[Edit this paragraph] What is a letter of credit

A letter of credit (L/C) is a valid document issued by a bank in accordance with the customer’s requirements and instructions. A written document that conditions a promise to pay.

Letter of credit is currently the most important and commonly used payment method in international trade.

Chinese and English samples and descriptions of letters of credit: /forexers_fin/20080405/lettercredit.html

[Edit this paragraph] The main parties to the letter of credit and their rights and obligations

< p> (1) Applicant. The person who applies to the bank for a letter of credit is also called the opener in the letter of credit.

Obligations: issue a L/C in accordance with the contract; pay a proportional deposit to the bank; pay the redemption order in a timely manner

Rights: inspect and redeem the redemption order; inspect and return the goods (all based on the letter of credit)

Note: The issuance application has two parts, namely, the issuance application to the issuing bank and the statement and guarantee to the issuing bank (declaring that the ownership of the goods before payment of the redemption order belongs to the bank; the issuing bank and its The correspondent bank is only responsible for whether the documents are qualified on the surface; the issuing bank is not responsible for errors in the delivery of documents; it is not responsible for "force majeure"; it guarantees the payment of redemption orders when due; it guarantees the payment of various fees; the issuing bank has the right to make additional payments at any time Deposit; has the right to decide on cargo insurance and increase the level of insurance, and the cost shall be borne by the applicant.

(2) The issuing bank accepts the entrustment of the issuing bank. The bank responsible for the letter of credit is responsible for guaranteeing payment.

Obligations: correct and timely issuance of the letter; assumes primary payment responsibility

Rights: charge fees and deposits; refuse to benefit. If the certificate issuance applicant is unable to pay the redemption order after payment, the order and goods can be processed; if the goods are insufficient, the balance can be claimed from the certificate issuer.

(3) Advising/notifying bank refers to the bank that is entrusted by the issuing bank to transfer the letter of credit to the exporter. It only certifies the authenticity of the letter of credit and does not undertake other obligations.

The authenticity of the letter of credit;

The transmitting bank is only responsible for the transfer.

(4) The beneficiary refers to the person designated on the letter of credit who has the right to use the letter of credit.

Obligation: After receiving the letter of credit, you should check it with the contract in a timely manner. If it does not match, ask the issuing bank to modify or refuse to accept it as soon as possible or ask the applicant to instruct the issuance of the letter of credit. The issuing bank will amend the letter of credit; if accepted, it will ship the goods and notify the consignee, prepare all the documents and present them to the negotiating bank for negotiation within the specified time; be responsible for the accuracy of the documents. If they are inconsistent, the issuing bank shall follow the instructions of the issuing bank to modify the order and Rights: If the document is still submitted within the time limit stipulated in the letter of credit: If the document is refused to be modified or if it still does not comply with the modification, it has the right to unilaterally cancel the contract and reject the letter of credit after notifying the other party; if the issuing bank goes bankrupt or unreasonably refuses to pay after the document is presented, it can directly request the issuance of the document. The applicant pays; if the issuing bank goes bankrupt before payment, the shipment of goods can be stopped and the letter of credit can be handled by itself; if the letter of credit has not been used when the issuing bank goes bankrupt, the applicant can be asked to issue another one.

( 5) Negotiating bank refers to the bank that is willing to buy the documentary draft handed over by the beneficiary.

According to the payment guarantee of the letter of credit issuing bank and the request of the beneficiary, according to the provisions of the letter of credit. The bank that advances or discounts the documentary draft delivered by the beneficiary and claims reimbursement from the paying bank specified in the letter of credit (also known as the purchasing bank, bill bank and discount bank; generally the advising bank; there are limited negotiation and free negotiation

Obligations: Strictly review documents; advance or discount documentary draft; endorse letter of credit;

Rights: negotiable or not; can be processed after negotiation (Freight) documents; after negotiation, if the issuing bank goes bankrupt or refuses to pay with an excuse, the advance payment can be recovered from the beneficiary

(6) Paying/drawee bank. The bank designated for payment on a letter of credit. In most cases, the payee bank is the issuing bank.

The bank that pays the beneficiary for documents that comply with the letter of credit (it can be the issuing bank or another bank authorized by it).

