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For many years a large number of brokers claim to be experts on the finance
sector, declaring to have contacts with alleged "banks, platforms and/or
Traders, we noticed their absolute lack of knowledge about banking tools such as
the issuance of a Swift’s and what they stand for. FEM along with First Edge Ltd
has made the decision to increase the awareness of our readers by explaining the
actual operative in issuing Swift’s and Bank Guarantee together with a Q and A
summary.
Sadly, people will do anything in desperation to make money. But sadly most
foundations along with investment and Heritage funding companies lose a lot of
time an effort by bad brokers who fails to do any checks on who they present.
Not to generalizes but most of these transactions are 99% fraud, scams, and
non-existent.
The other 1% operates at the highest levels in international banking, and they
never talk about these programs unless they are from in house connections
Sadly most brokers don’t have access to the likes of Euro or Bloomberg screens
and believes in people who say they are principle and direct to curtain banks ,
there people can play on the need for discretion and non-disclosure, using the
necessity for secrecy which is used by most banks to mask their real intentions.
Analyzing SWIFT
First we will analyze what a SWIFT is, on what is based the issuance of a MT-760
as well as the emission operative.
We would also like to punctuate that SWIFT is a Belgian company created in 1973.
Currently, SWIFT has advanced by leaps and bounds and nowadays more than eight
thousand banks use the system daily as a tool for any commercial activity many
people who claim to know what swift is does not know that swift has hundreds of
specially designed Swift MT Instruments used by various financial institutions
and banks around the globe.
Why is a Swift MT-760 most commonly used by most financial
institutions and banks?
The MT-760 is a kind of SWIFT message known as Guarantee that, as its name
suggests, works as a bank guarantee. Therefore, it is important to be warned
about its danger before malicious individuals.
Most investor's Bank issues a SWIFT MT-760 using an asset as base (CASH, BG, CD,
MTN, etc). This asset is issued in favour of the recipient (the recipient of the
MT-760). This kind of message is commonly used in the Commodities sector or in
businesses such as the import or export of any product. The issuing bank uses
the asset as a guarantee in favour of the client receiving the MT-760. It is
also important to note that this is the classic locking option when it comes to
participating in a Private Placement Program.
Prior to the emission of a SWIFT MT-760, the Issuing Bank will emit a SWIFT
MT-799 (Free Message). The MT-799 is issued as a Pre-Advice (notifying the
receiving bank that a guarantee in the form of MT-760 will be issued). Then, in
the next 24/48 hours, the receiving bank emits a SWIFT MT-799 to the Issuing
Bank confirming that they are ready to receive the MT-760. In the next 24/48
hours, the client's bank proceeds to the issuance of the SWIFT MT-760, with the
acceptance of the receiving bank. Thus, the asset is locked in favour of the
recipient for the time specified in the text of the SWIFT message.
To explain it in a simpler and more graphical manner, this will appear detailed
on the Image 1 located below the text.
If a MT-760 is issued, can it be revoked?
Absolutely NO. Many unscrupulous brokers and alleged platforms want the investor
to believe that the MT-760 can be withdrawn without inconveniences when the
investor orders it. The reality is quite different.
When a SWIFT is issued and accepted by the receiving bank it is totally
IRREVOCABLE. It can only be revoked if the recipient of the MT-760 gives consent
to his/her bank to proceed with the withdrawal.
What assurance is there regarding a MT-760?
When a client issues a SWIFT MT-760 for a period of (for example) 10 months, in
addition to being irrevocable, this involves serious risks since the so-called
platforms or intermediaries who claim to have contact with a trader can interact
with the asset and this lead to its loss. And these are terrible consequences
for the client.
What assurance is there regarding a MT-760?
We advise the client to make sure that the person he/she will be working with is
a real Trader. Once the Trading agreement is in front of the client, they should
ensure that they are dealing with the right person/company.
What happens if I issue a SWIFT MT-760 to a real Trader?
