Some enterprises and companies, unable to obtain bank funds through proper channels, regard opening forward letters of credit without trade background as one of the main ways and means to defraud bank funds, and their means of committing crimes are various. If false contracts or false documents are used to forge the trade background, domestic applicants and foreign beneficiaries will jointly defraud the bank. When domestic applicants use fake contracts to trick banks into issuing forward letters of credit, foreign beneficiaries submit fake documents matching the letters of credit through remittance banks. Because their purpose is to defraud the bank of funds, regardless of the authenticity of the documents, regardless of whether there are discrepancies, the applicants accept the documents and urge the issuing bank to accept them. Once the issuing bank accepts it, the conditional payment commitment of the issuing bank becomes the unconditional payment responsibility due. After receiving the acceptance from the issuing bank, the issuing bank will discount it at the request of the beneficiary so that the beneficiary can borrow money from the bank. Some forged or fabricated the entrepot trade background, some forged the entrepot trade background by buying and selling warehouse receipts, and some forged the entrepot trade background by opening letters of credit. Although these means are different, the ultimate goal is the same, that is, to use the forward letter of credit opened by the bank to discount the returned funds. These funds can't be repaid when they are due, resulting in huge advances from banks. This is why the People's Bank of China prohibits commercial banks from opening forward letters of credit without trade background.
(b) Misappropriation risk
In the long-term letter of credit business, the importer sells the goods and collects the payment. Before the payment date, he is likely to continue to turn over the funds or use them for other purposes. If the importer misappropriates the investment in fixed assets, the fixed investment will generally not generate benefits immediately on the maturity date of the letter of credit, and the due accounts payable will not be paid without cash withdrawal. If it is overdue, the issuing bank will have to make an advance payment. Other importers, in pursuit of high profits, misappropriate payment for goods, speculate in stock futures and force banks to advance funds. The usual way for importers to occupy and misappropriate funds is to exceed the reasonable opening period. In the forward letter of credit business, the payment time of the letter of credit is usually 90 days, and the longest is 180 days. Its reasonable term depends on the capital recovery cycle of imported products. No matter what some companies import, the longer the better. Many importers require 360-day forward payment in order to occupy bank funds as long as possible.
(3) Market risk
Here mainly refers to the risks brought by importing hot-spot sensitive goods. This kind of goods refers to the hot-selling goods in a certain stage and period. Since the 1980s, these commodities have been mainly concentrated in wood, plywood, paper pulp, steel, edible oil, sugar and fertilizer. In the 1990s, chemical raw materials, chemical fiber, steel products, refined oil and other commodities appeared. Because it is a hot and sensitive commodity, the commodity price fluctuates greatly, and the price rise and fall is difficult to predict. If it is spot payment, the bank risk is relatively small for cash on delivery documents; For forward payment, importers usually use the domestic sales of imported goods to pay for the goods under the forward letter of credit or the bank's standby loan, which will greatly increase the bank's risk. Because in this case, once the price of imported goods falls, the sales are not smooth, and the due funds cannot be recovered, the importer cannot repay the payment for imported goods on time, and the bank is forced to advance funds, resulting in bad advances.
(4) importers
In order to cheat the trust of banks, importers always try their best to hide the unfavorable aspects, such as foreign exchange evasion, foreign exchange fraud, violation of foreign exchange policy, non-verification of imports, and even smuggling. Importers are punished, which often leads the issuing bank to advance with its own funds. If the importer can't return the advance payment of the issuing bank, it will lead to the formation of non-performing assets of the issuing bank.
On the one hand, the demand for forward certificates increases, on the other hand, forward certificates are more risky than spot certificates. Therefore, only strict precautions can be conducive to the healthy development of forward letters of credit. (a) according to the system, strictly review the forwarding card business.
The key to preventing risks lies in the card-issuing bank's comprehensive review of applicants in strict accordance with internal rules and regulations:
1. Review the applicant's qualifications and conditions for issuing letters of credit;
2. Investigate the applicant's operating conditions, asset quality and liabilities, credit rating, settled foreign exchange records and reasons. ;
3. Review the legality, operating conditions, profitability, liabilities and asset liquidity of the issuing guarantor;
4. Understand the beneficiary's credit status, production capacity and previous business cooperation, especially for letter of credit transactions with a large amount, and strengthen the investigation of the beneficiary's credit. Because the beneficiary's credit directly affects the success or failure of this business. Some beneficiaries cheat banks by forging documents, exporting inferior goods, filling more with less or colluding with importers. Therefore, it is particularly important to investigate the credit of beneficiaries.
(2) Strengthen margin management and implement a unified credit system.
For forward certificates, full deposit must be implemented or guarantee measures with the same effect must be taken. The proportion of deposit collection is closely related to the importer's reputation, business style, financial strength, the nature of imported goods and market conditions. For those with greater risks, a deposit of more than 100% must be implemented. The deposit must be managed in a special account, and shall not be withdrawn in advance or used for other purposes.
(3) Strict payment terms and examination of imported goods.
Although the long-term letter of credit is a trade financing between banks and enterprises, it is to solve the urgent needs of enterprises, but enterprises should use special funds for special purposes and recover them one by one, and cannot turn around. After a business process is completed, it should be returned to the bank, and the enterprise can reapply when it is reused. If an importer has two months' production and processing plus one month's sales repayment period, and a complete production cycle is 90 days, then it is not appropriate for him to apply for opening an L/C in 180 days or 360 days. Therefore, the forward period should be shortened to reduce the risk of banks. At the same time, the issuing bank should be more cautious about the hot and sensitive goods imported by importers. It is necessary to confirm that importers have legal ways to import, increase the margin ratio and implement corresponding risk prevention measures. At the same time, the authenticity of the license should be verified before issuing the license.
(d) Pay attention to the post-management of forward certificates.
First of all, we should pay attention to the replacement. Some banks strictly control the opening of letters of credit, and after the letter of credit is opened, they relax their vigilance against its amendment, which eventually leads to business risks. Therefore, the modification of the letter of credit, especially the increase of the amount, the extension of the validity period, the modification of documents and the modification of payment terms, should be as strict as when opening the letter of credit.
Secondly, pay attention to collecting negative news from importers. Some banks, after the receipt is accepted by the applicant, put the documents on the shelf and wait for the due applicant to pay. Once the importer has problems during this period, the risks of the bank will follow. Therefore, we should pay attention to the tracking of importers, keep abreast of their sales, management and finance, and find out whether importers are punished or brought to court for violating relevant state regulations, or even pay a large sum of money, so as to make an early response and take corresponding measures.