Five Common Ways of Credit Fraud

In international settlement fraud, documentary fraud is the most important and hidden type. This paper tries to analyze and discuss the common ways of documentary credit fraud.

First, the common ways of documentary fraud and its characteristics (a) Counterfeit or forged seal (signature) fraud. The so-called "counterfeiting of fake or falsified seals" means that fraudsters are typing out and will be sent by post. The outbound credit counterfeits or falsifies the signature (signature) of the issuing bank's signature to the beneficiary (exporter) and attempts to fraudulently take delivery of the exported goods.

This type of fraud generally has the following characteristics:

1. The letter of credit goes directly to the beneficiary without notice, and there is no detailed address of the sender in the envelope. The postmark is vague;

2. The format of the letter of credit used is obsolete or obsolete;

3. The letter of credit signing stroke is not smooth, or a printed signature is used;

4. The terms of the letter of credit are self-contradictory, or violate the rules;

5. The letter of credit requires that the goods be shipped by air, or that the bill of lading be made the applicant (importer) as the consignee.

For example, a foreign trade company in Henan has received a documentary credit in the name of STANDARD CHARTERED BANK LTD (BIRMINGHAM BRANCH, ENGLAND) in the amount of USD37,200.00; London National Westminster Bank (NATIONAL WESTMINSTER BANK LTD. LONDON).

The certificate was reviewed by the local bank professional of the beneficiary and found several suspicions: (1) The format of the letter of credit was obsolete. There was no mailing address for the envelope, and the postmark was ambiguous and could not be identified from where it was sent; (2) Letter of Credit Restriction Advice Bank - London Nationals Westminster Bank negotiates against the rules; (3) The detailed address of the acquiring bank is not found in the bank's yearbook; (4) The signature of the letter of credit is printed, not hand Signed, and unable to check; (5) The letter of credit required the goods to be airlifted to Nigeria, and the country had fraudulent cases. Based on the above points, the bank initially determined that the permit was a forged letter of credit, which was later verified by the issuing bank's head office. This was true, thus avoiding the forgery of credit card fraud.

(2) "Soft clause"/"trap clause" fraud The so-called "soft clause"/"trap clause" fraud means that fraudsters require the issuing bank to take full initiative in the hands of the issuing party and can constrain the benefits. The letter of credit of a person, which can be discharged at any time, is in essence a disguised revocable letter of credit in order to defraud our exporting companies and banks.

This fraud mainly has the following characteristics:

1. The amount of the permit is large, more than 500,000 US dollars;

2. Certificates contain “soft clauses”/“trap clauses” that restrict the rights of beneficiaries, such as requiring applicants or their designated representatives to issue inspection certificates, or applicants to specify the name of the shipping vessel, date of loading, navigation routes, or claiming “this The certificate is not yet effective" and so on;

3. The goods in the certificate are generally bulk building materials and packaging materials, such as "granite, cobblestone, cast iron cover, wooden box and fiber bags";

4. Fraudsters require exporting companies to prepay performance bonds, commissions, or warranty money to buyer representatives or intermediaries at 5%-15% of the contract amount or issuing amount.

5. After the purchaser obtains the performance bond, commission, or warranty money, he is guilty of an excuse, refuses to issue an inspection certificate, or does not notify the shipment, so that the exporter cannot obtain a full set of documents to negotiate and suffer losses.

For example, a trading company in Liaoning and a US Jinhua company have signed a 50,000 cubic metre granite contract for Hong Kong for a total amount of up to 19.5 million US dollars. The buyer has opened the first letter of credit under the above contract through a bank in Hong Kong. The amount is 1.95 million U.S. dollars. The license has the following "soft clause": "The goods can only be shipped after receiving the shipping notice of the applicant's designated shipping name, and the shipping notice will be issued by the issuing bank in a subsequent letter of credit modification" (SHIPMENT CANONLY BE EFFECTED UPON RECEIPT OF APPLIANT`S

SHIPPING INSTRUCTIONS THROUGH L/C OPENING BANK NOMINTING

THE NAMEOF CARRYING VESSEL BY MEANS OF SUBSEQUENT CREDIT

AMENDMENT). After receiving the permit, the trading company will pay the quality assurance fee of 2.6 million yuan to the buyer's designated representative. Before loading the ship, the buyer's representative will come to the place of origin for inspection. The reason for the unqualified quality of the goods is to refuse to issue a “shipment notice”, resulting in the goods Withholding places, the Chinese company could not ship foreign exchanges at all and the losses were very heavy.

(3) Forged Letters of Credit Modification Book Fraud The so-called “fraudulent amendments to falsification letter of credit” means that fraudsters issue radial amendments to credit lines or beneficiaries without the issuance of an issuing bank, in an attempt to drill exporters to induce beneficiaries. Ship. In order to defraud export goods.

