Acceptance on Free Format (MT 999 )

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Farazr
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Joined: 11/08/2007
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I am writing down below problem I regularly face as a beneficiary working on L/C at 90 days from b/l date.  

Upon reciept of bank documents , the applicant's bank has been sending the beneficary's bank, the  acceptance message on 999 FORMAT (Free form message) .

The beneficiary's bank (meaning my bank) is telling its customer/ applicant (Me) that this acceptance is on 999 message format and claims that it holds no value, infact claims it to be a 'bogus' message. Beneficary bank then sends a swift message to the applicant's bank requesting an authenticated accetpance through tested telex, but there is never a reply from them.

Because of no reply from applicant bank reagrding the authenticated message request , I have to wait till 90 days , till the applicant bank makes the payment on the maturity date ( 90 days after B/L date) / Because My bank refuses to purchase the Bill if the accetpance is on 999 format.

Is this practice of the applicant bank acceptable according to UCP 600?

What should the beneficiary's bank do to be able to get 999 message authenticated ?

What should I do being the beneficary because I am unable to get the bill dicounter untill my bank reiceved an authenticated accetpance ?

 

Thank you for your inputs.

 

 

 

albechao
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Joined: 03/12/2008
You can ask the issuing bank to discount instead

There is an alternated way of solving the problem, I think you can instruct your bank (the remitting bank) to request the issuing bank to discount the bill instead.

cristiand
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Joined: 08/10/2007
tough subject

It depends on more.  Maybe the defauld is of your bank. IS your bank the confirming bank and provide its engagement to pay on maturity? If yes I don't understand why cannot discount documents as long as they invariably should pay in default of the issuing bank payment. If it is not, your bank has no obligation to do that unless expresly agreed. But you can insist on having LC opened from other issuing bank. So talk to your buyer. When your bank has requested the authentication of such a message and had no reply... always there is a suspicion with that bank  and a bad practice.

Frammi
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Joined: 08/17/2007
quick reply

The beneficiary's bank (meaning my bank) is telling its customer/
applicant (Me) that this acceptance is on 999 message format and claims
that it holds no value, infact claims it to be a 'bogus' message.
Beneficary bank then sends a swift message to the applicant's bank
requesting an authenticated accetpance through tested telex, but there
is never a reply from them.

A MT 999 is like an unsigned letter. I wouldn't
call it a bogus (=fraudulent) message, as it
is nevertheless sent by SWIFT. But you cannot
rely on it as it has no legal authenticity.

Because of no reply from applicant bank regarding the authenticated
message request , I have to wait till 90 days , till the applicant bank
makes the payment on the maturity date ( 90 days after B/L date) /
Because My bank refuses to purchase the Bill if the accetpance is on
999 format.

I can understand your anger, but your bank,
too.

Is this practice of the applicant bank acceptable according to UCP 600?

I didn't find a hint it is not - although it is not
common to act like this.

What should the beneficiary's bank do to be able to get 999 message authenticated ? What should I do being the beneficary because I am unable to get the
bill discounted untill my bank received an authenticated accetpance?

You both can't do a lot. It's the issuing bank's
work. They have to sent an MT 799 to a
correspondent bank with which your bank also
holds a correspondentship.

However this might cost some charges.

-Each long journey starts with a small step-

Best regards

Frammi

Frammi
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Joined: 08/17/2007
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CDCS06
Offline
Joined: 08/01/2007
MT 999

UCP ot any of the ICC publications do not comment on SWIFT formats. Basically, almost all the banks do not act on MT 999, he reason being the format is unauthentic. To act on a particular SWIFT, the messege must be authentic. The beneficiary's bank should have asked issuing bank to send letter of acceptance on their letter head and forward the same through post/ courier or to route the telex through third bank who have test key arrangement with both the banks (this method involves additional costs).

Regards, Ajit

pan
Offline
Joined: 09/13/2007
SWIFT FREE FORMAT MT999 (refresh)

IMHO, the SWIFT message MT 999 is authentic, but not authenticated !!!

-Authentic, because is originated from a bank, or better
from a Member of SWIFT and guaranteed by
the system.

-Not authenticated, because
we are not sure that the person authorizing it, legally binds the sender??

First of all, why banks refuse to have testkeys agreement
with other banks, specially minor banks?,
If they check the existence and
the status of these banks, may be they will find
banks that are creditworth and may be they will appreciate the services.

SWIFT works like a
back to back system, my access code to
the net is checked so the receiving is
checked too. No possibility to send or receive a “BOGUS” message.

Second:The bank will provide internal controls to avoid that a
message could be sent by unauthorized person. In my bank, I can input a message
MT 999, but before being released, someone will verify and authorize it.

And how many documents, letters, messages etc, are not
authenticated and regularly sent to
third parties, think to collections, how is checked the signature of the remitting bank in the cover letter, then many remittances indicate that the
document, electronically edited, does not need a signature!!!

So, if a bank sent
documents under a documentary credit to the issuing bank(not official
correspondent), any communications with that bank, in and out, must be
considered “TRUE” and having legal effects, specially if executed by a System
to which both banks take part :(SWIFT).

In the past, at the time of Telex messages, reading the Post Office / Telex company contractual conditions, the USERS were deemed
to be responsible for any misuse and for the misconduct of the clerical staff
working for (some telex machines had a key, kept by an officer, and the telex
paper was countersigned in the evening
when left the working place and checked in the morning, with the messages
arrived during the night.

So, finally, I think that a SWIFT message sent as MT999 must
be accepted when relating to a transaction that already exists.

Naturally, comments well accepted

Thanks and Ciao

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