Transferable LCs and correspondent banks

[elmorte]

Hello everyone,

I'm wondering if anyone can confirm the following. Let me explain the situation first.
1. We are an intermediary in country B, and we received a transferable LC from country A to be transferred to country C.
A->B->C. Should be straightforward.
However:
2. Our bank does not have a direct relationship with a beneficiary's bank or any banks in country C.
Hence we are told that the LC cannot be transferred.

I did some online research and I read that in case of direct (or non-transferable LCs), if the issuing and beneficiary bank do not have a direct relationship then the LCs are usually advised by correspondent banks with whom the both issuing and beneficiary's bank have a relationship, so the correspondent bank is the common link.

My question is: is the same possible for transferable LCs? Our bank has many correspondent banks in common with the receiving bank, one of them being our bank's HQ in the USA. Is it possible in theory to transfer an LC via a common correspondent bank or is that only possible for direct LCs?

Thank you in advance!

Nik

[picant]

Hi Pal,

theoretically it is possible, but many banks, due to KYC/AML etc rules use only correspondent
bank. MT720 contains field 57A too. Difficulties may arise, so all must be considered.
Other comments appreciated
Ciao

[shahriar]

.

[elmorte]

Thank you picant!

I guess you're right that in theory they can do it but I've spoken to a few different banks today and they won't unless they have a direct relationship with the beneficiary bank.