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CORPORATE LAW – COMPLIANCE IN TRADE FINANCE

Very important:

 You copy shall not exceed 2 pages (font ‘’Arial’’ 10 or equivalent)

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Further to brilliant studies performed at UPEC University you have been appointed to work in the trade

finance team of ITFB, International Trade Finance Bank1. Your knowledge in the field of Compliance is

highly appreciated in order to mitigate growing risks that all corporates and banks are facing

henceforward.

Luckily, you have been appointed to work in the ITFB branch headquartered in New-York, in order to

mitigate compliance risks, protect the bank in this very sensitive area and fight against AML-TF2

breaches.

Compliance Officer, you are reporting now to Mrs. Collins, Head of Compliance for ITFB US. Everyone

in the branch is aware that Mrs. Collins appreciates efficiency, clear flowcharts and concise

explanations, and always asks her staff to go right to the point. Her agenda is quite busy…

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Question 1 (3 pts): Referring to the L/C terms (cf. Appendix) that are received from your colleagues of

the L/C3 Department of ITFB New-York.

- What is the full diagram / flowchart of such deal?

You shall detail all stakeholders, steps / flows, from the signature of the contract until

the payment to the beneficiary

1 - ITFB is one of the largest banks in USA, Investment grade ranked AA1 / AA+ (Moody’s, Fitch, Standard & Poor’s). 2 - Anti Money Laundering & Terrorism Financing 3 - Letter of Credit

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Question 2 (12 pts). Very much concerned about this draft, Mrs. Collins requests all your comments

regarding this Letter of Credit.

- From a compliance standpoint what are, in details, all due diligences to perform in such type of

deal?

- As a Compliance Officer in charge of scrutinizing this deal specifically, what are the various

issues that comes out from this MT700 message?

- Would you approve such deal? In case you would not, what are the amendments to perform in

order to allow the L/C department to proceed?

Question 3 (5 pts). A growing way for money launderers to transfer large amounts of money across

borders relies on ‘’over invoicing’’ and / or ‘’under invoicing’’ technics.

- Using diagrams / flowcharts including the buyer, the seller, and both banks, detail the

different steps describing each one of these two technics used by money launderers.

APPENDIX

MT700 - ISSUE OF A DOCUMENTARY CREDIT FROM: INTERNATIONAL TRADE FINANCE BANK, KHARTOUM SWIFT: ITFBINBB

TO: INTERNATIONAL TRADE FINANCE BANK, NEW YORK SWIFT: ITFBUS33

27: SEQUENCE OF TOTAL 1/1

40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE

20: DOCUMENTARY CREDIT NUMBER 20200525 ITFBINBB 019370313

31C: DATE OF ISSUE MAY 25, 2020, KHARTOUM

40E: APPLICABLE RULES UCP LATEST VERSION

31D: DATE AND PLACE OF EXPIRY DECEMBER 30, 2020, USA

50: APPLICANT GLOBAL WOOD CORPORATION PRIVATE LIMITED 8-2-626, WHITEFIELD MAJESTIC BUILDING, ROAD NO.110, KHARTOUM – 5000, SUDAN

59: BENEFICIARY GENERAL MOTOR INC. 4211 WEST SCOUT BOULEVARD SUITE 1600 MIAMI, FLORIDA 5772 - USA

32B: CURRENCY CODE, AMOUNT USD 10,200,850

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39A: PERCENTAGE CREDIT AMOUNT TOLERANCE 20/20 in VALUE AND QUANTITY

41D: AVAILABLE WITH ... BY... INTERNATIONAL TRADE FINANCE BANK, NEW YORK (SWIFT CODE: ITFBUS33) BY DEFERRED PAYMENT

42P: DEFFERED PAYMENT DETAILS AT 180 DAYS FROM B/L DATE

43P: PARTIAL SHIPMENTS ALLOWED

43T: TRANSSHIPMENT NOT ALLOWED

44E: PORT OF LOADING ANY PORT(S) IN USA

44F: PORT OF DISCHARGE PORT SUDAN, SUDAN

44C: LATEST DATE OF SHIPMENT SEPTEMBER 30, 2020

45A: DESCRIPTION OF GOODS AND/OR SERVICES 1.000 MT +/- 10 PCT OF AMMONIUM NITRATE IN BULK AS PER CONTRACT NO. IS 18-0225 DATED 25TH APRIL 2020 AT USD 1200.85/MT CFR PORT SUDAN, EAST COAST SUDAN (INCOTERMS 2010)

ORIGIN US GULF, USA

SHIPMENT TERMS CFR PORT SUDAN, SUDAN

46A : DOCUMENTS REQUIRED 1. BENEFICIARY’S SIGNED COMMERCIAL INVOICES IN ONE (1) ORIGINAL PLUS THREE (3)

COPIES, QUOTING THIS LC NUMBER AND SHIPMENT TERMS

2. FULL SET OF THREE (3) ORIGINALS PLUS THREE (3) NON-NEGOTIABLE COPIES OF CLEAN ‘’ON BOARD’’ CHARTER PARTY BILL OF LADING, MADE OUT TO ORDER AND ENDORSED TO THE ORDER OF INTERNATIONAL TRADE FINANCE BANK MARKED FREIGHT PREPAID OR FREIGHT PAYABLE AS PER CHARTER PARTY AND NOTIFY