Prior to the issuance of the MT-760, the signing of the Trading agreement will
take place. Here we will find the banking coordinates of the Traders bank where
the client will need to issue the SWIFT. Upon the issuance and receipt of the
MT-760, it will be the same trader the one in charge of "monetizing" such SWIFT,
and with the amount of credit obtained, the program will be accessed. It is
important to point out that, being the Traders company the recipient of the
SWIFT and the one in charge of obtaining the credit line, it will also be the
one responsible for its refund and for confronting all incurred expenses.
Main Reasons not entry in a Private Placement Program
1.- Brokers who contact directly to investors saying they are members of the
Trader's Office. Absolutely false. Trader's Office never contact with investors
at an earlier stage. Program Manager is the person who provides the first
contact with the client once the operation has been submitted and verified.
2.- "Trading Platforms" which say they have direct contact with a real Trader
and after you can verify that's not true. They never show you a real trading
contract, Trader's name is not identified, etc...
3.- Investors who do not have enough capital to access to the program and they
decide to rental an instrument (leasing). Instruments of leasing are not valid
for entry to PPP because the investor is not the "applicant" (owner) of assets
(he is only the beneficiary) and makes not possible the issuance of a Swift
MT-760 (one of the two blocking options) in favour of banking trader
coordinates.
4.- Investors who do not have the money in a bank acceptable. They have their
funds in an offshore bank that does not allow the verification bank to bank.
5.- Investors who do not have a good explanation from the origin of money. The
capital which will access into the program must be good, clean, clear and
non-criminal origin.
6.- Investors who do not have a qualifying asset to be worked. Bonds considered
"trash" or cases in which the asset is deposited in a security house and has no
full bank responsibility. Any asset to be worked must have full bank
responsibility by a TOP50 Bank.
7.- Investors who try to enter into the program following their own rules. They
indicate the procedure to follow, the way the asset must be blocked, etc. This
is not the right way to participate in a PPP. In this financial opportunity, the
process is marked by the Trader and not by the investor. If the investor does
not follow the procedure imposed by the trader, he is not valid for this
financial opportunity.
8.- Investors who do not cooperate enough with the management group or they are
delayed too much when they have to send the documentation requested by the
management group.
9.- Investors who has an asset can't be verified on a bank to bank basis
10.- Investors who want to block the assets via Swift MT-799 or DTC-Euroclear.
In the case of Swift MT-799 is not possible because a MT-799 is a free format
message bank to bank and not a blocking swift like can be a MT-760. About
systems like DTC-Euroclear are not accepted by the banks which grant the credit
lines.
11.- Investors who are in a black list and not exceed the due diligence.
In Next Months Edition we will be showing all the question and answers needed to
ask along with what MT instruments is used by most banking and financial
institutions around the world.
If you have any questions or comments feel free to let us know by Contacting us
at info@femagazine.co.uk.
Part 2 of this months edition of FE Magazine will review and analyze the main
structure of PPP MTN/LTN and swift. Due to current financial restraints, we are
unable to publish curtain financial information, but most of what is published
is true and authentic from main principle’s figures that has or have been a head
figure in the operation of trade floor room along with financial institutions
and banking around the globe.
For many years a large number of brokers claim to be experts on the finance
sector, declaring to have contacts with alleged "banks, platforms and/or
Traders, we noticed their absolute lack of knowledge about banking tools such as
the issuance of a Swift’s and what they stand for. FEM along with First Edge Ltd
has made the decision to increase the awareness of our readers by explaining the
actual operative in issuing Swift’s and Bank Guarantee together with a Q and A
summary.
Sadly, people will do anything in desperation to make money. But sadly most
foundations along with investment and Heritage funding companies lose a lot of
time an effort by bad brokers who fails to do any checks on who they present.
Not to generalizes but most of these transactions are 99% fraud, scams, and
non-existent.
The other 1% operates at the highest levels in international banking, and they
never talk about these programs unless they are from in house connections
Sadly most brokers don’t have access to the likes of Euro or Bloomberg screens
and believes in people who say they are principle and direct to curtain banks ,
there people can play on the need for discretion and non-disclosure, using the
necessity for secrecy which is used by most banks to mask their real intentions.
Analyzing Swift
First we will analyze what a SWIFT is, on what is based the issuance of a MT-760
as well as the emission operative.
