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Can a bank refuse to handle documentary collections because they have no correspondence relationship with the drawers bank?

Hi Pal,

I think that any bank has the possibility to refuse the collection if it has no fixed relationship with the remitting bank.
Due to the famous KYC, AML rules, embargoes etc , it remains difficult to act having no such information before operating.
Surely, the remitting bank sends documents to the collecting bank indicated by the seller under a buyer advice, so the bank will evaluate this situation with care.
Other comments appreciated
Ciao

Hi

Agree with Picant in collections bank has all right to refuse a collection which the bank feels it is impossible for them to handle. If they do not have the correspondent relationship or the proper Swift Key arrangements etc., they can refuse stating not interested to handle the collection documents. This is my personal opinion.,

Agree with Both Picant and Arun Bank can refuse to handle the documents without delay if they are not able to act on it.

Arun wrote:Hi

Agree with Picant in collections bank has all right to refuse a collection which the bank feels it is impossible for them to handle. If they do not have the correspondent relationship or the proper Swift Key arrangements etc., they can refuse stating not interested to handle the collection documents. This is my personal opinion.,

Based on your comment and if receiving bank do not have proper Swift Key arrangement with the remitting bank, how would the latter instruct the former to return all documents?

As per Article 1c of URC 522 which states that ''If a bank elects, for any reason, not to handle a collection or any related instructions received by it, it must advise the party from whom it received the collection or the instructions by telecommunication or, if that is not possible, by other expeditious means, without delay.''

In addition to that, regarding the swift keys, its impossible for any remitting bank or a presenting/collecting bank to have swift key arrangements with all banks all over the world, and hence, they may use the help of a 3rd bank (usually your best correspondent bank) to authenticate messages while quoting the required information in the swift message, consider charges to be paid for this service.

To the minimum, in Inward Bills for collection, I feel that the swift key authentication is required when the presenting/collecting bank would like to send an acceptance message that the D/A are accepted by drawee and that the payment will take place on maturity date. usually the swift payments MT202 will be transmitted on maturities to your nostro correspondent which you have already a swift key arrangement, the 2nd swift message along with the payment (the advice of payment) can be transmitted through MT999 mentioning at the top of the swift message ( As we don't maintain a swift arrangement between our two institutions, kindly consider this message as MT499).

Bank's can refuse to make the transaction happen due their relation at ANY TIME, even in mid transaction (less likely but it happens in the UK).