A) GLOBAL WOOD CORPORATION PRIVATE LIMITED 8-2-626, WHITEFIELD MAJESTIC BUILDING ROAD NO.110, KHARTOUM – 5000, SUDAN

B) INTERNATIONAL TRADE FINANCE BANK

3. CERTIFICATE OF QUANTITY IN ONE ORIGINAL AND THREE COPIES, ISSUED BY AN INDEPENDENT SURVEYOR AT LOAD PORT.

4. CERTIFICATE OF QUALITY IN ONE ORIGINAL AND THREE COPIES, ISSUED BY AN INDEPENDENT SURVEYOR AT LOAD PORT.

5. SHIPPING COMPANY OR THEIR AGENT’S CERTIFICATE CERTIFYING THAT THE CARRYING VESSEL IS CLASSED EQUIVALENT TO LLOYDS 100A1 AND IS SEAWORTHY AND NOT MORE THAN 20 YEARS OLD.

6. CERTIFICATE FROM SHIPPING COMPANY, OWNER, MASTER OR AGENT EVIDENCING THAT THE CARRYING VESSEL WILL NOT CALL AT OR PASS THROUGH ANY LIBANESE PORT DURING ITS VOYAGE TO SUDAN

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7. BENEFICIARY TO E-MAIL ONE SET OF NON-NEGOTIABLE DOCUMENTS TO THE APPLICANT ON E-MAIL ID BENEFICIARY'S CERTIFICATE OF COMPLIANCE TO THIS EFFECT TO ACCOMPANY THE DOCUMENTS FOR PAYMENT

47A: ADDITIONAL CONDITIONS (INCLUDING OTHER DOCUMENTS REQUIRED):

1. ADVISING BANK IS TO ADD CONFIRMATION TO THIS L/C. CONFIRMATION CHARGES ARE TO THE ACCOUNT OF THE BENEFICIARY AND ARE TO BE COLLECTED UPFRONT

2. SPELLING AND / OR TYPING MISTAKES WHICH DO NOT EFFECT ANY CHANGES IN DESCRIPTION OF GOODS, AMOUNT, QUANTITY AND QUALITY ARE ACCEPTABLE

3. INSURANCE TO BE COVERED BY THE APPLICANT.

4. ALL DOCUMENTS MUST BE ISSUED IN ENGLISH LANGUAGE OR CONTAIN ENGLISH TRANSLATION.

5. CHARTER PARTY BILLS OF LADING ARE ACCEPTABLE. SPLIT BILLS OF LADING ARE ACCEPTABLE

6. TOLERANCE OF PLUS OR MINUS 10 PERCENT IN VALUE AND QUANTITY IS ACCEPTABLE

7. NAME OF THE ISSUING BANK, L/C NUMBER SHOULD BE QUOTED ON INVOICE

8. THE BANK’S UNDERTAKING OR THE BANK’S ROLE WHEN ACTING AS AN ADVISING BANK OR A NOMINATED BANK SHALL BE AUTOMATICALLY BE SUSPENDED IF - THE APPLICANT, THE BENEFICIARY OR ANY OTHER PERSON, ENTITY,

ORGANIZATION INVOLVED IN THE LETTER OF CREDIT OR IN THE MAIN CONTRACT AND/OR,

- THE GOODS OR SERVICES SPECIFIED IN THE MAIN CONTRACT, BECAME SUBMITTED TO AN INTERNATIONAL SANCTION ADOPTED BY THE EUROPEAN UNION OR BY ANY OF ITS MEMBERS STATES, THE UNITED NATIONS, THE UNITED KINGDOM AND/OR THE UNITED STATES OF AMERICA. IN THIS SITUATION, THE BANK’S UNDERTAKING OR THE BANK’S ROLE WILL BE TERMINATED WITH THE NOTIFICATION THAT THE BANK MAY SEND

71B: CHARGES ALL COMMISSIONS AND CHARGES OUTSIDE SUDAN ARE FOR BENEFICIARY'S ACCOUNT.

48: PERIOD FOR PRESENTATION DOCUMENTS PRESENTED LATER THAN 21 DAYS AFTER BILL OF LADING DATE BUT WITHIN THE VALIDITY OF THE CREDIT ARE ACCEPTABLE.

49: CONFIRMATION INSTRUCTIONS CONFIRM

78: INSTRUCTIONS TO PAYING/ACCEPTING/NEGOTIATING BANK DOCUMENTS TO BE COURIERED TO INTERNATIONAL TRADE FINANCE BANK / KHARTOUM IN TWO SETS.

REIMBURSEMENT INSTRUCTIONS: UPON RECEIPT OF YOUR SWIFT CONFIRMING HAVING TAKEN UP AND FORWARDED TO US DOCUMENTS IN STRICT COMPLIANCE WITH CREDIT TERMS, WE WILL REMIT COVER IN ACCORDANCE WITH YOUR INSTRUCTIONS, ON THE DUE DATE.

THIS LETTER OF CREDIT WILL BE GOVERNED BY THE UNIFORM CUSTOMS AND PRACTICE FOR COMMERCIAL DOCUMENTARY CREDITS (2007 REVISION) OF THE INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO: 600 OR ANY REVISION OR AMENDMENT THERETO AS MAY BE IN FORCE FROM TIME TO TIME.

72: SENDER TO RECEIVER INFORMATION PLEASE SEND DOCUMENTS BY DHL COURIER DIRECTLY TO US.

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