2019 - TRANSACTION INVOLVING THE USE OF
A BANK DRAFT
FEBRUARY 1, 2019
Based on the most recent banking rules and regulations there
have been some changes to how the successful use of a Bank Draft (only
acceptable from major banks) must be addressed.
First, the client must prepare all the required Client
Documents on the letterhead of the client (entity or individual as the case
might be) and in the required text and format as provided to the client. These documents include the following:
Letter of
Intent
Confidential
Client Information Sheet
Authority to
Verify (notarized)
Sworn
Affidavit of Asset Owner (notarized)
Passport of
the Signatory (not on letterhead)
Corporate
Resolution (only if the client is an entity)
Attached are the required Client Document
Templates
Second, the bank plays a much bigger role in this
transaction as special documents are required and they must be in the exact
text and format as specified.
BANK LETTER OF COMMITMENT – The Bank Letter of Commitment must be
issued on the full bank letterhead; in the required text and format; and,
signed by two (2) responsible officers of the bank. Please
see the drafted Bank Letter of Commitment in this document. The Bank Letter of
Commitment is the first document that must be issued by the sending bank. This is the document that gets the receiving
bank to agree to the transaction and opens the portal for the receipt of the
balance of the bank documents.
BANK DRAFT – The Bank Draft must be current; must be issued for a
period of 12 months; and, must be made payable to the Funding Source, not to the Client.
This means that the bank will have to re-issue the Bank Draft as
required.
BANK LETTER OF CONFIRMATION – The Bank Letter of Confirmation must
be issued on the full bank letterhead; in the required text and format; and,
signed by two (2) responsible officers of the bank. Please
see the drafted Bank Letter of Commitment in this document. Note that this letter can only be issued
after the Bank Draft has been properly issued with a current date and shown the
Payee as the Funding Source.
DEMAND DRAFT – The Demand Draft must be issued on the full bank
letterhead; in the required text and format; and, signed by two (2) responsible
officers of the bank. Please see the drafted Demand Draft in this
document.
SWIFT MT 110 – The SWIFT MT 110 must be issued from the sending
bank to the receiving bank via the SWIFT System. Please
see the drafted SWIFT MT 110 in this document.
Third, the following steps must be followed in this transaction:
1. The
Client must issue the Client Documents.
2. The
Bank must issue the Bank Letter of Commitment as the first Bank Document.
3. After
the Provider has received and validated all the Client and the Bank Letter of
Commitment, the Agreements will be issued.
One Agreement for the hypothecation of the Bank Draft. One Agreement for the enhancement of the
resulting funds from the hypothecation.
4. The
Bank must then issue the Bank Draft, the Bank Confirmation Letter and the Demand
Draft and provide a copy of each to the Provider.
5. Thereafter,
the originals of the Bank Draft, Bank Letter of Confirmation, the Bank Letter
of Commitment, and the Demand Draft must be overnight delivered, via bonded
courier (such as DHL) to the receiving bank.
6. Upon
receipt of the original documents, the receiving bank will require that the
sending bank issues a SWIFT MT 110 and send it to the receiving bank to
validate the Demand Draft that was sent in original hardcopy.
7. Thereafter,
it will take approximately 7-10 Banking Days to hypothecate the Bank Draft.
