The Countermeasures for the folding of L/C

- May 15, 2018-

From the various cases of the above-mentioned documentary credit fraud, the fraud object is mainly our export enterprise, and the victims also involve the exporter's banks and the Industrial and Trading Company to cooperate closely and take effective measures to avoid or reduce the occurrence of the case of the fraud, and the following precautions can be implemented.

First, the exporter Bank (the notifying bank) must examine the authenticity of the letter of credit seriously and responsibly, and grasp the credit standing of the issuing bank. For a letter of credit, a letter of credit should be carefully checked to verify the conformity of the seal, and the large amount should also be required to confirm the confirmation by the issuing bank; for the opening of the letter of credit and its amendment, the agreement shall be checked in time to prevent the counterfeiting and forgery. At the same time, we should also compare the name, address and information of the issuing bank with the bank's Yearbook, find out the doubt, and inquire immediately to the issuing bank or the agency bank to ensure the authenticity, legality and reliability of the issuing bank.

Second, export enterprises must carefully choose trade partners. In the search for trade partners and trade opportunities, contact and understand customers as far as possible through formal means (such as participation in Canton Fair and field visits). Do not do business with unidentified or poorly creditworthy customers. Before signing a contract, we should try to entrust the relevant advisory bodies to carry out a credit investigation to the customers so that they can make a good choice and make the right choice, so as to avoid the wrong choice of the trading partners and the bitter fruit of their own food.

Third, banks and export enterprises need to examine the letter of credit carefully. Bank verification should focus on the validity and risk of evidence. Upon discovery, the "soft clause" / "trap clause" and other adverse clauses that contain the initiative not in their own hands must be resolutely and quickly revise with the merchants, or take corresponding precautions to prevent them from being in the bud.

Fourth, exporters or Industrial and Trading Company should establish contract terms equally, reasonably and prudently when signing contracts with foreign investors. The unequal and unreasonable terms of the interests are completely eliminated, such as "prepaid performance gold, quality assurance gold, gold and intermediary fee clause", etc. so as to avoid the misuse of the other party's trap and the loss of money.