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Because this issue of DCInsight is coming out around the time of the Banking Commission meeting in Beijing on 21-22 April, the next issue of the magazine will report the results of that meeting in detail. In the meantime, there are several items on the meeting's agenda worth mentioning.

ISBP revision

The Drafting Group tasked with revising ISBP 681 has already been selected. Chaired by Gary Collyer, the Banking Commission's Technical Adviser, who also chaired the UCP 600 Drafting Group, it consists of eleven members representing ten countries, with three of the members, including Mr Collyer, already having served on the UCP Drafting Group. The meeting in Beijing, the first for the group, was an organizational and strategy meeting, pointing the way to the scope of the revision and the items to be added and amended. Mr Collyer has already indicated that the revision could take a couple of years and would aim to cover a num ber of subjects not treated in the present ISBP, such as inspection certificates, analy sis certificates and health or phyto sanitary certificates.

Forfaiting

The first draft of the rules on forfaiting, a joint project of the Banking Commission and the International Forfaiting Asso ciation (IFA), is in the process of being discussed and circulated. In 2009, the two organiza tions got the green light from the Banking Commission to begin their work. The work will cover rules for both the primary and secondary markets.

Trade Finance Default Register

A joint project of the Banking Commission and the Asian Development Bank (ADB), the Trade Finance Default Register aims to collect enough data on letter of credit defaults to persuade the Basel II regulators to lower capital require ments for trade finance "to an appropriate level that reflects the risk profile". ICC has long maintained that the Basel regulations are too strict, given that defaults are relatively rare in trade finance. A second objective of the Register is to channel information back to financial institutions that they can use to assess risk and establish internal limits for trade finance. Once the data are collected from institu tions, ideally banks would be able to obtain information on the aver age default per cent ages for trade finance transactions in individual countries.

Anti-money laundering

The Banking Commission's officers have approved a position paper expressing concern over the sanctions clauses that are finding their way into more L/Cs. These clauses may read something like the following: "Presentation of docu ment(s) that are not in compliance with the applicable antiboycott, antimoney laundering, antiterrorism, antidrug trafficking and economic sanctions laws and regulations is not acceptable. Applicable laws vary depending on the transaction and may include United Nations, United States and/or local laws." The ICC paper makes several points, among them that "sanction clauses give the issuer discretion whether or not to honour, they bring into question the independent nature of the letter of credit and its irrevocability. Of particular con cern are clauses that alter the reimburse ment provisions of UCP 600 with respect to nomi nated banks that have acted pursuant to their nominations or that seek to shift the risk of compliance with sanctions to nominated banks." The paper continues, saying that "the issue relating to the implementation of sanctions related policy by banks causes a specific problem when considering the role of a confirming bank or a nominated trans ferring bank." Finally, it recommends that banks "refrain from including such clauses that bring into question the bank's commitment or the irrevocable nature of a transaction, or where the use of such a clause is in conflict with local law".

Other items

Apart from these items, the Commission has a number of other issues on its plate. Among these are the promotion and implementation of the revised URDG 758; the question of the Bank Payment Obli gation (BPO) being developed by SWIFT, which was discussed in the Winter 2010 issue of DCInsight; and the ongoing revision of Incoterms, which is scheduled to be finished this year.