Since the emergence of many intermediaries who claim to be knowledgeable about the sector, in addition to being attributed contacts with alleged "platforms" and/or Traders, we have noticed the absolute ignorance that we have about banking tools such as the issuance of a SWIFT MT-760. That is why, and in order to expand the knowledge of the general public, we have decided to create this article explaining the actual operation of the issuance of this type of "Guarantee".
We will analyze what is a SWIFT, on which the issuance of an MT-760 is based, as well as the issue operation.
At first, emphasize that the company SWIFT was created in 1973 and is of Belgian origin. Currently, SWIFT has made great strides and currently, there are more than eight thousand banking entities that daily use this system as a tool for any commercial activity.
What is an MT-760?
The MT-760 is a type of SWIFT message known as Guarantee, which, as its name indicates, functions as a Banking Guarantee, and it is therefore important to warn of its danger to malicious individuals.
The Investor Bank issues a SWIFT MT-760 using an Asset (CASH, BG, CD, MTN, etc.) as the basis. This asset is issued in favor of the Beneficiary (The recipient of that MT-760). This type of massage is commonly used in the Commodities sector or businesses such as the import or export of any product. The issuing bank uses said asset as collateral in favor of the receiving customer of the MT-760. It is also important to emphasize that this is the classic blocking option for participation in a Private Placement Program.
SWIFT MT-760 issuance operation
Before issuing a SWIFT MT-760, the Issuing Bank will issue a SWIFT MT-799 (Free Message). This MT-799 is issued as Pre-Advice (Notifying the Receiving Bank that a guarantee will be issued in the form of MT-760). Then, in the next 24 / 48h, the receiving bank issues a SWIFT MT-799 to the Issuing Bank confirming that they are prepared to receive said MT-760. In the following 24/48 hours, the customer's bank proceeds to issue the SWIFT MT-760, accepting it from the receiving bank. In this way, the asset is blocked in favor of the beneficiary during the time stipulated in the text of the SWIFT message.
In order to explain it in a more graphic and simple way, it is detailed in image 1 located below the text.
When I issued an MT-760, can I revoke it?
Absolutely NO. Many unscrupulous intermediaries and alleged platforms tell the Investor that the MT-760 can be revoked without problems when the investor wants it when the reality is very different.
When a SWIFT is issued and accepted by the receiving bank, it is totally IRREVOCABLE. And it can only be revoked if the beneficiary of the MT-760 gives his consent to his bank to proceed with its revocation.
What safety exists on an MT-760?
When a client issues a SWIFT MT-760 for a period of (For example) 10 Months, besides being irrevocable, it involves serious risks since supposed platforms or intermediaries that claim to have contact with a trader can interact with that Asset and produce the loss of it being horrible consequences for the client.
We advise the client to make sure that they are going to work with a real Trader and that once they have the trading contract in front of them, they make sure that they are dealing with the correct person/company.
What happens if I issue a SWIFT MT-760 to a real Trader?
Prior to the issuance of the MT-760, there will be the signing of the Trading Contract where the bank coordinates of the Trader Bank will appear, where the client will have to issue the SWIFT.
After the issuance and reception of the MT-760, the same trader will be responsible for "monetizing" said SWIFT and with the amount of the credit obtained, the program will be accessed. It is important to emphasize that since the trader's company is the beneficiary of SWIFT.
Basic rules for participation in a Private Placement Program:
1. The customer's bank must be a TOP50.
2. It can not be a bank of a communist country.
3. Chinese citizens with a Chinese passport can not be signatories of a Trading contract. They are not allowed to participate in a PPP.
4. The two options available to access a Private Placement Program are:
- Cash;
- Any of the following financial instruments: BG (Bank Guarantee), CD (Certificate of Deposit), MTN (Medium Term Notes), SBLC (Stand By Letter of Credit), SKR (SafeKeeping Receipt). These instruments must enjoy FULL BANK RESPONSIBILITY by the issuing bank.
5. The asset or even cash is useless unless the bank is important enough (TOP50) and is based in Europe.
6. If the bank is not strong enough to fend for itself, you can try to get a correspondent bank to assume full banking responsibility for the asset in question.
7. If you are not the owner of the asset or the cash, you can not enter the program unless it is assigned to the bank account where the resources are deposited.
8. The asset will be blocked for one year. Therefore before being blocked, you will have to have a prudential life cycle before your maturity date so that it can be worked.
9. The bank must be able to block the asset through a SWIFT MT-760.
10. If the asset is gold, the Hallmark documents will have to be contributed.
11. Cash or assets issued by banks UBS and ABN AMRO are not accepted.
References and Credit to:
Mrs. Simona P.
Mr. Ajaero Tony Martins
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