(ON THE FULL LETTERHEAD OF THE ISSUING BANK)
DATE: CURRENT DATE
BANK LETTER OF COMMITMENT
TO :
FULL LEGAL NAME OF RECEIVING BANK
FULL LEGAL ADDRESS OF RECEIVING BANK
CITY, COUNTRY
BANK OFFICER :
FULL LEGAL NAME OF OFFICER
EMAIL ADDRESS : OFFICER’S
EMAIL ADDRESS
ACCOUNT NAME :
FULL LEGAL NAME OF ACCOUNT HOLDER
ACCOUNT NUMBER :
ACCOUNT NUMBER
TRANSACTION CODE :
CODE
DEAR SIR:
RE :
BANKER’S DRAFT (DEMAND DRAFT) €500,000,000
WE, THE UNDERSIGNED AUTHORIZED BANK OFFICERS OF FULL LEGAL NAME OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK, DO HEREBY CONFIRM, WITH
FULL BANK RESPONSIBILITIES AND LIABILITIES, THAT WE ARE READY TO ISSUE THE
DEMAND DRAFT, IN FAVOR OF NAME OF FUNDING SOURCE,
OUR BANK DRAFT IN THE AMOUNT OF FIVE HUNDRED MILLION
EURO DOLLARS (€500,000,000) IN THE LAWFUL CURRENCY OF THE EUROPEAN UNION
AND THAT SAID DEMAND DRAFT WILL BE DUE AND PAYABLE ONE (1) YEAR AND ONE (1) DAY
FROM THE ISSUED DATE.
WE FURTHER CONFIRM THAT WE WILL ISSUE OUR IRREVOCABLE BANK
UNDERTAKING TO GUARANTEE PAYMENT AGAINST THIS DEMAND DRAFT IRRESPECTIVE OF ANY
CREDIT RELATIONSHIP THEREOF.
UPON RECEIPT OF YOUR EMAIL AND YOUR ACCOUNT HOLDER’S
INSTRUCTIONS TO YOU TO RECEIVE THE DEMAND DRAFT, WE WILL CONFIRM THIS DEMAND
DRAFT BY AUTHENTICATED SWIFT MT 110, AS SET FORTH IN THE ATTACHMENT TO THIS
DOCUMENT.
PLEASE INFORM YOUR ACCOUNT HOLDER OF THIS EMAIL AND WE LOOK
FORWARD TO YOUR URGENT REPLY IN THIS MATTER AS TIME IS OF THE ESSENCE.
FOR AND ON BEHALF OF FULL LEGAL NAME
OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK,
WITH TELEPHONE NUMBER FULL NUMBER OF BANK.
_________________________
(SIGNATURE)
BY: TYPE NAME OF OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
__________________________
(SIGNATURE)
BY: TYPE NAME OF OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
BANK STAMP OR SEAL
(ON THE FULL LETTERHEAD OF THE ISSUING BANK)
DATE: CURRENT DATE
BANK LETTER OF CONFIRMATION
WE, FULL LEGAL NAME OF BANK,
LOCATED AT FULL LEGAL ADDRESS OF BANK, DO HEREBY
CONFIRM, WITH FULL BANK RESPONSIBILITIES AND LIABILITIES, THAT WE HAVE ISSUED,
IN FAVOR OF NAME OF FUNDING SOURCE, OUR BANK
DRAFT IN THE AMOUNT OF FIVE HUNDRED MILLION EURO
DOLLARS (€500,000,000) IN THE LAWFUL CURRENCY OF THE EUROPEAN UNION FOR
THE PURPOSE OF INVESTMENT.
TYPE OF INSTRUMENT :
CERTIFIED BANKER’S DRAFT
DRAFT NO. :
NUMBER
DATE OF ISSUE :
DATE
DATE OF EXPIRY :
DATE
AMOUNT : €500,000,000
AMOUNT IN WORDS :
FIVE HUNDRED MILLION EURO DOLLARS
APPLICANT :
FULL NAME
MATURITY DATE :
ONE (1) YEAR AND ONE (1) DAY
WE FURTHER CONFIRM THAT THESE FUNDS ARE UNRESTRICTED, GOOD,
CLEAN, AND CLEARED FUNDS, FREE OF ANY LIENS AND ENCUMBRANCES AND THAT THE RULE
OF FULL DISCLOSURE HAS ESTABLISHED THAT THESE FUNDS WERE LEGALLY OBTAINED FROM
NON-CRIMINAL AND NON-TERRORIST BUSINESS ACTIVITIES, FREELY AVAILABLE FOR THE
INVESTMENT AND CAN SERVE AS COLLATERAL TO SECURE ANY LOAN. THIS BANK DRAFT WILL BE CONFIRMED BY SWIFT
MT 110.
