Confirmation

DanielD · Post by **DanielD** » Fri Mar 27, 2009 12:00 am

Would you consider confirming a credit available by negotiation where the original documents have to be sent to the IB but the examination of documents will be made against presentation of "exact" photocopies of the originals and reimbursement instructions to the same bank but in another city.
Regards
Daniel

ThuHoangAnh_ · Post by **ThuHoangAnh_** » Sat Mar 28, 2009 12:00 am

Dear Daniel,

I find there’s no problem at all. Any way the issuing bank must reimburse the confirming bank as per its reimbursement instructions to the negotiating confirming bank, which is be normally construed as follows: “Upon receipt of your authenticated swift message certifying that all documents presented are complying with the credit terms and conditions we (the issuing bank) shall reimburse you as per your instructions” or the like.

Best regards,
N. H. Duc

NigelHolt · Post by **NigelHolt** » Mon Mar 30, 2009 1:00 am

I certainly would be in ‘two minds’ about this unusual -at least to me- arrangement Daniel and perhaps would want to know the reason for it and satisfy myself as to the standing of the beneficiary. One risk, I suppose, could be the copy documents presented to the nominated bank differ in some way materially from the original documents presented to the issuing bank and the issuing bank then refuses reimbursement for reasons connected to the original documents even though the copy documents comply, whatever the ‘legalities’ of doing so. However, the fact remains that provided that the issuing bank’s mandate to the nominated bank is clear the issuing bank is obliged to reimburse the nominated bank if it negotiates what is a complying presentation made to it.

[edited 3/30/2009 9:05:35 AM]

DanielD · Post by **DanielD** » Mon Mar 30, 2009 1:00 am

N.H. Duc,

Now and according to the Commentary, the documents under a DC available by negotiation are sent to the issuing bank and upon the issuing bank ascertaining that they comply, the issuing bank will reimburse in accordance with the instructions of the negotiating bank.

Jeremy,

Maybe the issuing bank "outsources" the checking of the documents but needs the originals, so photocopies are checked. I find it not very comfortable for the reasons you mention but also because UCP are made for originals documents and not copies or photocopies.

Daniel

NigelHolt · Post by **NigelHolt** » Mon Mar 30, 2009 1:00 am

Daniel,

I now think I might well have misunderstood your posting. I thought the beneficiary was sending original documents direct to the issuing bank and presenting (photo)copies to the nominated bank.

I think I would be a little more relaxed about the scenario as I now understand it.

Regards, Jeremy

DanielD · Post by **DanielD** » Mon Mar 30, 2009 1:00 am

Jeremy,

Maybe my posting was not very clear. Actually the IB receives the originals. Photocopies and reimbursement instructions are to be sent to the same bank but in another city.
Daniel

ThuHoangAnh_ · Post by **ThuHoangAnh_** » Mon Mar 30, 2009 1:00 am

Daniel,

It does not matter whether the issuing bank or its branch in another city will ascertain the compliance of the documents. The fact that the photocopies of the documents are sent to the issuing bank’s branch for checking and determining if they are complying will not extend the time limit for examination of documents as stipulated in sub-article 14 (b), i.e., five banking days following the day the documents presented at the issuing bank’s counter.

The issuing bank must reimburse the negotiating bank once the documents are determined to be complying but in any case not later than such five banking days plus one or two days for payment arrangement.

Best regards,
N.H. Duc

DanielD · Post by **DanielD** » Tue Mar 31, 2009 1:00 am

N.H. Duc,

Actually, my concern is not the time period for examination but the fact that the determination of compliance will be made upon presentation of photocopies not originals
Regards
daniel

ThuHoangAnh_ · Post by **ThuHoangAnh_** » Tue Mar 31, 2009 1:00 am

Daniel,

There’s no problem if the exact photocopies of originals are presented. As the documents to be checked are not originals, when checking the documents the checker must accept the truth that the signatures, marks, stamps or lables of the issuers of the documents are not originals.

Long time ago I came across many L/Cs (mainly in the filed of garment processing for export) issued by Korea banks where all the documents required including B/L were the photocopies whereas the originals were sent directly to the applicant. It seemed very risky for the beneficiary. However, the Korean banks paid as the documents (photocopies) presented were complying.

Best regards,
N.H. Duc

JudithAutié · Post by **JudithAutié** » Thu Apr 02, 2009 1:00 am

Hi
I do feel that this transaction should be looked upon with caution -- first and foremost what immediately jumps to my (twisted?) mind is that the way the transation is set up is ideally suited for money laundering.

I certainly would look into any such transactions with great care before proceeding.

But then maybe I've just been too influenced by the lectures I have given in the past to my colleagues.

Judith