The right to pay or not to pay; once paid, there is no right to pursue the beneficiary or the bona fide holder of the bill

(7) Confirming Bank accepts the issuing bank Entrust a bank to guarantee the letter of credit in its own name

Add "guaranteed payment"; an irrevocable firm commitment; be independently responsible for the letter of credit and pay against the document; after payment, you can only claim from the issuing bank; if If the issuing bank refuses to pay or goes out of business, it has no right to pursue recourse against the beneficiary and the negotiating bank.

(8) Accepting Bank: The bank that accepts the draft submitted by the beneficiary is also the paying bank.

(9) Reimbursement Bank is a bank (also called a clearing bank) that is entrusted by the issuing bank in the letter of credit to repay advances to the negotiating bank or paying bank on behalf of the issuing bank.

Only pay without reviewing the document; just pay without refund; if not reimbursed, the issuing bank will reimburse.

[Edit this paragraph] General collection and payment procedures by letter of credit

(1) The applicant for the issuance of a letter of credit fills out the application form according to the contract and pays a deposit or provides other guarantees. Please The issuing bank issues the certificate.

(2) The issuing bank issues a letter of credit to the beneficiary based on the content of the application and sends it to the advising bank where the exporter is located.

(3) The advising bank will hand over the letter of credit to the beneficiary after verifying that the seal is correct.

(4) After the beneficiary verifies that the contents of the letter of credit are consistent with the provisions of the contract, the beneficiary will ship the goods in accordance with the provisions of the letter of credit, prepare documents and issue a draft, and send it to the negotiating bank for negotiation within the validity period of the letter of credit.

(5) The negotiating bank will advance the payment to the beneficiary after reviewing the documents according to the terms of the letter of credit.

(6) The negotiating bank sends the bill of exchange and shipping documents to the issuing bank or its specific paying bank for claim.

(7) After the issuing bank verifies that the documents are correct, the payment is made to the negotiating bank.

(8) The issuing bank notifies the issuer to pay the redemption order.

[Edit this paragraph] Main contents of the letter of credit

(1) Description of the letter of credit itself. Such as its type, nature, validity period and expiration place.

(2) Requirements for goods. Describe according to the contract.

(3) Transportation requirements.

(4) Requirements for documents, namely cargo documents, transport documents, insurance documents and other relevant documents.

(5)Special requirements.

(6) The issuing bank’s responsibility to guarantee payment to the beneficiary and the holder of the bill of exchange.

(7) Most certificates from abroad are marked with the following note: "Unless otherwise specified, this certificate is published in accordance with the International Chamber of Commerce's "Uniform Customs and Practice for Documentary Credits (Revised in 1993)", which is the International Chamber of Commerce No. 500 ("ucp500")"

(8) Inter-bank wire transfer claim clause (t/t reimbursement clause).

[Edit this paragraph] Characteristics of letter of credit payment methods

1. The issuing bank bears the primary and independent payment responsibility.

2. A letter of credit is a self-sufficient document. Although the letter of credit is issued based on the sales contract, once the letter of credit is issued, it becomes an agreement independent of the sales contract.

3. A letter of credit is a transaction of documents, and the relevant parties deal with documents, not goods, services and/or other behaviors. The bank is only responsible for the apparent consistency between documents and documents.

[Edit this paragraph] Types of letters of credit

(1) According to whether the bill of exchange under the letter of credit is accompanied by shipping documents, it is divided into: documentary letter of credit and clear letter of credit .

①Documentary Credit is a letter of credit that pays against a documentary draft or only a document. The documents here refer to documents that represent the ownership of the goods (such as ocean bills of lading, etc.), or documents that prove that the goods have been shipped (such as railway waybills, air waybills, and parcel receipts).

②Clean Credit is a letter of credit that pays against a clean draft that does not come with shipping documents. The bank pays against a clean letter of credit, and may also require the beneficiary to attach a non-shipping document, such as an invoice, advance payment list, etc.

In the payment settlement of international trade, documentary letters of credit are mostly used.

(2) Based on the responsibility of the issuing bank, it can be divided into:

①Irrevocable letter of credit. It means that once a letter of credit is issued, within the validity period, the issuing bank cannot unilaterally modify or cancel it without the consent of the beneficiary and relevant parties. As long as the documents provided by the beneficiary comply with the provisions of the letter of credit, the issuing bank must fulfill its payment obligations.

