Drawee given as BIC

[melissachin]

Credit in SWIFT format has given a BIC for the drawee(field 42A) as BOFCUS33SFO with no further details.

When the beneficiary presents drafts drawn on the drawee identified merely as BOFCUS33SFO, is it acceptable?

Thank you
[edited 8/7/01 1:12:14 PM]

[larryBacon]

I would suggest that when such incomplete information is included in a L/C, the advising bank, upon receipt of the L/C should seek clarification from the issuing bank, referring them to Article 12 of UCP.

[SEANDAINER]

If the L/C was a SWIFT L/C, it is a technical problem with whoever is the printer of the Original instrument (either yourselves or another advising bank). Most SWIFT interfaces translate the SWIFT/BIC into a full bank name before it prints. Suggest you check with your SWIFT/telex department if it was printed at your office, otherwise let the other bank know of the problems that their prints can cause.

[hatemshehab]

The BIC in SWIFT is the Bank Identifier Code that is designated the bank when subscribing to SWIFT system. Since it is an identifier it is unique in its nature and therefore should be interpreted that it is the name of the bank in SWIFT format.

Since we know that this code has a sole connotation and that there is no substantial change in the presentation of this draft as the name of the drawee bank can be identified, there is no problem in the draft itself.

The code you stated can be easily identified from SWIFT and Bankers Almanac as:

UNION BANK OF CALIFORNIA, INT'L, FORMERLY KNOWN AS BANK OF CALIFORNIA, INT'L. NEW YORK.

I do not see the urgency of applying article 12 on this case due to the above clarification.

Apparently, The beneficiary presented his draft in such a manner applying the orthodox approach of compliance. He is certainly frightened that the bank might reject his documents if he states otherwise. Although I believe that this draft does not give strong ground for raising a discrepancy. But to quote Mr. T. O. Lee “anything may happen these days”

I agree with the advise of Mr. Seandainer that it is a technical problem in print that has to be looked into.

[larryBacon]

I regard it as unreasonable to expect a beneficiary to be able to directly determine from a BIC which bank is quoted. In similar circumstances, I have found advising banks unwilling to give an interpretation in writing of such codes. What choice does the bene now have to ensure payment ? I suggest that he seek clarification under Article 12 or submit a B/E showing the BIC. However, in the event of non-payment, I would not like to be the one waiting to see whether a court would recognise a mere code as being a valid drawee.

[hatemshehab]

I have nowhere stated that the beneficiary is requested to seek what a BIC is or what it stands for. It is a matter that should be taken by the bank involved in L/C; nominated bank, confirming bank, as the case may be.

My argument is that presentation of such a draft by beneficiary sticking literally to L/C terms and conditions should not stimulate the bank for raising a discrepancy in documents.

My reference to article 12 is not to undermine or defeat its purpose, but does the BIC constitute something unclear to a bank? is the BIC (BOFCUS33SFO) so ambiguous that the bank should hold the L/C in abeyance until instruction of clarification is received from the issuing bank?

In my opinion it is not required, but that does not mean that Mr. Bacon’s suggestion is wrong too. One might take a conservative approach rather than being liberal. For this reason, I stated "I do not feel the urgency of applying article 12 in this particular case."

I hope that I have made myself clear, as I do not see myself in disagreement with Mr. Bacon.

[larryBacon]

My thanks to Hatemshehab for clarification (without invoking Article 12 !!). Perhaps I too needed to clarify my comments.

Banks are in the somewhat fortunate position of being able to look at a L/C in isolation (exclusively in relation to UCP).
Beneficiaries and applicants, of necessity consider other things. If there is a dispute over this L/C, the bene should also consider whether the B/E would be accepted in court if only a code is used in place of the Drawee.

[T.O.Lee]

Those opinions expressed so far are from open-minded bankers but they are still tinted with banker colours.

As a consultant, we are neutral because our clients can be anybody. Here we would like to join the discussion, a bit late due to time zone handicap, from a bank client's point of view.

VIEW FROM AN APPLICANT

As an applicant, these strange codes are not from me. I have never given such instructions. That is not what I want. I ask for a pizza and the bank gives me a hamburger.

VIEW FROM A BENEFICIARY

As a beneficiary, am I receiving a DC from an UFO bank? I have to play safe. If you deem quoting precisely an UFO code in my drafts a discrepancy, may I know which Article of the UCP 500 that I have not complied? I think the discrepancy, if any, is created by the UFO bank rather than by me.

VIEW FROM A BANK CUSTOMER

SWIFT/BIC codes etc are matters between banks and have nothing to concern the banks' customers. As a good customer service provider, don't give us something that we don't understand.

VIEW FROM A CONSULTANT

The advising bank should have either translated or clarified from the issuing bank, before it advises such UFO codes.

