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MAXIMUCH has mandatory KYC policies in place to deter people from laundering money. We are obliged to conduct a comprehensive KYC "Due-diligence to comply with international banking rules, AML Policy and with the rules established by our various principals and the domestic laws of their countries.
Financial instruments, mainly Bank Guarantees or Standby Letters Of Credit (BG/SBLC), are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver cash (bond).
International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial instruments can be either cash instruments or derivative instruments:
· Cash instruments – instruments whose value is determined directly by the markets. They can be securities, which are readily transferable, and instruments such as loans and deposits, where both borrower and lender have to agree on a transfer.
· Derivative instruments – instruments which derive their value from the value and characteristics of one or more underlying entities such as an asset, index, or interest rate. They can be exchange-traded derivatives and over-the-counter (OTC) derivatives.
ADVANTAGES OF SBLC/BG
SBLC/BG denotes an irrevocable obligations assumed by banks. The principle that if a compliant demand is made under a standby letter of credit, an issuing bank must pay, subject to only very limited exceptions.
A key purpose of the widespread use of standby letters of credit to finance commodity transactions is the comfort it gives to the seller that it will receive payment.
The drafting of the SBLC should provide that the presentation of a demand would be conclusive evidence that the amount claimed was “due and owing” to the Beneficiary of the SBLC. The beneficiary’s belief that payment was “due and owing” should activate payment.
The meaning of the words “obligated to pay” has to be considered in the context of the certificate to be tendered under the SBLC.
Exceptions to the rule that an issuing bank must pay under an SBLC are limited and difficult to prove. If you have concerns about the reliability of your counterparty, requiring them to provide an SBLC from a reliable bank and governed particularly by English law remains a good way of securing payment.
If you are the beneficiary of an SBLC, you should insist that it contains clear wording to the effect that presentation of a demand by you will be conclusive evidence that the amount claimed will be “due and owing”. In order to rely on the strength of these decisions, you should also ensure that English law governs the SBLC, even if it does not govern the underlying contract.
The great utility of the standby letter of credit is reflected in the fact that it can be used in practically any situation in which one party to a contract is concerned with the other party's ability to perform. Some of the many ways in which a standby letter of credit can be used are: to ensure payment or performance in construction financing, corporate consolidations, real estate transactions, management contracts, leases on real and personal property, stock transfers and purchases, and bid and performance bonds; to ensure payment of salaries to highly paid individuals such as professional athletes and entertainers; and to ensure payment of professional services such as attorney's fees.
The standby letter of credit is neither a contract nor a negotiable instrument and if it is not properly drafted, it will not be considered a guarantee at all. The standby letter of credit or SBLC is a distinct legal instrument, unlike any other. The obligation of the issuer of the SBLC is independent of the underlying contract between the issuer's customer and the beneficiary of the SBLC. The standby letter of credit enables a businessman to enter into business ventures with minimal fear of loss. By substituting the credit of a third party, usually a bank, for that of the debtor, the businessman can help to protect his investment. Finally, the standby letter of credit is particularly well suited for preventing loss or delay of payment caused by the debtor's bankruptcy. Because the standby letter of credit and its proceeds are not part of the bankruptcy estate, the beneficiary of a standby letter of credit should receive payment from the bank without delay. The low cost and adaptability to a wide range of business transactions make the standby letter of credit very attractive to the business community and to business lawyers.
MAXIMUCH has long experience in issuance of SBLC & BG and we have successfully attained closure many times over. Multinationals, Corporations, Banks, Airlines Operators, Investment Banking Companies, Mine Owners, Project Owners, Oil & Gas E&P Companies/Traders/Refiners, Commodity Traders, etc. have successfully obtained SBLCs through us. If you follow our procedure, it is likely that you might obtain an SBLC provided you are financially capable to transact and possess the right business credentials. We, however, do not accept SBLC / BG applications from either brokers or intermediaries.
Buying a Bank Guarantee (BG) or Standby Letter of Credit (SBLC) Owned Instrument & Service Description
A Bank Guarantee (BG) is the name used mostly in Europe and Standby Letter of Credit (SBLC) is exactly the same, but used in the USA. Since we are working globally you will see the expression BG/SBLC in our documents.
Our Purchased Bank Guarantees – Owned, are issued by World's Top 25 Banks. We use the Bank SWIFT Network to have clients' Owned Bank Guarantees (BG) and Standby Letters Of Credit delivered Bank to Bank using SWIFT MT799 followed by SWIFT MT760. We operate a reliable, efficient delivery and authentication process.
