The practice of sending advised LCs by mail/fax to bene

[ajoy]

Sometimes advising banks send LC copies by fax/email to beneficiaries. In some countries like Hong Kong this seems to be a very common practice despite the fact that the turn around time for LC advising is already very aggressive. Do you think this is a practice banks should discourage or avoid on account of risks involved? What do we think are the risks inherent in the practice?

[shahriar]

in my opinion, its the beneficiary who is to decide this. if the beneficiary is happy with email, i see no problem. however if the LC is freely available, i think this practice may turn to be risky.

[ajoy]

I do agree with both points 1) It is upto the bene to agree to this or otherwise 2) there is a higher risk for freely availble LCs.

Generally when we advise LC copies by email we would be sending the original LC and Advise by mail in due course. In other words the e mail advise is for information only.

Email as we know is not a secure means of transfer. So there is possiblity of interception / falling into wrong hands. Apart from the fact that the LC it can be misused , business information pertaining to the client may fall into wrong hands.

There is also the risk of sending the email to the wrong party. True you could mail a document to the wrong party also but that is less likely as you need to get a whole address wrong or mismatched.

Simliarily we have risks associated with fax too.

- Would it make sense to insist that the advising banks take an e-mail indemnity ( or fax indeminty as the case may be) from the beneficiary before provding this service. I know that some banks do this but am not sure how widespread the practice is. Do you practice this?
Ajoy

[Judith]

however if the LC is freely available, i think this practice may turn to be risky.

I'm not sure if that's true. A bank will negotiate documents only if the beneficiary presents the original negotiable copy of the LC. (This is usually a copy of the SWIFT which has the original seal of the advising bank and a duly authorised signatory.)

Other comments appreciated.

[Gart]

I totally agree with Judith and see no reason for concern. We usually send an advice to the customer upon receipt of L/C by fax and/or e-mail followed by the original L/C advice sent by mail. There are a lot situations where the beneficiary is just waiting for confirmation of L/C issuance and is ready to ship the goods immediately after receipt of L/C advice from us while the mail advice may postpone shipment for couple of days.