📘 Knowledge Base

Bank-to-Bank Instrument Issuance Procedure

(Letters of Credit, SBLCs, Bank Guarantees, MTNs)

📌 Overview

This article explains the official bank-to-bank procedure used for issuing financial instruments such as Letters of Credit (LC), Standby Letters of Credit (SBLC), Bank Guarantees (BG), and Medium-Term Notes (MTN).

This process is used because it is proven, compliant, and eliminates ambiguity, contractual disputes, and unnecessary transaction delays by ensuring that banks communicate directly with banks, using verified contacts and bank-approved verbiage only.

🎯 Purpose of This Procedure

The objective of this structured workflow is to:

• Eliminate misunderstandings between parties

• Avoid rejected or blocked communications

• Prevent contractual conflicts

• Ensure compliance with internal bank risk and AML controls

• Maintain a clear audit trail between institutions

This is a standard institutional practice for high-value transactions.

🧾 Step-by-Step Procedure

🔹 Step 1: Bank Officer Business Card (Client’s Bank)

Requirement:
The client must provide a business card from their bank officer.

Why This Is Required

• Confirms the exact institutional email address

• Verifies the authorized bank officer

• Prevents emails from being blocked by:

  • Bank firewalls

  • Anti-spoofing controls

  • Internal compliance filters

Without the business card attached, interbank emails are frequently blocked and never reach the bank officer.

🔹 Step 2: Client Authorization to Communicate with Their Bank

The client provides written authorization allowing direct communication between banks.

This authorization is already embedded within:

• Client onboarding documentation

• Smart Plan Agreement

• Institutional verification framework

This ensures:

• Lawful authority to communicate

• No breach of confidentiality

• Clear consent on record

🔹 Step 3: RWA (Ready, Willing & Able) Email Initiation

Using the verified bank officer contact, the issuing bank sends an RWA email directly to the receiving bank.

What the RWA Confirms

• Readiness to issue the instrument

• Authority to transact

• Availability of funds or collateral

• Compliance with AML and sanctions screening

The RWA is the first formal interbank document and establishes intent.

✔ Example RWA confirmations and acceptance responses are documented in executed transactions involving U.S. Capital Private Bank

Re_ RWA Email Confirmation

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🔹 Step 4: Receiving Bank Acceptance & Verbiage Issuance

After reviewing the RWA, the receiving bank responds by:

• Confirming acceptance

• Providing their own approved instrument verbiage

• Specifying:

  • Instrument type (LC / SBLC / BG / MTN)

  • Preferred issuing bank

  • SWIFT format (e.g., MT760)

  • Any special clauses or conditions

Why the Receiving Bank Provides the Verbiage

• The wording has already cleared internal risk management

• Acceptance becomes immediate

• No additional compliance delay

Sending bank-generated verbiage first would require the receiving bank to re-submit it to risk, significantly delaying the transaction.

✔ This structure is demonstrated in formal RWA acceptance and MT760 annexures

RWA Acceptance PT Bat

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🔹 Step 5: Issuing Bank Selection

The receiving bank specifies where the instrument must be issued from.

Example:

• If issuance is requested via HSBC London, the issuing bank proceeds accordingly.

Because U.S. Capital Private Bank maintains relationships with top-tier global banks, the requested issuing institution can be accommodated without restructuring the transaction.

🔹 Step 6: Conditional Term Sheet

The receiving bank provides a Conditional Term Sheet, which includes:

• Instrument parameters

• SWIFT routing instructions

• Receiving account details

• Transaction conditions

This completes the technical framework prior to SWIFT transmission.

🔹 Step 7: Bank Invoice & Cost Disclosure

The issuing bank issues an invoice covering:

• SWIFT transmission fees

• Instrument issuance costs

• Correspondent banking charges (if applicable)

The invoice is passed to the client without alteration.

🔹 Step 8: Client Payment & Final Authorization

Once payment is received:

• Treasury authorizes release

• Compliance confirms clearance

• SWIFT transmission is scheduled

🔹 Step 9: SWIFT Transmission & Completion

The issuing bank transmits the instrument via:

• MT760 / MT700 / MT799 (as applicable)

The receiving bank:

• Verifies authenticity

• Confirms receipt

• Posts the instrument internally

The transaction is then complete.

✅ Why This Process Is Used

✔ Eliminates ambiguity
✔ Prevents email security failures
✔ Uses bank-approved wording only
✔ Aligns with internal risk controls
✔ Creates a clean audit trail
✔ Proven in executed transactions

This procedure is institutional-grade, repeatable, and scalable for cross-border banking instruments.

📞 Contact Information

For institutional coordination or procedural clarification:

Email: [email protected]
Website: https://uscapitalprivatebank.com
Phone: +971 52 992 6005