Assignment of proceeds under L/C working scheme

[Gart]

Hi there,

I'm just curious about your practices of effecting payments under assignment of proceeds under L/Cs in various regions: do the presenting banks upon receipt of the funds from the issuing bank credit the current account of beneficiary and only then effect the payment in favour of the assignee by debiting the current account of beneficiary or just use some internal accounts for such a transaction and the assigned funds do not reach the current accounts of the beneficiary (in such a case how does the presenting bank act if they know that the current account of the beneficiary is arrested / frozen by local authorities)?

[picant]

Hi Pal,

all is regulated by local Law, the letter of assignment, normally, contains the clause that the proceeds must be free and at disposal.
On receipt of funds, if they are free the amount will split in two parts, one for the assignee and the balance for the lc beneficiary.
Sometime the assignment is the only way to buy goods to complete the supply, the parties well known that this practice is not a guarantee of payment....
Other comments appreciated
Ciao