DOCUMENTS NOT PRESENTED TO THE TRANSFERRING BANK

QUESTION

Dear Mr. Old Man,

I have a case relating to documents under the transferred LC presented directly to the issuing bank bypassing the transferring bank.

Our bank issued a transferable LC with Kookmin Bank as the transferring bank Kookmin Bank transferred the LC to the second beneficiary but it didn’t advise our bank of  the status of  the transferred credit.

The second beneficiary presented the documents to our bank through Industrial Bank of Korea (not the transferring bank), all documents include drafts and invoice were made by the second beneficiary.

We treated the documents as discrepant based on sub-article 38(k) UCP 600 as the documents were not presented through the transferring bank.

Please give me your idea about above situation

Thank and Best Regards,

NGLC                                              

TRADE FINANCE OPERATION CENTER

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ANSWER

Hi,

According to sub-article 38 (k) UCP600, presentation of documents made by  or on behalf of the second beneficiary must be made to the transferring bank. However, where the LC  is transferred for full value and there is no substitution of documents, the transferring bank would indicate in its advice of transfer  that the second beneficiary can  present the documents direct to the issuing bank and the transferring bank would also advise the issuing bank of the same.

Check this with Kookmin Bank or with Industrial Bank of Korea. If they confirm that the LC was transferred 100% of the LC value and that the second beneficiary was allowed to present the documents direct to the issuing bank, your bank should pay.

Kind regards,

Mr. Old Man