ADVISING MT 720 DIRECT TO THE SECOND BENEFICIARY?

QUESTION

Hello Mr. Old Man,

Kindly you are requested to answer me the following obstacle:

We have received an Irrevocable Transferable LC i.e. we are 1st beneficiary. So we asked from our bank i.e. transferring bank to transfer a portion of our LC to a 2nd beneficiary's bank. But the matter is: The bank of 2nd beneficiary that is deemed as advising bank in the form of transferred lc, didn't accept to advise the LC to 2nd beneficiary.

Can the transferring bank advise this MT720 directly to the 2nd beneficiary or not? I will be so delight if you refer to UCP articles in your response (if any). Your quick and fine reply will be highly appreciated.

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ANSWER

It is possible for the transferring bank to transfer the credit and advise the same direct to the second beneficiary. However, this would occur when the transferring bank and the second beneficiary are located in the same country.

Where the transferring bank and the second beneficiary are in different countries, the transferred credit would be advised to the second beneficiary through the second beneficiary’s bank. By advising the transferred credit, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the transferred credit and that the advice accurately reflects the terms and conditions of the transferred credit received (sub-article 9.b).

The transferring bank may advise the transferred credit in MT720 direct to the second beneficiary but this should be done in paper form with authorized signatures. The second beneficiary must ask his bank to authenticate the signatures on the advice.

The beneficiary may face risks (fraud) if the advice of the transferred credit is not authenticated.

Best regards,
Mr. Old Man