MT-799 & MT-999
Submitted by Larry Kortkamp on Wed, 03/24/2010 - 02:23
SWIFT MT 799 - Sample MT-799 PDF
The MT-799 is a free format SWIFT message type in which a banking institution confirms that funds are in place to cover a potential trade. This can, on occasion, be used as an irrevocable undertaking, depending on the language used in the MT-799, but is not a promise to pay or any form of bank guarantee in its standard format. The function of the MT-799 is simply to assure the seller that the buyer does have the necessary funds to complete the trade.
What does the SWIFT MT-799 option provide?
An account with the SWIFT MT-799 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds in compliance with the SWIFT Category 7 "Treasury Markets & Syndication" message types. Often there is a misconception that a particular circumstance requires a SWIFT MT760 message, when in fact, the SWIFT MT-799 format provides the required bank confirmation for the application. There is a $1 million minimum account size for a SWIFT MT-799, and additional costs apply.
The MT-799 is usually issued before a contract is signed and before a letter of credit or bank guarantee is issued. After the MT-799 has been received by the seller’s bank, it is then normally the responsibility of the seller’s bank to send a POP (proof of product) to the buyer’s bank, at which point the trade continues towards commencement.
The actual payment method commonly used is a documentary letter of credit or an MT-103 (wire transfer), which the seller presents to the issuing or confirming bank along with shipping documents. Once the bank confirms the documents, the seller is then paid. An alternative method is to use a bank guarantee in place of a letter of credit. It is normally at the seller’s discretion which method of payment is used.
How Do I Issue An MT-799
The short answer is that you don’t. Approach your bank, and make an arrangement with them to have an MT-799 wired to the seller’s bank. Some banks are reluctant to issue MT-799’s, as these make them liable for the full cost of the trade, which can sometimes be in the millions. A bank will normally not issue an MT-799 without some form of collateral to secure their own interests, so be prepared to put up a hefty amount of collateral.
What Does A MT-799 Look Like?
An MT-799 is an automated message sent electronically from one bank to another, so you won’t really ’see’ an MT-799 at all. The paperwork associated with an MT-799 will vary from bank to bank, though most banks follow a similar format. Sample MT-799 PDF
What Information Do I Need To Send A MT-799?
You will need the following information to send an MT-799.
• Name of the advising bank.
• LC Number.
• LC Amount.
• Tenor of Draft.
• Latest shipment date.
• Person or entity liable for confirmation fee.
• Whether the LC is restricted for negotiation or not.
• A description of the merchandise.
• Port and/or country where product will be loaded.
• Port and/or country where product will be unloaded.
• LC Number.
• LC Amount.
• Tenor of Draft.
• Latest shipment date.
• Person or entity liable for confirmation fee.
• Whether the LC is restricted for negotiation or not.
• A description of the merchandise.
• Port and/or country where product will be loaded.
• Port and/or country where product will be unloaded.
What does the SWIFT MT-999 option provide?
In order to know what an MT999 is; one must be familiar with an MT799, both are classified by SWIFT as "free format message" .. the difference is that for an MT799, banks must exchange a so called BKE authenticator...which means a test key is automatically coded into the sent message, and decoded at the receiving end.
An MT999 is the same, just without this test code. therefore it’s considered unauthenticated, and MT999 messages have no value whatsoever, unless confirmed via a separate test key.