This fraud has the following characteristics:

1. Although the original license is true and legitimate, it contains certain provisions that restrict the rights of beneficiaries and needs to be amended;

2. The amendment is issued by means of telegrams or telex, and misappropriation of his password or borrowing of the original password;

3. The revised book is not issued by the issuing bank and is issued directly to the advising bank or beneficiary;

4. The certificate stipulates that after shipment, an original bill of lading is mailed to the applicant;

5. The shipments will be shipped in a short period of time to force beneficiaries to rush delivery.

For example: There is a letter of credit of USD1,092,000.00 and the beneficiary is a foreign trade company in Hainan. The permit contains such a "soft clause": "Only if the purchaser of the bank has added electricity to open the revised book and notified by the advising bank of the buyer's shipping instructions, the designation of the name of the shipping vessel, and the date of shipment, it can only be installed. Must be included in each set of documents (SHIPMENTCAN ONLY BE EFFECTED UPON RECEIPT OF BUYER`S

SHIPMENT INSTRUCTIONS MOMINATION NAME OF CARRYING VESSEL

DATE OF SHIPMENT IN THE FORM;OF;UOR;AUTHENICATED CABLE AMENDMENT THRU ADVISING BANK AND COPY

OF SUCHAMENDMENT MUST BE INCLUDED IN EACHSET OF DOCUMENTS

FOR NEGOTIATION), at the same time, stipulates: "1/3 of the original bill of lading is mailed to the applicant after shipment." In the future, the Bank will notify the beneficiaries of their concerns and provide them with precautions. Later, the Bank received a revised copy of the original certificate, revised the name of the ship and the date of shipment, and changed the original permit to allow partial shipments instead of partial shipments, but the deposit was still in use. Original password. The Bank immediately became alert and immediately consulted the issuing bank. After confirming that the message was a forgery amendment, it immediately notified the beneficiary to stop the shipment. At this time, the beneficiary's export goods (70 tons of white pepper) are ready to go, and the risk is self-evident.

(IV) Altering the L/C fraud The so-called “treating L/C fraud” refers to fraudulent elements deliberately altering expired letters of credit, changing the original amount, shipping period, and beneficiary name, and mailing or handing in the beneficiaries directly. In order to defraud export goods, or induce exporters to open letters of credit, fraudulent bank financing.

This kind of fraud often has the following characteristics:

1. The original letter of credit is a letter opening method to facilitate correction;

2. The contents of the alteration are the amount of the credit, the shipping period and the name of the beneficiary;

3. The letter of credit is not confirmed by the issuing bank;

4. The letter of credit will be sent to the beneficiary without notice;

5. The amount is huge to swindle profits.

For example, a foreign trade company in Jiangsu has received a letter of credit opened by a Hong Kong merchant for an amount of US$3.18 million. After review by the local BOC, it was noticed that the amount of the certificate, the shipping period and the name of the beneficiary had obvious traces of alteration. The beneficiary was therefore reminded to pay attention to it, and immediately asked the issuing bank to find out that this card was altered by the merchant and handed over to the foreign trade company. In an attempt to request our bank to issue a letter of credit of US$6.3 million in order to trick overseas. In fact, this is an old L/C that has expired long ago. Thanks to the high level of vigilance of our bank, we stopped this huge amount of credit fraud.

(5) Counterfeiting of Confirmed Credit Cards Fraud The so-called “falsified counterfeit letter of credit fraud” refers to fraudulent elements who, on the basis of providing false letter of credit, in order to obtain the trust of the exporter, intentionally forge the redemption letter of the international bank. To achieve the purpose of defrauding our bulk export goods.

This type of fraud often has the following characteristics:

1. The issuing bank of a letter of credit is a bank that is fake or cannot be verified at all;

2. Confirmed acts of internationally renowned banks to increase deception;

3. The redemption letter was sent to the other side. Its signature was a fake signature.

4. The two sides of the trade do not understand in advance and only know each other through the intermediary;

5. The amount of the permit is large and the shipment period is short.

For example, a Bank of China has received a telegraphic letter of credit issued by the Indonesian Bank of America (ASIAN UERO-AMERICAN BANK, JAKARTA, INDONESIA) requesting confirmation from UBS New York Bank, amounting to US$6 million, and the beneficiary is A foreign trade company in Guangdong exported 2 million dry snake skins. However, after checking the bank yearbook, there was no information on the issuing bank. Later on, it received a confirming letter from the UBS Zurich. However, only one of the two signatures was similar and the other could not be checked. At this point, the beneficiary claimed that the goods were ready and urgently needed to be shipped so as not to miss the shipment. For prudent reasons, on the one hand, the Bank of China dissuades beneficiaries from temporarily shipping, on the other hand. Inquiries with UBS New York and Zurich Switzerland have been answered, and they have received a reply: "I have never heard of the issuing bank and have not confirmed this letter of credit. Please provide more detailed information to check the matter." At this point, it can be determined that the permit is a counterfeit letter of credit and the fraudster attempts to defraud us of export goods.