②Revocable letter of credit. The issuing bank does not need to obtain the consent of the beneficiary or relevant parties for a letter of credit that has the right to be revoked at any time, and should indicate the word "cancellable" on the letter of credit. However, "UCP500" stipulates: As long as the beneficiary has obtained negotiation, acceptance or deferred payment guarantee in accordance with the terms of the letter of credit, the letter of credit cannot be revoked or modified. It also stipulates that if the letter of credit does not indicate whether it is revocable, it shall be regarded as an irrevocable letter of credit.

(3) Depending on whether another bank guarantees payment, it can be divided into:

① Confirmed letter of credit. Refers to a letter of credit issued by the issuing bank, in which another bank guarantees payment obligations for documents that comply with the terms of the letter of credit. The bank that confirms the letter of credit is called the confirming bank.

②Do not confirm the letter of credit. The letter of credit issued by the issuing bank has not been confirmed by another bank.

(4) According to different payment times, it can be divided into:

① Letter of credit at sight. Refers to a letter of credit in which the issuing bank or paying bank immediately performs its payment obligations after receiving the documentary draft or shipping documents that comply with the terms of the letter of credit.

② Usance letter of credit. Refers to a letter of credit in which the issuing bank or paying bank performs its payment obligations within the specified period when receiving the documents of the letter of credit.

③Fake usance letter of credit.

The letter of credit stipulates that the beneficiary shall issue a usance draft, and the paying bank shall be responsible for discounting it, and stipulates that all interest and fees shall be borne by the issuer. For the beneficiary, this kind of letter of credit is actually still a collection at sight, and there is a "usance L/C payable at sight" clause in the letter of credit.

(5) Depending on whether the beneficiary’s rights to the letter of credit can be transferred, it can be divided into:

① Transferable letter of credit. Refers to the bank (collectively referred to as the "transferring bank") that the beneficiary of the letter of credit (the first beneficiary) may request to authorize payment, bear deferred payment liability, accept or negotiate, or when the letter of credit is freely negotiable, the bank may request the letter of credit to A letter of credit that transfers all or part of the letter of credit to one or several beneficiaries (secondary beneficiaries) by a transfer bank specially authorized by the Bank. The issuing bank must clearly indicate "transferable" in the letter of credit, and it can only be transferred once.

②The letter of credit is non-transferable. Refers to a letter of credit in which the beneficiary cannot transfer the rights of the letter of credit to others. If the letter of credit does not indicate "transferable", it is a non-transferable letter of credit.

(6) Revolving letter of credit. It means that after the letter of credit is used in whole or in part, its amount is restored to the original amount and can be used again until the specified number of times or the specified total amount is reached. It is usually used in the case of uniform delivery in batches. Under the condition of a circulating letter of credit based on the amount, the specific methods for restoring the amount to the original amount are:

① Automatic recycling. When a certain amount is used up in each period, it can be automatically restored to the original amount without waiting for notification from the issuing bank.

②Non-automatic loop. After a certain amount is used up in each installment, you must wait for the notification from the issuing bank to arrive before the letter of credit can be restored to the original amount.

③Semi-automatic cycle. That is, within a few days after a certain amount of money has been used up each time, the issuing bank will give a notice to stop recycling, and the amount will be automatically restored to the original amount starting from the xth day.

(7) Folio letter of credit. Refers to a letter of credit issued by two letter of credit applicants with each other as the beneficiary. The amounts of the two letters of credit are equal or substantially equal, and they can be issued at the same time or successively. It is mostly used for barter trade or processing of supplied materials and compensation trade business.

(8) Opposite letter of credit. Also known as re-issuing a letter of credit, it means that the beneficiary requires the advising bank or other bank of the original letter of credit to issue a new letter of credit with similar content based on the original letter of credit. The issuing bank of the opposing letter of credit can only issue a new letter of credit based on the irrevocable credit card. Certificate is issued. A counter-letter of credit is usually issued by an intermediary to resell other people's goods, or when the two countries cannot handle import and export trade directly, a third party is used to communicate trade. The amount (unit price) of the original letter of credit should be higher than the amount (unit price) of the counter letter of credit, and the shipping period of the counter letter of credit should be earlier than the provisions of the original letter of credit.