STEP BY STEP PROCEDURE FOR OBTAINING BG/ SBLC
1. Beneficiary submits a signed official Letter Of Interest (LOI) for applying for SBLC/BG together with compliance documents:
1.1 Client Information Sheet (CIS)
1.2 Statement of Non-Solicitation of Funds
1.3 Irrevocable Fee Protection Agreement covering all identified beneficiaries/ intermediaries from both sides
1.4 Clear color copy of the beneficiary’s/Signatory’s passport
1.5 Certificate of Incorporation of beneficiary’s company
1.6 Proof of fund (POF): There must be availability of cash funds (not credit line) in the beneficiary's bank account sufficient to cover at least the price of the first tranche of the instrument. This can be in the form of a Bank Comfort Letter (BCL) or RWA (ready, willing, and able) letter issued by the beneficiary's bank and signed by at least two bank officers, or a screen shot of the account statement no older than three days from the date of filling the CIS.
2. After thorough and extensive due-diligence of the applicant/beneficiary and subsequent approval by the Provider, applicant/beneficiary will receive the Deed Of Agreement (DOA) Format which spells out Terms and Conditions of the Contract, approved contract amount (Face Value), Individual tranche size and schedule, Price, etc.
3. The applicant/beneficiary completes the Deed of Agreement (DOA):
a. Accepting the SBLC price.
b. Confirming applicant’s/beneficiary’s bank will accept the Provider’s Corporate Invoice
c. Confirming acceptance of SWIFT MT799 BPU verbiage.
d. Confirming the Intermediary Fee Protection Agreement
e. Confirming the acceptance of the SWIFT MT760 (SBLC) verbiage
The filled & signed DOA must be returned on beneficiary’s letterhead & sent to MAXIMUCH via e-mail duly signed in blue ink and stamped on each page
4. After internal scrutiny and evaluation of the filled DOA received from the applicant/ beneficiary, the Provider might undertake another due-diligence of the applicant/beneficiary. Once satisfied, the Deed Of Agreement (DOA) would be countersigned by the Provider after filling in all the relevant information relating to the Provider and his Bank, and returned to either the applicant/beneficiary for lodging it in his bank or to the applicant’s/beneficiary’s bank directly
5. The fully executed Deed Of Agreement (now lodged with Provider’s and Beneficiary’s respective banks) becomes the legally binding contract between the two parties.
6. The Provider will issue a Corporate Invoice to the Beneficiary’s bank showing the all-inclusive amount of the SBLC/BG price and commissions to be paid after the SBLC/BG has been delivered via SWIFT MT760.
7. The beneficiary’s bank will send a written confirmation via SWIFT MT799 to the Provider’s bank stating that “it is RWA (ready, willing and able) to receive the SBLC/BG as per the Deed Of Agreement.
8. Provider’s Bank will acknowledge the receipt of the SWIFT MT799 RWA send a counter MT799 RWA to the Beneficiary’s bank confirming it is ready, willing and able to send the SBLC/BG Pre-Advice via SWIFT MT799 to the Beneficiary’s Bank.
9. Within three (3) banking days, the Provider’s bank will issue the SWIFT MT799 Pre-Advice confirming that the instrument will be delivered against the issuance of SWIFT MT799 BPU (bank payment undertaking) by the beneficiary's bank.
10. Beneficiary’s Bank will send the SWIFT MT799 BPU (Bank Payment Undertaking earlier used to be called ICBPO) as per the verbiage earlier provided in the DOA to guarantee payment for the Corporate Invoice after delivery of the SBLC/BG to beneficiary’s bank (Note: ICBPO is now banned)
11. Within five (5) banking days after Provider’s bank receives and authenticates the SWIFT MT799 BPU, the Provider’s bank will deliver the SBLC/BG via SWIFT MT760 and also provide the copy of the SWIFT message via bank e-mail.
12. Within Five (5) banking days after the SBLC/BG is delivered and received by Beneficiary’s bank via SWIFT MT760 and is authenticated, the beneficiary’s bank will activate the Bank Payment Undertaking and pay the Provider via SWIFT MT103. The hard copy of the SBLC/BG to be delivered via bank bonded courier to the beneficiary’s bank within seven (7) days after the payment being received by principal’s bank.
13. The beneficiary pays xxxxxxx percent all inclusive (xx% + 2%) of face value of each tranche, as per the relevant irrevocable fee protection agreement .
