If It Sounds too Good to be True . . .
Once in a while someone comes up with a transaction that appears to be too good to be true. But instead of asking the right questions and determining the credibility of all parties, greed takes over and naive victims lose a lot of money.
Since the perpetrators of these schemes tend to use the same terminology repeatedly, these terms should raise caution flags. So for the benefit of the readers, an alphabetical list, compiled from numerous sources including the ICC Commercial Crime Services and my bulky file of transaction copies accumulated over the years, follows below. While the terms individually may not cause concern, if more than one of these terms appears in a financial proposal, adhere to caution as the rule.
Terms that Raise Red Flags
- Bank co-coordinator or bank co-ordinates
- Bank hard copy
- Bank to bank transaction
- Certified bank invoice
- Class A Bank
- Closing bank, cutting bank, designated bank, fiduciary bank
- Cutting house
- Discounted letter of credit
- Divisible, assignable and transferable letter of credit
- Fresh cut paper
- Good, clean and non-criminal origin
- ICC 3032 London Short Form
- ICC 3039 London Long Form, or 3039 Format for Standby Letters of Credit
- Irrevocable bank purchase order
- Key tested telex or KTT
- Live prime bank instruments
- Master collateral commitment
- Non-circumvention, non-disclosure
- One-Year letters of credit
- One year one day
- Ten years one day
- Prime bank debenture, guarantee, instruments, and notes
- Prime World Bank or Top Bank
- Ready willing and able
- Roll programme
- Seasoned paper
- Soft probe
- Top world prime banks
- Transaction tranches of tens of millions of dollars
- Window time
- Zero coupon letters of credit
Does anyone care to add to the list? Not every one of these terms constitutes a sure sign of fraud. However, they should raise caution flags and cause one to investigate the credibility of the parties in the transaction.
Amazingly, in spite of the many alerts to these scams, they still exist. Apparently a sufficient supply of naive and greedy individuals, who fall for the scams, keeps them circulating. And this lesson doesn’t even consider the scams perpetrated by letters allegedly coming from Nigeria. Nigeria is worthy of a separate blog of its own.