(9) Advance letter of credit. It means that the issuing bank authorizes the paying bank (advising bank) to advance all or part of the amount of the letter of credit to the beneficiary, and the issuing bank guarantees repayment and bears the interest. That is, the issuing bank pays first, and the beneficiary delivers the documents last. The opposite of a usance letter of credit. The advance letter of credit is paid against the exporter's clean bill, and the beneficiary is also required to attach a statement responsible for replenishing the documents specified in the letter of credit. When the shipping documents are delivered, the paying bank will deduct the interest on the advance payment when paying the remaining payment. .

(10) Standby letter of credit. Also known as commercial paper letter of credit and guaranteed letter of credit. Refers to the certificate issued by the issuing bank to the beneficiary at the request of the issuing bank promising to assume a certain obligation. That is, the issuing bank guarantees that when the issuing applicant fails to perform its obligations, the beneficiary can obtain reimbursement from the issuing bank by relying on the provisions of the standby letter of credit and submitting the issuer's proof of default. It is bank credit, which is a way for the beneficiary to obtain compensation when the issuer defaults.

[Edit this paragraph] English definition of letter of credit

Definition of L/C:

A form of guarantee of payment issued by a bank used to guarantee the payment of interest and repayment of principal on bond issues.

[Edit this paragraph] Origin of letter of credit

Letter of credit originated from ancient Roman law, which clarified the process of commodity and currency exchange Credit documents written in words can be used to express the business reputation of both parties in the exchange.

[Edit this paragraph] Methods to prevent letter of credit fraud

Among international settlement frauds, documentary letter of credit fraud is the most important and relatively hidden type. This article attempts to briefly analyze and discuss the common ways of documentary credit fraud.

1. Common methods and characteristics of documentary letter of credit fraud

(1) Counterfeit or forged seal (signature) fraud

The so-called "counterfeit or forgery" "Seal (signature) fraud" means that fraudsters use a typewriter to type out a letter of credit and send it by post, counterfeiting or forging the seal (signature) of a person authorized to sign at the issuing bank in an attempt to deceive the beneficiary (exporter) with the fake one. Blindly shipping goods ultimately achieves the criminal purpose of defrauding export goods.

This kind of fraud generally has the following characteristics:

1. The letter of credit is delivered directly to the beneficiary without notification, and the envelope does not have the sender’s detailed address and the postmark is unclear;

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2. The format of the letter of credit used is an old or outdated format;

3. The signature strokes of the letter of credit are not smooth, or the signature is printed;

4. The letter of credit The terms are contradictory or contrary to convention;

5. The letter of credit requires the goods to be transported by air, or the bill of lading is made with the applicant (importer) as the consignee.

For example: A foreign trade company in Henan once received a documentary letter of credit issued in the name of Standard Macquarie Bank Birmingham Branch (STANDARD CHARTERED BANK LTD. BIRMINGHAM BRANCH, ENGLAND), with an amount of USD37 ,200.00 yuan, the notifying bank is NATIONAL WESTMINSTER BANK LTD.LONDON.

Because the letter of credit was not reviewed by the beneficiary’s local bank professionals as usual, several suspicious things were found:

(1) The format of the letter of credit was very old and the envelope was not sent. The sender's address is unclear, and the postmark is unclear, making it impossible to identify where it was sent;

(2) The letter of credit restricts negotiation by the advising bank - NatWest Bank in London, which is against the norm;

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(3) The detailed address of the acquiring bank is not found in the bank yearbook;

(4) The signature on the letter of credit is printed, not hand signed, and cannot be verified;

(5) The letter of credit requires the goods to be transported by air to Nigeria, a country where fraud cases are common. Based on the above points, the bank initially determined that the letter of credit was a forged letter of credit. Later, it was verified by the head office of the issuing bank that this was indeed the case. This avoids a fraud involving forged credit documents.

(2) Stealing or borrowing another bank’s password (password) to commit fraud

The so-called “stealing or borrowing another bank’s password (password) to commit fraud” refers to fraudsters committing fraud at electronic stores. In the letter of credit, it was falsely stated that a third bank had used a security deposit, but the confirmation message from the third bank had no confirmation of the security deposit, in an attempt to conceal the truth and defraud the exported goods.

