Trade and Supply Chain View

Compliance in trade finance refers to the adherence to regulatory and legal requirements in conducting trade finance transactions. It involves ensuring that all activities related to trade finance, such as letters of credit, documentary collections, and guarantees, comply with applicable laws, regulations, and industry standards. Compliance in trade finance is crucial for several reasons: 1. Regulatory requirements: Trade finance transactions are subject to various regulations imposed by national and international bodies. Compliance ensures that these regulations are followed, reducing the risk of penalties or legal consequences. 2. Anti-money laundering (AML) and counter-terrorism financing (CTF): Trade finance can be vulnerable to money laundering and terrorist financing activities. Compliance measures help prevent these illicit activities by implementing due diligence procedures, customer identification processes, and transaction monitoring. 3. Sanctions compliance: Trade finance t...

An export contract is a formal agreement between parties for the sale and delivery of goods in exchange for value. Since this agreement forms the basis of the export process, it is essential to ensure that all actions align with the terms of the contract. The following practical steps can help ensure compliance and successful fulfillment of the export agreement: 1. Order Supplies Begin by sourcing and ordering the required materials or products as per the buyer's specifications. This ensures that the goods meet the agreed-upon quality and quantity standards. 2. Manufacturing Coordinate with the manufacturer to produce the goods within the stipulated timeframe and to the exact specifications outlined in the contract. Monitor progress to avoid delays or deviations. 3. Arrange Packaging Ensure that the goods are properly packaged to meet both the buyer’s requirements and international shipping standards. This step is critical to prevent damage and ensure compliance with customs and im...

The primary distinction between a Bill of Lading (B/L) and a Sea Waybill lies in their role in the ownership and transfer of goods during shipment. Below is a professional comparison of the two documents: 1. Ownership Bill of Lading: Represents the title to the goods being shipped and serves as evidence of the contract of carriage. It holds the carrier accountable for the safe delivery of the goods. Depending on the terms, it can be either negotiable (allowing transfer to another party) or non-negotiable. Sea Waybill: Does not confer ownership or title to the goods. It functions as a receipt and evidence of the contract of carriage but is strictly non-negotiable. 2. Transferability Bill of Lading: Can be transferred through endorsement or delivery, enabling ownership to change hands during transit. This flexibility is particularly advantageous in international trade where goods may be bought or sold while en route. Sea Waybill: Non-transferable, meaning only the original shipper retain...

SBLC is an independent undertaking, the issuer of the SBLC has its own obligation to pay the beneficiary on receipt of a document made by, or on behalf of the beneficiary, which comply with the terms and conditions of the SBLC. Standby letters of credit is “irrevocable” meaning that it cannot be changed or cancelled prior to its stated expiry date without the agreement of all parties. Applicant should consider the following when deciding to use SBLC. Performance risk: The applicant should carefully review and understand the terms and conditions of the SBLC, including any performance requirements or conditions that must be met in order to draw on the SBLC. Failure to meet these requirements could result in loss of funds or other negative consequences. Legal risk: The applicant should seek legal advice to ensure that they fully understand their rights and obligations under the SBLC, as well as any potential legal risks associated with it. This includes understanding applicable laws and...

SBLC is an independent undertaking, the issuer of the SBLC has its own obligation to pay the beneficiary on receipt of a document made by, or on behalf of the beneficiary, which comply with the terms and conditions of the SBLC. Standby letters of credit is “irrevocable” meaning that it cannot be changed or cancelled prior to its stated expiry date without the agreement of all parties. The beneficiary should consider the following when deciding to accept SBLC. A beneficiary must determine its credit rating of the issuer. Where an issuer’s credit rating, size or country risks are unacceptable to the beneficiary, a beneficiary may require an acceptable confirming bank. Fraud risk: There is a possibility of fraudulent SBLCs being issued by unauthorized parties or fake banks. Beneficiaries should thoroughly verify the authenticity and credibility of the issuing bank before accepting an SBLC. Beneficiary should ensure that SBLC wording complies with the requirements of the underlying contrac...

Incoterms rules and documentary credits are integral components of international trade, working together to facilitate smooth transactions by defining responsibilities and providing financial security for buyers and sellers. 1. Overview of Incoterms Rules The Incoterms rules, published by the International Chamber of Commerce (ICC), establish a standardized framework for defining the rights and obligations of buyers and sellers in international contracts for the delivery of goods. These rules: Clarify who is responsible for specific costs, risks, and tasks associated with the transportation and delivery of goods. Serve as a key reference in negotiating international sales contracts to allocate responsibilities for shipping, insurance, and customs clearance. 2. Overview of Documentary Credits Documentary credits, also known as letters of credit, are financial instruments issued by banks to guarantee payment to the seller upon presentation of specified documents. These credits: Ensure fi...