When dealing with Bank Guarantees (Demand Guarantees) and Letters of Credit (Documentary Letters of Credit), you may often hear someone discuss the use of SWIFT MT799, Pre-Advice & Bank Comfort Letter (BCL).
Kingrise Finance Limited are providers of SWIFT MT799 Pre-Advice & Bank Comfort Letters (BCL)
Swift MT799 is a type of SWIFT message that banks use to securely communicate authenticated free format messages with other banks.
It is important to understand that the MT799 is not used for transferring funds or a promise to do so.
SWIFT MT799 messages are mostly used for showing proof of funds or proof of deposits.
Since the MT799 is free format, banks can easily send many various types of messages to other banks before funds, a guarantee, or letter of credit is sent via SWIFT.
Types of MT799 Messages
Banks have many uses for the MT799 message including:
- Proof of Funds Letters (POF)
- Ready Willing and Able Letters (RWA)
- Pre-advice Letters
How Do I Use the SWIFT MT-799?
A bank with SWIFT MT-799 capability allows SWIFT electronic verification for proof of funds in compliance with the SWIFT Category 7 “Treasury Markets & Syndication” message types.
People often believe that in order to show proof of funds, they require a SWIFT MT760 message, but in reality, they simply need a SWIFT MT799 message.
More often than not, the MT799 is issued right before a contract is signed and/or before a letter of credit or bank guarantee is issued.
Once the MT799 has been received by the seller’s bank, the seller often sends the buyer a proof of product (POP) to show their capability in the contract as well.
How Can I Get A SWIFT MT-799 Message Issued?
Only a bank that has SWIFT capabilities can issue a MT799. You can try to use your personal bank, or you can use Kingrise Finance Limited to provide you the service from their banks.
Banks normally will not issue a MT799 without some type of collateral.
If you don’t have the collateral at hand, you can utilize the services of a Trade Finance Broker as they can often provide you a MT799 without the use of your own collateral.
What Information Do I Need To Provide In Order To Send A MT799?
Here is the most common information needed to send a MT799:
- Applicant’s name and contact information
- Instrument amount
- Advising bank’s information
- Beneficiary’s name and contact information
- Validity of instrument
- Copy of contract / pro forma invoice
- Letter of Credit number
- Letter of Credit amount
- Letter of Credit draft
- Latest shipment date
WHAT IS A BANK COMFORT LETTER? (BCL)
A Bank Comfort Letter (BCL) or as it is sometimes referred to, a Bank Confirmation Letter is a letter from a bank or financial institution confirming the intent and capability of the clients to enter into a financial business transaction both legally and financially.
The Bank Comfort Letter officially vouches for the fact that the borrower (an individual, company or organization) is eligible to borrow a specified amount of funds for a specified purpose.
WHAT IS A PRE-ADVICE LETTER? (PRE-ADVICE)
When it comes to Letters of Credit, at the request of an applicant, the issuing bank may send a Pre-Advice Letter of issuance and/or amendment of the particular letter of credit.
A pre-advice is usually marked with a reference such as “full details to follow”.
Unless otherwise stated, the Pre-Advice Letter irrevocably commits the issuing bank to issue/amend the letter of credit as stated in the said Pre-Advice Letter.
HOW DOES THE SWIFT SERVICES CLOSING PROCESS WORK?
Swift Services Closing Process
Step 1: Application
Fill out and return the Swift Services Application with the documents for your deal. (Pro Forma Invoice, SPA, Contract, Agreement, etc.)
Step 2: Issuing of Draft
A SWIFT MT799 draft of the Swift Letter will be created for you and your beneficiary to review and confirm.
Step 3: Draft Review and Opening Payment
a) Finalize the draft between you and your beneficiary and sign off on the draft (changes are free of cost).
b) We issue you a payment invoice for the Swift Letter, which you arrange to pay.
c) Once we receive your wire payment, we will release the finalized Swift Letter to the bank for issuance and delivery.
Step 4: Issuance
More often than not, the bank will issue the Swift Letter within 48 hours of release. Once issued, a copy of the Swift Letter will be emailed to you as it is transmitted via SWIFT MT799, including the reference number of the Swift Letter. Your seller’s bank will be able to receive and confirm the Swift Letter transmission soon thereafter.