We would also like to punctuate that SWIFT is a Belgian company created in 1973.
Currently, SWIFT has advanced by leaps and bounds and nowadays more than eight
thousand banks use the system daily as a tool for any commercial activity many
people who claim to know what swift is does not know that swift has hundreds of
specially designed Swift MT Instruments used by various financial institutions
and banks around the globe.
What assurance is there regarding a MT-760?
When a client issues a SWIFT MT-760 for a period of (for example) 10 months, in
addition to being irrevocable, this involves serious risks since the so-called
platforms or intermediaries who claim to have contact with a trader can interact
with the asset and this lead to its loss. And these are terrible consequences
for the client.
What assurance is there regarding a MT-760?
We advise the client to make sure that the person he/she will be working with is
a real Trader. Once the Trading agreement is in front of the client, they should
ensure that they are dealing with the right person/company.
What happens if I issue a SWIFT MT-760 to a real Trader?
Prior to the issuance of the MT-760, the signing of the Trading agreement will
take place. Here we will find the banking coordinates of the Traders bank where
the client will need to issue the SWIFT. Upon the issuance and receipt of the
MT-760, it will be the same trader the one in charge of "monetizing" such SWIFT,
and with the amount of credit obtained, the program will be accessed. It is
important to point out that, being the Traders company the recipient of the
SWIFT and the one in charge of obtaining the credit line, it will also be the
one responsible for its refund and for confronting all incurred expenses.
Main Reasons not entry in a Private Placement Program
1.- Brokers who contact directly to investors saying they are members of the
Trader's Office. Absolutely false. Trader's Office never contact with investors
at an earlier stage. Program Manager is the person who provides the first
contact with the client once the operation has been submitted and verified.
2.- "Trading Platforms" which say they have direct contact with a real Trader
and after you can verify that's not true. They never show you a real trading
contract, Trader's name is not identified, etc...
3.- Investors who do not have enough capital to access to the program and they
decide to rental an instrument (leasing). Instruments of leasing are not valid
for entry to PPP because the investor is not the "applicant" (owner) of assets
(he is only the beneficiary) and makes not possible the issuance of a Swift
MT-760 (one of the two blocking options) in favour of banking trader
coordinates.
Pension Funds
Q. - Why Don’t The Pension Funds Buy Directly?
A: They are regulated about the kind of investments they can make.
They cannot buy an instrument without demonstrated marketability,
they are restricted from buying “Wholesale”.
•Because they cannot legally “show” and block the Pension Plan’s
funds.
•Without showing and blocking, they cannot take advantage of the
spreads between new-issue and seasoned as it moves from new-issue to
seasoned with a history buyer.
Detect and Prevent a Fraud (Tips)
Unfortunately, the financial crisis and the spreading of the
benefits of the Secondary Market through the mass media and the
Internet have caused that a multiplicity of intermediaries and
brokers award themselves certain privileges such as shortcuts to
Banks, Traders and Commitments Holders. This has led to a series of
criminal practices such as the ones discussed below:
Questions and answers
Q. - You are requested an advance funding to start the process.
A: The client should never make any advance payment to carry out the handling
process. Be immediately suspicious of anyone who asks for an upfront capital.
Q. - Someone demands yours funds to be transferred to an account on behalf of a
third party.
A: The client's assets should NEVER be transferred or given to third parties.
They will always remain deposited on the investor's account.
Q. - You are told that they work or have direct contact with a platform
supported, supervised, approved, audited, affiliated with the FED (Federal
Reserve).
A: Do not trust this kind of comments. We would like to make a small comment
regarding the issue of the "platforms". Please be careful and alert about this
particular subject. This companies or platforms, as they call themselves, are
nothing but a group of "x" people who decide to create a society and claim to
have contact with a trader. The reality is quite different, since the vast
majority of them have no connection with any real trader and what they do is to
receive the assets themselves through a SWIFT MT-760 and then try to "settle"
the operation as failed. This is a very common practice among the so-called
platforms. It is extremely dangerous and can cause, in most cases, asset loss
and/or numerous costs to the client. For this reason many programs are never
opened or the investor loses his/her ASSETS.
