SWIFT MESSAGE TYPES FOR BANK GUARANTEES

April 26, 2023
1:34 am

SWIFT commonly known as the Society for Worldwide Interbank Financial Telecommunication, is a global messaging network used by banks and financial institutions to securely exchange information and instructions for financial transactions. One of the most common uses of the SWIFT network is for the issuance and transmission of bank guarantees, such as Documentary Letters of Credit (DLCs) and Standby Letters of Credit (SBLCs).

MT700: This message type is typically used for issuing a letter of credit (LC) or a standby letter of credit (SBLC). The process for sending and receiving this message involves the following steps:

The issuing bank sends the MT700 to the advising bank, which then forwards it to the beneficiary.
The MT700 contains details about the LC or SBLC, such as the terms and conditions of the credit, the amount of credit, and the validity period.
The beneficiary then verifies the authenticity of the MT700 and ensures that all of the terms and conditions are acceptable.
Once the beneficiary agrees to the terms, they can then use the MT700 to obtain financing from a third-party bank.

MT710: This message type is used to confirm that documents have been received and reviewed by the issuing bank. The process for sending and receiving this message involves the following steps:

The beneficiary submits the required documents to the issuing bank.
The issuing bank verifies that the documents are in compliance with the terms and conditions of the LC or SBLC and then sends an MT710 to the advising bank.
The advising bank forwards the MT710 to the beneficiary, confirming that the documents have been received and reviewed.
The beneficiary can then use the MT710 to obtain payment from the issuing bank.

MT760: This message type is used to issue a standby letter of credit (SBLC). The process for sending and receiving this message involves the following steps:

The issuing bank sends the MT760 to the beneficiary, which contains the details of the SBLC, such as the terms and conditions, the amount, and the validity period.
The beneficiary then verifies the authenticity of the MT760 and ensures that all of the terms and conditions are acceptable.
Once the beneficiary agrees to the terms, they can then use the MT760 to obtain financing from a third-party bank.

MT799: This message type is used for pre-advice or communication purposes between banks. The process for sending and receiving this message involves the following steps:

The issuing bank sends an MT799 to the advising bank to confirm that a LC or SBLC is in place and that the beneficiary has met the required conditions.
The advising bank then forwards the MT799 to the beneficiary, confirming that the LC or SBLC is in place.
The beneficiary can then use the MT799 as evidence to secure financing from a third-party bank.

Overall, understanding the various SWIFT message types is essential for effectively utilizing bank guarantees such as SBLCs and DLCs. Each message type serves a unique purpose and has specific requirements for sending and receiving. By familiarizing oneself with these message types and their corresponding processes, parties involved in bank guarantee transactions can increase efficiency, reduce errors, and ensure a smooth and successful transaction. As the global financial industry continues to evolve, staying up to date with “SWIFT” message types and their usage will remain a critical aspect of international trade and finance.

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SWIFT MESSAGE TYPES FOR BANK GUARANTEES

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