This kind of fraud usually has the following characteristics:

1. The certificate is unsecured, but claims to be confirmed by a call from a third bank;

2. The certificate is provided The shipment validity period is short to force the beneficiary to rush shipment;

3. The certificate stipulates that the beneficiary shall send an original bill of lading to the applicant after shipment;

4. Open a usance payment letter of credit with favorable interest rates;

5. The applicant and consignee in the letter are in different countries or regions.

For example: A certain Bank of China once received a letter of credit issued electronically by the ALERTA branch of AC Bank in Canada, with an amount of approximately US$1 million, and the beneficiary was an import and export company in Anhui. The bank's examiner found the following doubts about the certificate: (1) The certificate was not confirmed by a security deposit, and only stated "This certificate will be confirmed by a call from XX bank" in the certificate; (2) The validity period of the certificate was on the same day. , and the date of leaving the certificate is less than one week; (3) After requesting the beneficiary to deliver the goods, a set of duplicate documents and an original bill of lading will be mailed to the applicant by DHL express as soon as possible; (4) The certificate is valid for 45 days after sighting. payment, and stipulates that the beneficiary can claim interest at an annual rate of 11%; (5) the applicant for the letter of credit is in Canada, but the consignee is in Singapore; (6) the telex number for the incoming certificate is unreasonable. In response to these doubts, on the one hand, the Bank of China warned the company, "This certificate does not match the code, please postpone the shipment." On the other hand, it quickly checked with the International Department of the head office, and the answer was: "This trip is not available." Later, I received a confirmation message signed "Bank of America", but the message was not confirmed, so the Bank of China tried to contact the Bank of America representative office in Beijing and asked for assistance in verification. Finally, I received the reply: "The bank has never issued a confirmation message." Confirm the email and have no correspondence with the issuing bank." At this point, it was finally confirmed that this was a fraud case involving the theft of a third bank's secret key.

Another example: A certain Bank of China in Guangxi once received a letter of credit issued electronically signed by PT BANK DAGANG NEGARA INTL ORERATION, BANDUNG, INDONESIA, with an amount of approximately. US$800,000, to be certified using the secret deposit between the issuing bank and Standard Chartered Bank Shanghai Branch. Later, the Bank of China called the bank in Shanghai for verification and received a reply: "The Bank will not verify for the third bank that is not a member of its group and will not bear any responsibility." The Bank of China had no choice but to refer to the head office of the issuing bank, but was Notice: "The issuing bank has never issued this certificate, and the applicant has not registered locally and has no business records." Obviously, this was a fake letter of credit that had been stolen from another bank and pretended to be the National Commercial Bank of Indonesia.

(3) "Soft Clause"/"Trap Clause" Fraud

The so-called "Soft Clause"/"Trap Clause" fraud means that the fraudster requires the issuing bank to issue the initiative A letter of credit that is completely in the hands of the issuing party, can restrict the beneficiary, and can release the payment liability clause at any time. Its essence is a disguised revocable letter of credit in order to defraud our export enterprises and banks.

This kind of fraud mainly has the following characteristics:

1. The amount of the certificate is relatively large, more than 500,000 US dollars;

2. The certificate contains restricted benefits "Soft clauses"/"trap clauses" on the rights of the user, such as requiring the applicant or its designated representative to issue an inspection certificate, or the applicant specifying the name of the transport ship, the date of loading, the sailing route, or claiming that "this certificate is not yet valid", etc. ;

3. The goods in the certificate are generally bulk building materials and packaging materials, such as "granite, cobblestones, cast iron covers, wooden boxes and fiber bags";

4. Fraud The molecule requires the export enterprise to prepay 5% to 15% of the contract amount or the issuance amount as performance payment, commission or quality deposit to the buyer's designated representative or intermediary.

5. After the buyer obtains the performance payment, commission or warranty deposit, he will make excuses to make things difficult, refuse to issue an inspection certificate, or fail to notify the shipment, so that the export enterprise cannot obtain a full set of documents for negotiation, and suffers losses in vain.

For example: A Bank of China once received a letter of credit in the amount of USD1,170,000,00 issued by KP Bank in Hong Kong. The beneficiary was an import and export company in Guangxi, and the export goods were wooden boxes. The following "soft terms" are included in the certificate acquisition: "This certificate is not yet valid unless the name of the transport vessel has been recognized by the applicant and notified to the beneficiary by the issuing bank in the form of a revised certificate" (THIS CREDIT IS NON-OPERATIVE UNLESS THE NAME OF CARRYING VESSELHAS BEEN APPROVED BY APPLICANT AND TO BE ADVISED BY L/C OPENING BANK INFORM OF AN L/C ANENDMENT TO BENEFICIARY).

