What Is Letter of Credit Fraud?

Regarding the meaning of Fraud in Letter of Cr edit, there is no letter of credit fraud in the UCP, and the International Chamber of Commerce UCP500 has no definition of fraud and no provision for letter of credit fraud. First of all, UCP500 does not have a special definition like UCC5. Because the ICC's bank technical committee responsible for formulating the UCP500, after trying and hard work, believes that "it is clear that it is a terrible attempt to propose a clear terminology section in the Uniform Practice 500." Secondly because "this will cause many national committees There is no dispute between them, and there is no guarantee that an international consensus can be reached on the definition of these definitions, so this attempt was abandoned. "Therefore, there are no definitions or regulations on fraud in the previous versions of UCP.

Letter of Credit Fraud

Anglo-American grammar and

The theoretical flaw of the letter of credit itself (that is, the "independent abstraction" principle) is one of the main reasons for the letter of credit fraud. Letter of credit is for documentary documents and not for goods. This basic principle is reflected in

The letter of credit method itself does not prevent fraud, but otherwise, it is separate from

International

Letter of credit payment is one of the main methods of international trade payment. International trade is carried out between countries in the world, across oceans and borders, and involves a very wide range, generally involving more than two countries.

As the bank only reviews the relevant documents in the letter of credit settlement, as long as

It is mainly manifested in the following aspects:

(1) After the L / C is issued, it will not take effect temporarily.

It means that the actual date of shipment of the goods is later than the date of shipment stipulated in the credit, but it is still issued on the date stipulated in the credit

Because the laws of different countries have different regulations on fraud, the International Chamber of Commerce considers that it is not

The main targets of this type of fraud are

The object of this type of fraud is mainly banks, which are mainly manifested as collusion between buyers and sellers.

Choose your trading targets carefully. In the case of payment by letter of credit, due to

The seller provides various inspection certificates or other certification

Is the illegal businessman using the letter of credit transaction in the bank to review only from the formal requirements

In this case, sticking to the principle of independence and abstraction is obviously contrary to the basic principles of fairness, reasonableness, and good faith. Therefore, it is necessary to allow the exception of the principle of independent abstraction to exist to protect the interests of importers. The United States Uniform Commercial Code recognizes that letters of credit are independent of basic transactions, but also recognizes exceptions. Regarding letter of credit fraud, the Uniform Commercial Code and jurisprudence affirmed that the court has the power to issue injunctions, and on the other hand restricted the use of injunctions. Specifically, there are two main restrictions: First, the court's injunction must be based on the existence of fraud. Second, the degree of loss suffered should be based on irreparable evidence. The American approach not only maintains the principle of independence and abstraction, but also allows the existence and limitation of its exceptions, which better meets the needs of transactions.