In today's electronic world, there are several new instances of sophisticated financial fraud. Some cases are easier to detect, however, in an increasingly uncertain economic environment, mostly because of the unease of the US Dollar and the increasing strength and influence of the Euro. This has resulted in “banking instrument” fraud becoming increasingly common. I decided to write this article because as an international tax lawyer my offices have been receiving more than a dozen requests per month from honest clients looking to make money with a “sophisticated project” simply to discover that the “project” was on par with letters from Nigeria that promise unclaimed fortunes to appear on your doorstep because a dying uncle mentioned you in his will. I also compiled the list below with help from other credible sources I found on the internet.

In general, if you are approached to make a high yield income investment or to become involved in the prime bank investment fraud, then you should carefully look at the documentation that you are asked to sign and always use the advise of an experienced professional such as an accountant or a lawyer.  Such documents are normally filled with meaningless legal gibberish that are relatively easy to spot if you are dealing with fraudsters.

Some of the typical phrases you should look for are set out below. Some of them are meaningless and have no legal definition, but they were inserted into the documents or proposal in order to impress unsuspecting investors:

· Ready Willing and Able
· Prime Bank Guarantees (PBGs)
· Prime Bank Notes (PBNs)
· Guaranteed by Top 100 World Prime Bank
· Unconditional S.W.I.F.T. Wire Transfer
· Freely negotiable, irrevocable, clear SWIFT wire transfers
· Callable Conditional Sight Drafts
· Closing Bank
· Issuing Bank
· Fiduciary Bank
· Bank Menu
· International Banking Days
· ICC (International Chamber of Commerce) 400
· UCC (Uniform Commercial Code) Form references
· Banking co-ordinates
· Fresh cut paper
· Seasoned paper
· Collateral Houses, Collateral Source, Collateral Supplier
· Collateral First Transaction
· Grand Master Collateral Commitment
· Validation of the MCC (Master Collateral Commitment)
· Collateral Purchase Orders
· Collateral Provider
· Instruments delivered free of all liens and/or encumbrances
· Non-circumvention and Non-disclosure agreements
· Irrevocable Pay Order
· Irrevocable, irretraceable commitment of funds to purchase instruments
· Lending Bank, Funding Bank, Closing Bank
· Good clean cleared funds of non-criminal origin
· With full corporate and legal responsibility
· Interest at seven and one half percent, payable annually in arrears
· 5, 10, 20 years etc. plus one week or one day
· Fully binding commercial letter contract
· Client Company Principals
· Transaction Trenches
· Millions or Billions of US dollars with rolls and extensions
· Emissions, remission, commissions and fallout
· Transaction parameters
· There is to be no communication with our bank other than through the normal bank channels, no phone call allowed

If you see two or three of the above all in one document, then you ought to seriously consider whether or not fraud is involved and take reputable independent legal advice.

In the next part we will describe more about the most common fraudulent transactions: “Bank Guarantees” and “Discounted Bank Instruments”.

 

John A. Neocleous is the founder and Managing Partner of NCI Law Group , Neocleous & Neocleous law firm and NCI Finance Group. John has over 14 years of professional experience in the areas of international tax, corporate and criminal law, both as an academic and also as a practitioner in over 50 countries worldwide.