DCW maintains a list of recently-decided court cases involving commercial letters of credit, demand guarantees, and other trade finance instruments.
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Particularly crucial for AML and KYC concerns, LEI facilitates faster access to finances for SMEs. Despite ongoing challenges, it is advocated by industry bodies and regulators as a pivotal tool in advancing global trade.
During the 2007-08 financial crisis, it was realized that a central identification code unique to each financial institution was not available worldwide and each country had different code systems to recognize the counterpart corporation of financial transactions. Therefore, it was impossible for the business parties to identify the transaction details of individual corporations, know the counterpart of financial transactions, and calculate the total risk amount. As a result, it was difficult to assess the risk exposure of an entity and measure market risk. In 2011, regulators of the G20 countries began development of a system in response to the inability of financial institutions to identify organizations uniquely so that their institutions’ cross-border financial transactions could be fully tracked.
Established in 2014, the Global Legal Entity Identifier Foundation (GLEIF) is a non-profit organization based in Switzerland that oversees the operational integrity of the Legal Entity Identifier (LEI) system. GLEIF is managed by the LEI Regulatory Oversight Committee (LEI ROC) which is comprised of representatives from different jurisdictions worldwide. GLEIF regulates the Local Operating Units (LOUs) that are responsible for issuing LEI Codes.
The technical specification for LEI is ISO 17442. An LEI consists of a 20-character alphanumeric string, with the first four characters identifying the LOU that issued the LEI. Characters 5-18 are the unique alphanumeric string assigned to the organization by the LOU. The last two characters are checksum digits. The checksum is a value used to detect errors in data transmission. The LEI code in itself does not provide any valuable information but it is only used to uniquely identify each legal entity.
In the area of international trade, we definitely need the authenticity and identity of the parties engaged in a trade transaction. Knowing that trade is evolving to become a high-tech matter worldwide, parties involved in trade need to be identified by a central registration system. The LEI system is the ideal means to address this challenge.
In the first of his series of DCW articles on major issues surrounding potential revision of UCP, ICC Banking Commission Senior Technical Advisor Dave Meynell examines the concept of negotiation.
Letter of credit cases can reveal a great deal about how the industry's practice rules and standards are viewed and interpreted by the courts.
Issuer First Service Bank moved to dismiss wrongful dishonor complaint brought by World Fuel Services.
When issuing banks insert complex reimbursement terms and self-serving conditions into their credits, it distorts the purpose of the product, causes problems for confirming banks, and drives exporters away from using LCs.
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