DECODING SWIFT/BIC

To add some entertainment value to our otherwise quite dry discussions, as we also do in our workshops to keep everybody refreshed and amused, we try to decode SWIFT/BIC here. With due respect to the Society for Worldwide Interbank Financial Telecommunication Bank Identifier Code, "SWIFT/BIC" may be interpreted by a bank's customer as "Silly Words In Financial Telecommunication Bring In Confusions" if bankers do not use the codes properly.

We are from http://www.tolee.com

[edited 11/17/02 3:53:18 AM]

[hatemshehab]

I was very amused with the comment of Mr. Lee on SWIFT "Silly Words In Financial Telecommunication Bring In Confusions" if bankers do not use the codes properly.

This comment hits the nail in alerting bankers to the correct use of SWIFT BIC rather than hiding behind some provisions and stipulations that are “applied arbitrarily to every case”

Dear Mr. Lee

Your comments bring my memory to a recent case with a bank on funds transfer. Thank you for this thought provoking amusement. I envy you for this wittiness which is very rare.

I was approached by one of my acquaintances that applied for a fund transfer to be effected to a beneficiary lying in a hospital, his relative. The transfer did not reach the beneficiary and the transferring bank charged the applicant with substantial charges although the transfer amount was not so big.

The application was perfect in all aspects with regards to customary information required by any bank to effect payment. Among these information was the name of the beneficiary bank. The National Bank Of Romance And Joy. The bank sent as SWIFT quoting a BIC XYZ, which reads in narrative as The Romance National Bank, with A/C No. of the beneficiary. Apparently the correspondent bank was unable to effect payment to the beneficiary through such bank, to an account, which does not exist in that bank. The correspondent bank requested further information from the transferring bank after one day from the transfer date but the local bank responded (after 5 business days) with the same error adding to it the name of the branch “CCJ”. This branch is correct if it is meant for The National Bank Of Romance And Joy but not to The Romance National Bank.

The correspondent bank replied after two days “ the beneficiary bank cannot apply the funds, pls. provide us correct beneficiary BK & Br. Details.”

The transferring bank replied (after 4 business days) by free format SWIFT “ beneficiary bank The Romance National Bank, CCJ branch A/C 1234. If the beneficiary bank unable to apply funds pls. ask them to return back to us”

It is apparent that the transferring bank did not bother to check the correctness of the information sent by it NOT ONLY THAT, it did not in all these developments intimate to the applicant.

The correspondent bank got fed up of this communication and returned funds to the transferring bank and deducted his charges for the transfer and the correspondence thereunder.

When the applicant objected to the deduction of charges to his account the bank intimated him of the provision which state that:

“Neither the bank nor its correspondents or agents shall have any liability for any late or non delivery and any additional costs as a result of such events shall be for the account of the remitter and may be deducted from the remittance :

a- Incorrect or unclear information
b- Error or delays accruing in the wire, cables, mails or electronic translation
c- Equipment failure
d- Strikes
e- Non availability of the beneficiary
f- Any other event beyond the control of the bank or its Correspondents or agents.”

NEEDLESS TO MENTION THAT THIS REMINDS US OF ARTICLE 16 OF UCP 500

“Banks assume no liability or responsibility for the consequences arising out of delay and/or loss on transit of any message(s), or for delay, mutilation or other error(s) arising in the transmission of any telecommunication.”

The bank was very reluctant to reverse its entries and not only didn’t bother to accommodate the request of the applicant but also has told the applicant that his problem is with the correspondent bank.

Having studied the case and after obtaining all relevant documents from the bank we have decided to lodge an official complaint to the regulatory body and to CC the top management of the bank for this malpractice.

After two week of our complaint the management realized that they are before a strong case and therefore called the applicant and reversed all charges to his account.

I NEED NOT TELL MY FRIENDS IN THIS FORUM WHAT LESSONS WE CAN DRAW FROM THIS SINCE THEY ARE ALL PROFESSIONALS AND CAN APPRECIATE WHAT IS THE MESSAGE FROM THIS CASE.

Dear Mr. Bacon

I hope I made myself clear as to what I really wanted to say about the original query. Thank you for your clarification.


ALL NAMES AND CODES ARE FICTITIOUS



[edited 8/28/01 12:42:46 PM]

[SEANDAINER]

I agree with everything stated. But I also wonder the legality, under the various bills of exchange acts or laws around the world, of putting only a SWIFT/BIC and not a full company name.

Anyway, just thought I'd throw that in. At the end of the day if the advising bank gives a customer an L/C with out all standarised codes being translated, as is the purpose of them, they lack customer service, at a minimum, and I would suggest the customer jump up and down to get the bank to fix the problem. The other alternative, find a better bank.
If you want to look up a BIC code or it's corresponding details go to http://www.bicdirectory.swift.com/ and sign up for free.