Q. - Intermediaries who claim
to have relationships and contacts with PROGRAM MANAGERS and suggest that you
assets should be managed by this people.
A: This is a fairly common practice in recent years. The investor, through a
Corporate Resolution, appoints the broker as an authorized person to manage the
client's assets and sign the Trading Agreement. This option is totally
non-viable. An intermediary or broker can never be the person signing the
Trading contract unless the broker is assigned indistinctly on the bank account
where the resources are deposited (the client is unlikely to choose this option
given the risk involved)
Q. - You are told that your operation can be placed in less than 5 days.
A: As you can read in the Procedures section, there is a series of steps that
must be met during the handling process and each of them has its proper timing:
asset verification, customer düe diligence, signing of the Trading agreement,
program preparation, etc. It is mathematically impossible for an investor to
enter trading in just 5 days.
Q. - You are told that the Private Placement Program takes place on third world
banks.
A: A PPP is executed by a Trader with a related company and not by a bank.
Traders rely on TOP 10 banks to obtain credit lines and to collect the
investor's yields.
Q. - You are offered exorbitant returns for minimum quantities.
A: This type of programs are based on buying and selling financial instruments,
mainly MTNs (Medium Term Notes). The yields will depend on the amount of paper
issued and the trader's available capital to make such purchases. The more
capital is available, major purchases, major cuts and therefore a higher
profitability will be obtained when such instrument's sales are made. The less
capital, less purchases, and therefore less final profitability.
Q. - You are told that by renting an instrument you can access a PPP, and they
will be responsible for the rental and the placement.
A: This is the second cause of fraud. The approach is the following: For a very
low price you can rent an instrument (usually a Bank Guarantee) in order to
enter the program. The second part of the process (entering in program) is done
verbally. These same gentlemen who are responsible for renting the instrument
for the investor, will later place the client in program. The reality is quite
different. It is not possible to enter a PPP just by being the recipient of the
assets -and not their owner-. These gentlemen who were involved in the mediation
for the rental of the instrument through a leasing company, will collect their
comission and the investor won't be able to report such fact, because
everythingwill be in good standing and the respective contractual arrangements
for the rental of the instrument was previously signed by the investor. At last,
the truth is that the investor turns out to be the recipient of an asset that
cannot access the program, when that was its main goal, and therefore will
suffer the consequent economic decline that implies the payment for the rent of
the instrument. To place an asset as PPP, the client must appear both as
APPLICANT as well as RECIPIENT. Also, the asset must be deposited on the
client's account. The renting or leasing instruments usually show the financial
company that rents as APPLICANT and the clientas RECIPIENT
Q. - You are offered access to a program without locking the
assets.
A: The client's available resources must be blocked on the investor's account so
that the trader can obtain the credit line needed to enter the program. Some
bank will never grant a credit line if this capital was not previously locked in
favour of the trader's corporation. So beware of anyone who tells you that you
can enter the program without the proper asset lock. Systems such as DTC or
Euroclear are not accepted by banks that grant credit lines. The issuance of a
Swift MT-799 is not sufficient because this one is an informative swift and not
a locking one, such as the MT-760 .
Q. - You are told that they can do programs directly through a contact with the
bank.
A: Banks do not make programs directly with the Client. The client should
perform the operation through an Authorized Trader.
Q. - You are told that the asset's origin is not a relevant matter and that it
can be placed without inconveniences.
A: Error. All Assets (BG, CD, SKR, SBLC, etc.), through the issuing bank, should
be confirmed as clear, clean and with a non-criminal origin. The confirmation or
ratification documents should always be issued by banks headquartered within the
European Community. We hope we were of big help with this little FAQ to detect
and prevent possible fraud.
Our Next November Edition we will be showing the many Companies used by Swift
Messages.
If you have any questions or comments feel free to let us know through the
Contact section.
Complete SWIFT Message List we have marked X at the end of each instrument to
keep confidentiality on most of the Swifts, but you can contact ant of the staff
at First edge to check on authentication of each instrument.
Table 1 to 10 is Viewable in FE Magazine PDF Edition
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