When Bank of China notified the beneficiary of the letter of credit, Bank of China reminded them to pay attention to this "soft clause" and suggested that they modify the letter of credit to avoid possible risks. Later, after consultation, the applicant canceled the letter of credit, and Hong Kong IB Bank issued another letter of credit with the same amount, the same goods, and the same beneficiary. However, there was still such a "soft clause" in the letter of credit: "Shipment can only be made after receipt of the letter of credit." "SHIPMENT CAN ONLY BE EFFECTED UPON RECEIPT OF AN AMENDMENT OF THIS CREDIT ADVISING NAME OF CARRYING VESSE/AND SHIPMENT DATE". It can be said that the initiative is still in the hands of the applicant, but the beneficiary faces the risk of being unable to submit a full set of documents to the bank for negotiation if the applicant refuses to issue a shipping notice. At this time, the Bank of China learned that An industrial and trading company associated with the import and export company has remitted a RMB 400,000 guarantee deposit to the applicant's representative in Shenzhen, and the import and export company is planning to apply for a RMB package loan of RMB 6 million from it for loan order purposes. As a result, the Bank of China took decisive measures. On the one hand, it suspended loans to the company, and on the other hand, it urged it to try to assist the industrial and trading company in recovering the warranty deposit. After the cooperation of many parties, we were able to avoid losses.

Another example: A trading company in Liaoning signed a contract with Jinhua Enterprise in the United States to sell 50,000 cubic meters of granite to Hong Kong, with a total amount of US$19.5 million. The buyer issued a contract under the above contract through a bank in Hong Kong. The first letter of credit was in the amount of US$1.95 million. Credit regulations: "The goods can only be shipped after receipt of the shipping notice from the ship name specified by the applicant, and the shipping notice will be issued by the issuing bank via a letter of credit amendment later" (SHIPMENT CANONLY BE EFFECTED UPON RECEIPT OF APPLIANT`S; SHIPPING;INSTRUCTIONS THROUGH L/ C OPENING BANK NOMINTING THE NAMEOF CARRYING VESSEL BY MEANS OF SUBSEQUENT CREDIT AMENDMENT). After receiving the certificate, the trading company paid a warranty deposit of RMB 2.6 million to the buyer's designated representative. Before shipment, the buyer's representative came to the place of origin to inspect the goods, but refused to issue a "shipping notice" on the grounds that the goods were of unqualified quality, causing the goods to be damaged. Being stranded at the place of production, the Chinese company was unable to deliver goods and collect foreign exchange, resulting in heavy losses.

(4) Forgery of letter of credit amendment fraud

The so-called "forgery of letter of credit amendment fraud" means that fraudsters issue direct letters of credit to the advising bank or beneficiary without going through the issuing bank. The letter of credit modification is an attempt to exploit the exporter's loopholes and induce the beneficiary to ship goods in order to defraud the exported goods.

This kind of fraud generally has the following characteristics:

1. Although the original certificate is true and legal, it contains certain clauses that restrict the rights of the beneficiary and needs to be modified urgently;

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2. The amendment is issued by telegram or telex, and the secret key of another bank is stolen or the original certificate password is borrowed;

