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The MT-799
The MT-799 is a format SWIFT message type in which a banking institution confirms that funds are in place to cover a potential trade. This can, be used as an irrevocable 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 project.
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 (proof of product) to the buyer’s bank, at which point the project continues towards closing. The actual payment method commonly used is a documentary letter of credit, 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 A MT-799
The 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 project, 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, Be prepared to put up a an amount of collateral to qualify.
What Does A MT-799 Look Like?
An MT-799 is an automated message sent electronically from one bank to another, In our industry is also known as a bank to bank transaction (V O D verification Of Deposit) 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.
How can I use Proof Of Funds for a commercial Real Estate transaction or other projects? If you have a project for $10,000,000. or more. These are the procedures that we will be requested using a (SBLC, Stand By Letter Of Credit) to facilitate your transaction.
- The Client’s execution of the Principal Agreement, the Client must deposit the initial Fee into the Escrow Account. The Client will be required to provide the necessary documentation to complete the account establishment process. This information will include color copies of photo
- ID’s for all signatories; a second ID including address; Certificate of Good Standing or Incorporation, if applicant is a company; Employer Identification
- Number (if applicable) and Corporate resolutions (if applicable) and social security numbers for individuals. The Client will be a signatory on the account, but will be unable to conduct transactions or encumber the funds in the account in any manner.
- Upon confirmation that the Fee has been deposited by the Client into the Escrow Trust Account, the Proof of Funds Account will be opened in the Client’s name, and funds will be deposited into the POF account in the amount that is in the Principal Agreement.
- The Arrangement Fee is released from the Trust Account when confirmation is provided to the Escrow Agent that the account has been set up in the client’s name, and that the appropriate funds have been deposited as stipulated in the Principal Agreement.
- The Proof of Funds account will remain open for the Client’s use for the period of time stated in the Principal Agreement, and conditionally, may be extended through mutual agreement, and payment by the Client of the Arrangement Fee for such extensions, within five (5) days of the expiration of the current term.
