If It Sounds too Good to be True . . .

Once in a while someone comes up with a transaction that appears to be too good to be true. But instead of asking the right questions and determining the credibility of all parties, greed takes over and naive victims lose a lot of money.

Since the perpetrators of these schemes tend to use the same terminology repeatedly, these terms should raise caution flags. So for the benefit of the readers, an alphabetical list, compiled from numerous sources including the ICC Commercial Crime Services and my bulky file of transaction copies accumulated over the years, follows below. While the terms individually may not cause concern, if more than one of these terms appears in a financial proposal, adhere to caution as the rule.

Terms that Raise Red Flags

Bank co-coordinator or bank co-ordinates
Bank hard copy
Bank to bank transaction
Certified bank invoice
Class A Bank
Closing bank, cutting bank, designated bank, fiduciary bank
CUSIP
Cutting house
Discounted letter of credit
Divisible, assignable and transferable letter of credit
Fresh cut paper
Good, clean and non-criminal origin
ICC 3032 London Short Form
ICC 3039 London Long Form, or 3039 Format for Standby Letters of Credit
Irrevocable bank purchase order
Key tested telex or KTT
Live prime bank instruments
Master collateral commitment
Non-circumvention, non-disclosure
One-Year letters of credit
One year one day
Ten years one day
Prime bank debenture, guarantee, instruments, and notes
Prime World Bank or Top Bank
Ready willing and able
Roll programme
Seasoned paper
Soft probe
Top world prime banks
Transaction tranches of tens of millions of dollars
Window time
Zero coupon letters of credit

Does anyone care to add to the list? Not every one of these terms constitutes a sure sign of fraud. However, they should raise caution flags and cause one to investigate the credibility of the parties in the transaction.

Amazingly, in spite of the many alerts to these scams, they still exist. Apparently a sufficient supply of naive and greedy individuals, who fall for the scams, keeps them circulating. And this lesson doesn’t even consider the scams perpetrated by letters allegedly coming from Nigeria. Nigeria is worthy of a separate blog of its own.