3. The amendment is not issued through the issuing bank, but directly Issued to the advising bank or beneficiary;

4. The certificate stipulates that an original bill of lading be mailed to the applicant after shipment;

5. The validity period of the incoming certificate is shorter to force Beneficiaries rush shipments. A letter of credit worth USD1,092,000.00, the beneficiary is a foreign trade company in Hainan. The incoming certificate contains such a "soft clause": "It can only be loaded after receiving the buyer's shipping instructions, designated transport ship name, and shipping date with the wired amendment letter from our bank and notified by the advising bank; and the amendment letter must be SHIPMENTCAN ONLY BE EFFECTED UPON RECEIPT OF BUYER`S SHIPMENT INSTRUCTIONS MOMINATION NAME OF CARRYING VESSEL DATE OF SHIPMENT IN THE FORM OF UOR AUTHENICATED CABLE AMENDMENT THRU ADVISING BANK AND COPY OF SUCHAMENDMENT MUST BE INCLUDED IN EACHSET OF DOCUMENTS FOR NEGOTIATION), at the same time, stipulates: "1/3 of the original bill of lading will be shipped to the applicant by express mail." When the Bank of China notified the beneficiary of the certificate, it reminded them to pay attention to these terms and take precautions. Later, the Bank of China received an electronically issued modification letter under the original certificate. The modification letter specified the name of the ship and the shipping date, and changed the original certificate from allowing batch shipments to prohibiting batch shipments, but the secret key remained the same. Is the original certificate secret? The Bank of China immediately became alert and quickly checked with the issuing bank. After confirming that the message was a forged amendment, it immediately notified the beneficiary to stop shipping. At this time, the beneficiary's export cargo (70 tons of white pepper) was being prepared for shipment, and the risks were self-evident.

(5) Fake passenger inspection certificate fraud

The so-called "fake passenger inspection certificate fraud" means that fraudsters issue inspection certificates in the name of the applicant's representative at the beneficiary's place of shipment. However, his signature does not match the seal style left by the issuing bank. As a result, the beneficiary's documents were refused and the goods were defrauded.

This kind of fraud usually has the following characteristics:

1. The incoming certificate contains a "soft clause" that the inspection certificate is signed by the applicant's representative.

2. The certificate stipulates that the signature of the applicant’s representative must match the seal style of the issuing bank;

3. The certificate requires an original bill of lading to be handed over to the applicant’s representative; < /p>

4. The applicant gives a large check to the beneficiary as a pledge or guarantee;

5. The applicant controls the entire transaction process through the designated representative.

For example: A Bank of China once received a letter of credit issued by Hong Kong BD Financial Company with an information company in Hainan as the beneficiary. The amount was USD992.000.00 and the export goods were 200,000 cameras. The letter of credit requires that the applicant's designated representative issue a cargo inspection certificate before shipment, and his signature must be confirmed by the issuing bank, and stipulates that 1/2 of the original bill of lading shall be handed over to the applicant's representative after shipment. At the time of shipment, the applicant's representative came to the place of shipment, provided the inspection certificate, and took away one of the original bills of lading from the beneficiary with several large checks as collateral. Later, the beneficiary entrusted the relevant check to a local bank for negotiation, but was told: "The collection check was a bad check, and the signature of the inspection certificate issued by the applicant's representative did not match and was purely forged." What's even more unfortunate is that all the goods have been taken away and their whereabouts are unknown. The beneficiary suffered heavy losses and was in great distress.

(6) Alteration of letter of credit fraud

The so-called "altermination of letter of credit fraud" means that fraudsters deliberately alter the expired letter of credit and change the amount and effect of the original letter of credit. Date and name of the beneficiary, and directly mail or hand it over to the beneficiary in order to defraud export goods, or induce the exporter to open a letter of credit to defraud bank financing.

This kind of fraud often has the following characteristics:

1. The original letter of credit is opened by letter to facilitate alteration;

2. The alteration content is credit The amount of the credit, the period of validity and the name of the beneficiary;

3. The alterations in the letter of credit are not confirmed by the issuing bank;

4. The letter of credit is not notified by the advising bank. Directly to the beneficiary;

5. The amount is huge to obtain huge profits through fraud.

For example: A foreign trade company in Jiangsu once received a letter of credit issued by a Hong Kong merchant in the amount of US$1.27318 million.

After the local Bank of China reviewed it, it found that the amount of the certificate, the shipping date and the name of the beneficiary were all obviously altered, so it reminded the beneficiary to pay attention and immediately inquired with the issuing bank. Finally, it was found that the certificate had been altered by a merchant and handed over to the foreign trade company. company, in an attempt to require our bank to issue a letter of credit of US$6.3 million to it in order to defraud abroad. In fact, this is an old letter of credit that has expired long ago. Fortunately, our bank was highly vigilant and was able to stop this huge letter of credit fraud in time.

(7) Forgery of confirmed letters of credit fraud

The so-called "forgery of confirmed letters of credit fraud" refers to fraudsters who, on the basis of providing false letters of credit, obtain export rights. trust, and deliberately forged confirmation letters from major international banks in order to defraud our bulk export goods.