Confirming Bank Reject Payment On Internal Compliance Issue

dinesh2476 · Post by **dinesh2476** » Wed Jul 16, 2014 11:19 am

Dear Experts,

Can we reject payment to the presenter for confirmed/Clean certified documents.

Say for example. we have clean confirmed documents where we have to effect payment to presenter after 10 banking days of swift claim to issuing bank.

we will have this transaction unprocessed(nonpayment) till the last day of Pre-debit authority!!!. I have question in my mind that under what circumstances can we relieve from the position to pay to beneficiary/take advantage to relieve from the position to pay to beneficiary under confirmed LC's.

we cannot say country risk of issuing bank,solvency,political risk, war risk, risks etc. .....Do any one come across any situation like this before......Please share your opinion.

Can nego bank put compliance concern in front in order to avoid payment to the presenter(say when we(nego) bank examined the document there were no compliance concern regarding issuing bank country, port of loading and discharge countries, parties involved in the documents, now the documents in transist, recent compliance update that issuing bank country under sanction, port of loading/port of discharge under sanction.

Please share your experience here..........

Regards
Dinesh

dinesh2476 · Post by **dinesh2476** » Fri Jul 18, 2014 11:04 am

Dear Experts,

All opinions are welcome.

Does the negotiation bank have the rights to reject the payment to the presenter after certify that terms and conditions complied with, under what circumstances, Do we come across such cases before.

Thanks&Regards
Dinesh

picant · Post by **picant** » Sat Jul 19, 2014 12:32 pm

Hi Pal,

I think that is the Issuing Bank Country is entered in a sanctions list, you may refuse to effect payment, specially if your Country is determinating sanctions Countries by law or your bank adhere to AML, KYC etc.
ICC had to uptodate something concerning sanctions, I think it is freely downlable from ICC website.
Personally I have to read it too.
Other comments appreciated
Ciao

dinesh2476 · Post by **dinesh2476** » Sat Jul 19, 2014 7:16 pm

Dear picant,

Thanks for inputs.

Why the question was raised in mind was the confirming bank has to bear the risk of country risk,political risk and war risk, risk etc. once LC has been confirmed by them.

At the time of examining the documents, there were no sanctions/issue at port of discharge,(sanctions related) against issuing bank country, Later at the time of documents in transit, there were serious compliance concern put in place, knowing the fact that the Issuing bank will not pay, still confirming bank has to pay to the presenter.

Thanks&Regards
Dinesh

dinesh2476 · Post by **dinesh2476** » Sun Aug 17, 2014 11:04 pm

Dear Picant & All,

Picant- Do you had time to review the ICC opinion.

Dear All- Do we come across any case before, where the documents in transit to IB and port of discharge in IB country suddenly highlighted in the sanction list.

what could be the action for the confirming bank. Still confirming bank has to pay the beneficiary

Regards
Dinesh

Uppendhar · Post by **Uppendhar** » Sat Aug 30, 2014 7:15 pm

I think it is not only confirming bank but also issuing bank's responsibility to honor the complying presentation.....

Confirming Bank Reject Payment On Internal Compliance Issue

Confirming Bank Reject Payment On Internal Compliance Issue

Confirming bank rejected the payment

Reject the payment

Compliance concern

Port of discharge, sanction.

Confirming Bank cannot reject the payment