South Korea's Financial Supervisory Service (FSC) has issued a warning to banks to beware of bogus letters of credit (L/C), purportedly issued by foreign banks.

The FSC has sent a letter to local lenders and branches of foreign banks advising them to strengthen their L/C management processes.

Recent discoveries

Several local banks have recently discovered fake L/Cs, all of which appear to have been issued by foreign banks according to officials.

Most recently, a branch of Woori Bank informed the authorities that it had received an email, purportedly from a branch of Wells Fargo's in New York in December last year.

Foreign banks

The email apparently provided confirmation of a EUR 50 million standby L/C put up as a guarantee should a Korean trading company fail to meet its repayment obligations.

Investigations by Woori Bank with Wells Fargo revealed that the US bank did not issue the L/C.

This case resembles one reported to the FSC in June 2014 involving Standard Chartered Bank and a fake L/C purportedly issued by Citibank.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.