SBLC Procedures With Meet The Banker Option

We deal with different investors with different procedures.

SBLC procedures

With Pre-advise:

1. 2% in escrow (For amounts $10M and up).
2. Issuing bank send MT799 pre-advise
3. 1% gets released
4. Receiving bank accepts and sends RWA
5. Issuing bank send MT760
6. 1% gets released
7. 5 days later the remaining 8% plus commissions gets paid

 

Without Pre-advise:

1. Client submits application, and countersigns contract.

2. Client bank Issues MT103.23 for payment

3. Issuing bank sends MT760

4. Client bank receives MT760 and releases the line 23 condition.

 

Mix

1. Client submits application, and countersigns contract.

2. Client bank Issues 2% for payment (Either escrow or MT103.23)

3. Issuing bank sends MT760 (Minimum $25M)

4. Client bank receives MT760 and releases the line 23 condition.

5. Within 5 banking days, remaining balance plus commissions get paid.

 

Needs ISIN/CUSIP.

1. Put non-refundable call option fee in escrow

2. ISIN/CUSIPS will be blocked

3. (Option Pre-advise)

4. Within 5 days 6% placed in escrow

5. MT760 delivery of BG

6. Remaining 3+2 balance due in 10 days after delivery of BG.

 

Meet the banker

1. 15% + commissions placed in escrow

2. Meet the banker at UBS NY

3. Get BG/ SBLC issued during meeting.

 

 

#1 procedure:

1) 2% in escrow.

2) We send MT799 pre-advise

3) 1% gets paid from escrow

4) Receiving bank accepts and sends RWA

5) We send MT760

6) 1% gets released

7) 5 days later the remaining 8% plus commissions gets paid

Banks in DR: Citi NA, Scotia, BP

#2

Procedure: setup account. Client verifies. $50k payment for swift. Receiving bank replies with RWA for payment (10 to 12%) plus commissions issuing bank sends swift.

Banks in JKT: SC, HSBC, DB

Bank in US: JPM?

Bank in Europe: Barclay's, CS, DB, HSBC

Top 5 world bank China: Agricultural Bank

?#3

TRUST INVESTMENT BANK LIMITED in Pakistanen or Euro-Exim Bank in UK, Soleil NY

Procedure: funds place in escrow at sending bank. Swift is sent.

#4

HSBC UK. Full 10% plus commissions placed in escrow and released upon confirmation receipt.

#5

Receiving bank sets up ICBPO via MT700 to paymaster account. Barclay's UK sends MT-760. Paymaster calls on the ICBPO. No pre-advise nor phone calls/fax / email.

Some of the important questions would be:

Verbiage?

Issuing bank? (WEB? Top 50?, rating?)

Issuing country? (OECD?)

Are the RMA's in place with receiving bank?

Receiving country? USA? Or Non-USA??

Amount?

Pre-advise?

What escrow agent?

USD or Non-USD?

USA passports involved?

We deal with different investors with different procedures.

Add 2% commissions non USA, 1% USA.

Joe Tufo

925.352.6000

joe@joetufo.com

http://www.linkedin.com/in/joetufo

http://www.workingcapitalfast.com

 

Oh, by the way

As we are embarking on our 11th year in business of providing SBLC, BG and proof of funds, we reflect back on the most common questions we fielded in 2016.

One of the most common questions is "Why does it take so long to set up credit facilities"?

Aside from the fact that our files take less time to get approved than for a regular mortgage application (at substantial lower credit amounts), we like to shed some light on what is involved in the approval process.

First of all, any time a SWIFT is sent, the 2 communicating banks need to have a Relationship Management Agreement (" RMA") in place. When that does not exist, one has to be either opened, or the message has to be communicated through a correspondent bank.

The RMA is a messaging capability enabling members of the SWIFT network to exchange messages over the network. The use of RMA is mandatory for sending and receiving SWIFT messages with the exception of certain types of messages like in the "3" or "9" series.

A RMA can be either unrestricted or, through granular authorizations, be limited to specific incoming message types (often referred to as "RMA Plus").

SWIFT’s RMA functionality replaced the former Bilateral Key Exchange (BKE) and is used to authorize communications between members of the SWIFT network.

In order for banks to use these RMA's, there are certain risks involved, if not properly monitored:

These are the areas that are of extreme importance:

Are there any sanctions in place ?

Transaction screening

Sanctions testing

List management

Name client screening

Restricted countries

Do you Know Your Customer ("KYC ")?

Financial institutions are required to have a central collection of user information.

Identification of customer, Licenses, certificates of incorporation, regulator.

Ownership structure (director info, annual reports)

Type of business and client base including revenues and geography of customers

Compliance Anti Money Laundering ("AML") : Wolfsberg Questionnaire, US Patriot Act, AML controls

Tax information (FATCA) .

Analytics / AML

Compliance Analysis (Bank to bank monitoring)

The Financial Action Task Force on Money Laundering (FATF), is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001 the purpose expanded to act on terrorism financing. FATF 16 (FATF Recommendation 16 compliance reporting service would provide metrics to assess a bank’s own and correspondent banks adherence to FATF Recommendation 16 (former SR VII) based on information in the party fields of the FIN messages on the SWIFT network. FATF recommendation 16 requires financial institutions to include adequate and accurate originator information and beneficiary information on funds transfers and related messages, and the information should remain throughout the payment chain. The objective would be to increase transparency on the network by encouraging the industry to put correct data in party fields of transactions.

In the wake of the global financial crisis and countries’ response to it, the international community has been increasingly concerned about de-risking. The FATF understands this term to mean situations where financial institutions terminate or restrict business relationships with entire countries or classes of customer in order to avoid, rather than manage, risks in line with the FATF’s risk-based approach. This is a serious concern for the FATF and the FATF-style regional bodies (FSRBs) to the extent that de-risking may drive financial transactions into less/nonregulated channels, reducing transparency of financial flows and creating financial exclusion, thereby increasing exposure to money laundering and terrorist financing (ML/TF) risks.

A number of countries (like the USA and UK) have mandatory Suspicious Activity Report ("SAR") reporting requirements. When certain criteria are met (for example depositing more that $10,000 in a week in cash in a bank account) the bank has to file a SAR with the authorities.

All these regulatory requirements come with an extremely high price tags for banks, and can cause tremendous delays in processing files.

The days of KTT (the first SWIFT version), where messages were basically faxed / Telexed over, are gone. (Albeit, certain countries with sanctions still find them to be very useful).

The delays that we experience have not only to do with KYC, but more and more with KYCC (Know your Client's Clients) as well.

One of our associates found that out the hard way, when trying to wire his US funds in a USA bank to a prestigious USA law firm. The wire should have taken no more than a few hours for an amount under $10,000. However a few days later he got a call from Wells Fargo that the receiver was not in their Wells Fargo system, so they could not pay, until a full investigation was completed on the recipient. Aside from the fact that Wells Fargo might not have sophisticated tools like Google, or Yahoo at their disposal, it did cause major delays.

One of the services we offer is providing SBLC (USA), BG ( non-USA), SWIFT, and Proof of Funds (POF).

We deal with different investors with different procedures.

 

These five procedures have worked for 11 years on thousands of instruments transactions- some prospects have requested minor alterations.

I have 40+ years of financial services experience, thousands of endorsements and testimonials on my LinkedIn profile. Prospective and existing clients travel from all across the world to meet me in San Francisco. You are welcome too.

 

Sincerely and with gratitude,