Regulatory Alerts1999-07-19
Added · Updated
Fraud cases relating to letter of credit
The Hong Kong Monetary Authority issued this circular to alert authorized institutions to letter of credit fraud schemes that have resulted in $1.2 billion in losses since January 1998. The document details two primary fraud methods involving false negotiation documents and L/C kiting, while prescribing specific preventive measures such as rigorous credit assessments, authentication of shipping documents, and monitoring of abnormal transaction patterns. Institutions are required to review their internal controls to prevent fraud and are expected to report suspicious cases to the Commercial Crime Bureau to facilitate investigations.
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