14. All subsequent tranches will be based on the same procedure, until the agreed amount of the contract with Provider reaches completion or the collateral or funds become exhausted.
15. Any unauthorized bank calls without prior agreement between parties, probes or communications, or an improper solicitation or disclosure involving any of the banks concerned in this transaction will result in immediate cancellation of this transaction and subject the violating party to damages.
GENERAL PROVISIONS AND CONDITIONS:
IMPORTANT TO NOTE:
1. We accept applications only from actual end-user(s) of the SBLC/BG and we do not accept applications from any Broker/Intermediary/Consultant unless these entities are pre-approved by our compliance department.
2. If you are looking to Purchase or Lease an SBLC/BG, the current rates would be applicable. All purchases and Leasing involve 2% Intermediary commissions.
3. We will need Proof Of Funds (cash fund equivalent to or more than the total Price/Leasing Fee and Commissions) in the form of either a BCL, RWA, or Tearsheet duly signed by at least two (2) Bank officers of the Bank where the applicant maintains his/her transaction Bank Account.
4. The Instrument Transaction Terms are non-negotiable
5. The CIS must be submitted on Official Letterhead of the Applicant duly filled, signed, stamped, and notarized by competent judicial/legal authority.
6. There are no upfront charges involved in the transaction at any stage.
7. We will send to the Applicant a DOA (Deed Of Agreement) in MS Word format only when our compliance department clears the CIS after conducting all necessary due diligence about the applicant.
SBLC Facilitated By Maximuch
Standby Letter of Credit or Bank Guarantee (SBLC/ BG) Providers are mostly active in the secondary and the tertiary markets. But how does one find a genuine/reliable Provider for SBLC/BG ? To understand who these Providers are and how they function, one must understand about what is called as Collateral Transfers in the financial world. Collateral Transfer is basically the provision of transferring assets from one party (the Provider) to another party (the Beneficiary) often in the form of a Bank Instrument (BG or SBLC). This occurs whereby the Provider agrees (through his Issuing Bank) to issue a “Demand Guarantee” to the Beneficiary in return for a “rental” or “return” generally known as the “Contract Fee”. The parties agree to enter into a Collateral Transfer Agreement (CTA) which governs the issuance of the guarantee.
A Provider for SBLC/BG would often be a collateral management firm, a hedge fund, a Finacial Holding Company (FHC), a non-bank commercial company, or private equity company. They are high net worth corporations or individuals who hold bank accounts at a bank which holds either large sums in cash deposits, bonds, or other for of security that can turn into legal tender. Basically, in most cases these are liquid assets at the immediate disposal of their owner. Whenever the occasion arises, a Provider instructs his bank to secure and encumber liquid assets/ cash in his own account and authorizes the bank to "cut" (an industry term meaning to create a financial instrument such as SBLC or BG.
Provider's bank has neither interest nor unsecured liability in such a transaction. The bank receives its fee for "cutting" (creating) the SBLC/BG and "delivering" it to the Receiver/Beneficiary's bank first digitally over the SWIFT Platform and subsequently a hard copy of the SBLC/BG via bank bonded courier. All liabilities that might arise from selling or leasing the SBLC/BG rests completely with the Provider since the financial instrument (SBLC/BG) was created at the Provider's instruction alone and also since it is secured against Provider's cash/ liquid assets held by the bank. Provider's bank that creates and delivers the SBLC/BG is called the Issuing Bank.
SBLC/BG Providers are a rare breed and are extremely difficult to find. Providers do not advertise themselves or send emails soliciting business from clients. As mentioned earlier, they are ult high net-worth corporations or individuals or funds and they hold a commanding position in the financial sector. Their businesses span across finance, banking, capital markets, oil & gas, commodities trading, manufacturing, IT, etc. More often than not, dealing in Financial Instruments is only a small portion of their business interests.
Providers of SBLC/BG generally work through their brokers or mandates who further engage sub-brokers in the chain making direct access to Providers even more difficult. It is absolutely futile to look for SBLC/BG Providers over the Internet. For those who work in the Financial Services sector and interact closely with high net worth individuals, private equities, funds, asset managers, banks, etc. on a regular basis, the chances of coming across a genuine SBLC/BG Provider is much higher than those who are outside the Financial Services sector.
SBLC/BG PROVIDERS - MAX
SBLC/BG FACTS & MYTHS - MAX
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