Example of Standard Swift MT760 Delivery.
MT Name= Guarantee/Standby LC Purpose= Issues or requests the issue of a guarantee or Standby LC
A Swift MT760 (MT means Message Type) is a bank-responsible guarantee (LC, SBLC, BG) as well as Blocked Fund Letter issue communicated bank to bank by the sender bank. MT 760 sent upon instructions of its client (applicant) in favor of a particular transactions or country party (beneficiary). I the case of Blocked Fund Your issuing bank will submit a bank to bank message stating that they have blocked funds for a particular time frame specifically for the beneficiary of a recieving bank. Those funds are now an asset of the Beneficiary bank account.
The MT 760 is a swift message used to block funds in favor of someone other than the owner, collateralizing the asset via this message, while allowing for loans and liens against it. For example, most private placements require the investor to send a MT 760 to the trader’s account, allowing the trader to use this swift as a collateral guarantee for their bank. Again, despite what many brokers may claim, this is NOT everything you need to know about the MT 760. Now that you do know the definitions and applications, let’s cover the key points no one ever brings up about the MT 760: the FEES, and the RISKS…First and foremost, the fees for blocking a large amount of funds via MT 760 can be more than you would expect. In most cases, your bank will charge 1-2% of the value being blocked for this service. For example, on a 100M bank instrument this can be 1-2M that the owner must come out of their pocket with, unless they have a special relationship with their bank. If you complete the MT 760 and pay the fees, you should observe everything very closely from that point on. Once the MT 760 has hit the account of the trader, the line of credit should become available within 72 hours. At that time, the trader should be able to make their first bank instrument purchase, and give you a DEFINITE TIMELINE for your first profit disbursement. You may say, “Why do I need to watch this process so closely?” Well, here is the part that most brokers don’t tell their clients…When blocked in someone’s favor, the MT 760 collateralizes assets in the form of a swift guarantee, and by doing so, allows the beneficiary to draw credit against it. This means, if the loan to the “trader” was defaulted on, the bank would seize the collateral and you would be out of your money! Though this scenario is possible, I would consider it rare for two reasons… In today’s world, no bank will loan Millions of dollars to someone they haven’t vetted, no matter what collateral is on hand. Second, the MT 760 is quite rare, and this usually draws attention to the beneficiary of the swift.The main risks of MT760 is Identity theft.
But, be careful, there is always a SPECIAL VERBIAGE necessary if investor don’t want to loose his funds ! It is a bank guarantee with full responsibility from the bank. It means if the beneficiary of the swift call for the funds, the bank must pay immediatly. It is for this reason a very safe verbiage must be indicated in the swift.