCP 600 does not coincide
with the implementation date of SWIFT’s Standards Release 2007.
This means that the only way to let the ICC and SWIFT ‘live’ dates coincide and
to publish how the UCP 600 affects category 7 standards was by issuing 'SWIFT
UCP 600 Guidelines' that financial institutions can start using as soon as the
UCP 600 rules go ‘live’. All guidelines are based on the use of narrative text
in existing fields. This should ensure a seamless transition to the new rules.
The November 2006 SWIFT release caters for the UCP 600 using today’s existing
category 7 messages. A new mandatory field 40E Applicable Rules contains codes
to indicate adherence to specific rules. Other changes as described below will
be implemented in October 2007.
James Wills, Head of Trade Services Standards Development at SWIFT notes,
“The difference in dates for UCP 600 (1 July 2007) and the annual SWIFT
Standards Release (November 2006 and October 2007) has provided something of a
challenge. However, SWIFT has worked with the industry to develop this approach
to managing the issue, so that the community will be able to work successfully
with the dates and guidelines.”
The SWIFT UCP 600 Guidelines will be reflected in the official Standards Release
2007 documentation (Standards Release Guide and User Handbook) of 27 October
2007.
Changes that financial institutions can use from 1 July 2007
1. Date and place for presentation of documents under a credit
a) Field 31D “Date and Place of Expiry” of the MT 700, 705, 710, 720 and 740
The definition of this field should be interpreted as follows: “This field
specifies the latest date for presentation under the documentary credit and the
place where documents may be presented.” This guideline does not change the
usage of this field.
b) Field 41a “Available With... By...” of the MT 700, 705, 710 and 720 The
definition of this field should be interpreted as follows: “This field
identifies the bank with which the documentary credit is available (the place
for presentation) and an indication of how the credit is available.” This
guideline does not change the usage of this field.
2. Expiry dates in reimbursement authorizations (or amendments thereof)
a) Field 31D “Date and Place of Expiry” of the MT 740 The following usage
rule should be added: “This field should not be used to specify the latest date
for presentation of a reimbursement claim or an expiry date for the
reimbursement authorization.”
b) Field 72 “Sender to Receiver Information” of the MT 740 The following usage
rule should be added: “Any latest date for a reimbursement claim or an expiry
date for the reimbursement authorization should be indicated in this field and
not in field 31D.
c) Field 31E “New Date of Expiry” of the MT 747 The following usage rule should
be added: “This field should not be used to specify a new latest date for
presentation of a reimbursement claim or a new expiry date for the reimbursement
authorization.”
d) Field 72 “Sender to Receiver Information” of the MT 747 The following usage
rule should be added: “Any new latest date for a reimbursement claim or a new
expiry date for the reimbursement authorization should be indicated in this
field and not in field 31E.”
3. Details about the disposal of documents in a notice of refusal
Any details regarding the disposal of documents for which the two existing
code words “HOLD” and “RETURN” in field 77B “Disposal of Documents” of the MT
734 Notice of Refusal cannot be used, must reflect the content of article 16.c
of UCP 600 as follows:
a) The code word “NOTIFY”, to signify that “The issuing bank is holding the
documents until it receives a waiver from the applicant and agrees to accept it,
or receives further instructions from the presenter prior to agreeing to accept
a waiver.”
b) The code word “PREVINST”, to signify that “The bank is acting in accordance
with instructions previously received from the presenter.”
Because the contents (including code words) of field 77B “Disposal of Documents” of the MT 734 are not centrally validated (ie, checked) by SWIFTNet, users may start using the above codes as of 1 July 2007 (live date of UCP 600). Alternatively, field 77B may contain a narrative text, reflecting the content of article 16.c of UCP 600.
Anti Fraud Advisory FAQ
Our financial juridical sector advert the most fraud terms that appear over the internet.
· Bank Guarantee
· Letter of Intent
· MT-760
· MT-799
· NCND Agreement by ICC
· Performance Bond
· Proof of funds
· Standby Letter of Credit
Bank Guarantee
"Bank Guarantee" is loosely used to signify any one of several financial instruments used in trade finance. These include LETTERS OF CREDIT in their various roles, DEMAND GUARANTEES, and PERFORMANCE BONDS.
Financial con artists persuade their marks that there is a wonderful, secret
opportunity available in trading so-called PRIME BANK GUARANTEES, or PBG's.
They use the term as if it were a stand-alone financial instrument that can be
obtained in quantity like stocks and bonds, and attach all sorts of quick wealth
accumulation to the myth.
One finds the use of Bank Guarantee, BG, and PBG in HIGH-YIELD INVESTMENT
PROGRAM scams, in which the investor is told many a tale about leveraging
anywhere from $10,000 to $10,000,000 to purchase hundreds of millions or even
billions of dollars worth of guarantees on day one, then selling them on day two
for huge profits.
The truth of the matter is that the buying and selling of trade finance
instruments is a highly specialized field, relegated only to experienced
FORFAITERS and the forfaiting department of international banks. Forfaiting
requires an intimate working knowledge of international politics, law, and
economy.
As for selling a Bank Guarantee for profit, wouldn't really be very practical.
Letter of Intent
A Letter of Intent is written once a general agreement has been worked out between parties such as a buyer and a seller, and outlines the various points of the general agreement. An LOI is usually non-binding and contains a non-binding clause.
An LOI cannot and will not ever be considered a contract. This is simply contrary to contract law. The seller and buyer will always have to enter into an enforceable commercial contract. An LOI is simply just that, an expression of interest or intention. More than 95% of the time the LOI is written by a broker, not the actual seller, and for the most part, these brokers have just cut and pasted information on how to write an LOI from another broker so check for several errors, and remember it holds NO contractual bearing whatsoever.
The laws of perjury do not apply to ANY commercial document, LOI or agreement. This is contrary to contract law and it is impossible for someone to perjure themselves in a letter of intent or interest.
MT-760
Is not a proof of funds, blocking of funds, movement of funds, or a fund settlement. MT-760 serves ONE purpose only it is for the movement of a bank guarantee (NOT MTN’s or any bonds) from the sellers bank officer to the buyers bank officer, these are used in buy/sells of BG's ONLY.
MT-799
MT-799 is a simple text message sent bank to bank. In this business, this is used for a bank to bank proof of funds only. The MT-799 is not a form of payment, and it is not an undertaking or promise to pay. It is simply a bank to bank confirmation of “funds on deposit”, nothing more. A lot of scammers have modified the use of the MT-799 to make it look like a bank undertaking they are just kidding themselves, this is never the case.
NCND Agreement by ICC
The I.C.C., Paris/France is NOT an enforcement, adjudication, or legislative body. They are simply an informational body and tey have never published anything on the subject of an NCND, accordingly the ICC has no jurisdictional authority or standing in any commercial agreement. In the UNDERGROUND NETWORK NCND's are handed out like candy. It is the very first request from one INTERMEDIARY to another. Often everything is crammed into one of these NCND's so that they may run several pages, with the signatory page being rife with parties to the agreement. Even commission figures are sometimes included, although commissions are part of a separate agreement in the normal course of business. One sure-fire way to spot a phony NCND is by a referral to the INTERNATIONAL CHAMBER OF COMMERCE (ICC) UCP400, UCP500 or UCP600. The UCP 400 or 500 or 600 is a booklet that outlines standard practices for DOCUMENTARY CREDITS and has absolutely nothing to do with NCND's.