MT999: Accept or Refuse?

Intro

MT999 is often used as a free format SWIFT message between banks. It looks simple and convenient. But when it is not authenticated, especially in documentary credit transactions, it may create risks that are not always clearly understood.

QUESTION

Dear Mr. Old Man,

We would be interested to know how your bank treats non-authenticated SWIFT message MT999:

1. How are they handled? Are they refused, and the sender is asked to use a bank with which both sender and receiver have an arrangement for transmitting/receiving authenticated messages?
2. If banks refuse to handle non-authenticated SWIFT messages, what are the reasons?

Thank you for your comments.

Best regards,

Kevin

______

ANSWER

Dear Kevin,

Thank you for your question.

It depends on the content of the MT999 whether we accept it or refuse to handle it.

We may accept it if it is only an acknowledgement of receipt or, for example, an advice of refusal issued in accordance with sub-article 16(c).

However, we would refuse to handle an MT999 if it is used to issue a letter of credit or an amendment. Although sub-article 9(f) allows a bank to advise a credit or amendment without authentication, provided that the beneficiary is informed, in practice such a credit or amendment is not valid for the beneficiary to present documents for negotiation or payment to the nominated bank or the issuing bank.

It is also recognized that most advices of letters of credit or amendments do not clearly state whether they are authenticated or not. Because of this, banks may forget to inform the beneficiary that the message is not authenticated. In such a case, the advising bank may be liable for negligence if shipment has been made and the credit or amendment later turns out to be fraudulent.

In short, MT999 may be used for simple or informational purposes, but it should not be used to issue or amend a documentary credit.

Kind regards,
Mr. Old Man