Google+  

Why Is A Swift Mt799 Important?

In the world of finance there are funds moving back and forth continuously between banks and between depositors. Many transactions, especially transactions in the commodities business or import-export businesses there is a need for financial guarantees prior to the consummation of the transaction. There are a number of ways to accomplish this, one is a Swift MT760. However, prior to the MT760 being transmitted, the banks which are involved communicate with one another using a Swift MT799 proof of funds.

As a MT760 is a transaction where the agreed upon amount is frozen by the senders bank and made available to the recipient through his bank, it is very important that the receiving bank know that funds are available to cover the transaction. Depending on the way the message is worded the MT799 can be considered as irrevocable but it in itself is not a promise to pay or any form of financial guarantee. The only reason for having it is to assure the seller side that the buying side possesses sufficient funds to consummate the trade. There is a misconception that there must be a Swift MT760; the fact is the MT799 is the bank confirmation for the application for a MT760.

As a MT799 proof of funds is just that, it is a sent prior to contract signing and before a MT760, letter of credit or other form of bank guarantee is issued. The MT799 is implemented from the seller’s bank, it simply requests confirmation that the buyers bank holds sufficient funds to pay upon presentation. The MT799 can be sent well before the sending of the MT760, often times this can be measured in weeks.

An MT799 proof of funds has no impact on the finances of anyone; this is not the case once the transaction proceeds and the MT760 is sent. At this time the funds that had been said to be in the account are frozen.

All Swift transactions, and there are nine, are done between member banks. As the buyer in a transaction you cannot issue the MT799 to the seller’s bank, this must be done by your bank. There are some banks that are extremely reluctant to issue MT799s without significant collateral to secure their interests.

Be the first to like.

Shares
Share This