This posting is in addition to and to be read in conjunction with our two previous postings for best understanding of this subject.
We would like to end our posting on this topic with a page in our "How to Detect 'Footprints' in A Fraudulent Document?" Workshop. The quoted page is copyright protected. Viewers who want to use it have to do two things: (1) They need written approval from us and (ii) to state expressly and prominently the source of this information is from "T. O. Lee Consultants Ltd. of Toronto". Otherwise they will face legal consequences.
TIPS ON DETECTION OF FRAUDS IN PRESENTED DOCUMENTS
1 During bad economy periods, be on the alert that certain presentations may be fraudulent.
2 Start by checking if the L/C is to cover the Applicant’s own import or just opened for someone else’s import in return for a fee. That means to watch out for the activities of the “DC Fraud Promoter”.
3 Approach the Applicant for background information about the transaction and the Beneficiary.
4 List down the special features of the transaction and the cargoes.
5 Prepare a new checklist by inferring the consequential data and requirements as you will expect as a direct result of the special features of the transaction (as mentioned in 4 above).
6 Use common sense to determine the viability of the transaction and to judge the logic behind the special features.
7 Check the presented documents against the new checklist (as mentioned in 5 above).
8 Examine beyond the requirements of UCP 500 and the local law, including those documents not called for in the L/C, from risk management perspectives.
9 Make enquiries to the carrier, if necessary, on the existence of the vessel, her present location, ports of call and final destination.
10 Compare signatures in various documents for similarity, note common features and determine if they appear to be from the same person.
11 Check the maximum loading limits of the vessel, aircraft, container, ULD (unit load device), pallets, igloos, and other units of package.
12 For giant size cargoes, check against the maximum dimensions of the cargo compartments or holds of the aircraft model used for the transport.
13 Check for compliance with the transport, quarantine, safety and pollution regulations, if required.
14 On Incoterms 2000, check for compliance or compatibility with the foreign exchange regulations of the exporting and importing countries.
15 Check for inconsistency in other data and information.
16 If in doubts, involve more colleagues in the checking. New men may bring new perspectives, different approaches and even new findings.
17 Involve an international trade frauds expert(s) if necessary.
18 Meanwhile watch out for the requirements of UCP 500 on “reasonable time” (“three days safety harbor” in USA) in checking documents and in advice of discrepancies, if any, “without delay”.
19 Provide continuous fraud prevention workshops designed and conducted by international trade frauds experts.
NON-BANKING KNOWLEDGE IS A MUST FOR SOME TIPS HERE
To put some of those tips named above into action to achieve results, a document checker, or a bank manager who has the authority to determine discrepancies, must need some non-banking knowledge, such as those stated below:
Tips No. 11 - For the maximum loading capacity of the containers in cubic and weights measurements. To start with, they must know the different types of containers, such as “Hi-Cubes”, “Fantainers” for cargoes that need good ventilation during the long sea voyage, “Tank” containers for liquid cargoes, “Open Top” containers for odd size cargoes, so on and so forth. Their functions and specifications can only be described in more details in workshops.
Tips No. 12 - We have identified a fraudulent air waybill from the size of the cargo stated in the packing list, which cannot go through the largest cargo bold doors in a Boeing 747 Jumbo jet of any model. If a checker does not know what is the maximum size for a cargo to go through these doors, then how can he detect this impossibility?
Tips No. 13 - This requires a checker to know the trade practices of the commodity trade, such as coffee, he is handling all the time in order to find out those inconsistent or contradictory information, the “footprints”, amongst the documents.
FRAUDSTERS ARE HANDICAPPED IN A GAME WITH THE BANKERS
Fraudsters are mostly the “Hit-and-Runners", all being amateurs. They do not open the company just for creating frauds like the Solo owners. When they need to create a DC fraud, they are already in serious finance crisis, daily chased by the creditors, their banks, and maybe their wives for money to pay the rents for the condominium, and other household expenses. They do not have a calm state of mind to fabricate the fraudulent documents. And they are also quite disturbed and cannot concentrate or focus on their fabrication works. So they are bound to make careless mistakes, or negligence on the minute details. That means they are bound to leave some “footprints” on the fraudulent documents.
But the document checkers and their senior mangers are sitting comfortably in a bank, with nice and quiet environment, and in a good state of mind to perform the checking. In this sense the game is played with the fraudsters in handicap. A peaceful cat to face a nervous mouse. If the cat cannot catch the mouse, we have to blame the cat. The cat may defend herself:
“As a pet, our main duty is to provide comfort and amusement to our masters, and to play the role of a child for those owners that have no children living with them. However, catching a mouse is not written in the UCP (Uniform Cat Practice). According to the UCP, we cats do not need to know anything which is non-cating!”
IF YOU NEED MORE, PLEASE CONTACT US INDIVIDUALLY
We do have examples to illustrate Tips Nos. 6, 8, 10, 11, 12, 13, 14, & 15, taken from actual fraudulent documents in the DC fraud cases we have handled with the sensitive information taken out to protect our customers. These are exercises to test the competence of the participants in “footprints” detecting and model answers will be given after the exercises. We cannot present these images here due to the limitation of the Discussion Forum format that can only take word documents.
We hope members would gain some benefits here. If they wish to have more, they may contact us individually. Thanks for your patience in reading these long postings.
And may you all be lucky all the time!
www.tolee.com
[edited 7/14/02 4:24:13 PM]