WE, THE UNDERSIGNED, BEING DULY AUTHORIZED BANK OFFICERS OF FULL LEGAL NAME OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK, SIGNED THIS DOCUMENT
CONCERNING THIS CERTIFIED BANKER’S DRAFT ON BEHALF OF THIS BANK.
FOR AND ON BEHALF OF FULL LEGAL NAME
OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK,
WITH TELEPHONE NUMBER FULL NUMBER OF BANK.
_________________________
(SIGNATURE)
BY: TYPE NAME OF OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
__________________________
(SIGNATURE)
BY: TYPE NAME OF OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
BANK STAMP OR SEAL
(ON THE FULL LETTERHEAD OF THE ISSUING BANK)
DEMAND DRAFT
WE, THE UNDERSIGNED AUTHORIZED BANK OFFICERS OF FULL LEGAL NAME OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK, ON THE INSTRUCTIONS OF THE
“DRAWEE”, FULL LEGAL NAME OF THE DRAWEE, HEREBY
PROMISE TO PAY TO THE ORDER OF THE “PAYEE”, NAME OF
FUNDING SOURCE, OR ANY BONA FIDE HOLDER OF THIS DEMAND DRAFT, THE SUM OF
FIVE HUNDRED MILLION EURO DOLLARS (€500,000,000),
ON THE MATURITY DATE.
EFFECTIVE PAYMENT WILL BE IN EUROS, THE LAWFUL CURRENCY OF
THE EUROPEAN UNION, WITHOUT DEDUCTION FOR AND FREE OF ANY PRESENT OR FUTURE
TAXES, IMPORTS, COLLECTION CHARGES, LEVIES, OR DUTIES OF ANY NATURE THEREOF.
THIS DEMAND DRAFT IS
PAYABLE AT:
FULL LEGAL NAME OF BANK
FULL LEGAL ADDRESS OF BANK
CITY, COUNTRY
THIS DEMAND DRAFT IS UNCONDITIONAL, IRREVOCABLE, NEGOTIABLE,
ASSIGNABLE AND TRANSFERRABLE AND SHALL RANK PARI PASSU WITH ALL OUTSTANDING
OBLIGATIONS OF THIS BANK.
THIS DEMAND DRAFT SHALL BE GOVERNED BY COUNTRY LAW.
FOR AND ON BEHALF OF FULL LEGAL NAME
OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK,
WITH TELEPHONE NUMBER FULL NUMBER OF BANK.
_________________________
(SIGNATURE)
BY: TYPE NAME OF OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
__________________________
(SIGNATURE)
BY: TYPE NAME OF OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
BANK STAMP OR SEAL
(TEXT AND FORMAT OF
SWIFT MT 110)
SWIFT Input :
MT 110
Sender :
FULL NAME OF SENDING BANK
FULL ADDRESS OF SENDING BANK
CITY, STATE, COUNTRY
BANK
SWIFT CODE
NAME AND TITLE OF BANK OFFICER
OFFICER’S PHONE NUMBER: NUMBER
OFFICER’S EMAIL ADDRESS: EMAIL ADDRESS
ACCOUNT NAME: CLIENT’S NAME
Account Number: CLIENT’S ACCOUNT NUMBER
RECEIVER : Full Bank Name
Full Bank Street Address
City,
State, Country
Bank SWIFT Code
Bank
Officer’s Name
Bank
Officer’s Phone Number
Bank
Officer’s FAX Number
Bank
Officer’s Email Address
Account Name: RECEIVING ACCOUNT NAME
Account
Number: RECEIVING ACCOUNT NUMBER
MT 110 NARRATIVE
-------------------------------------------SWIFT
MESSAGE TEXT ----------------------------------------
PRINCIPAL AMOUNT : €500,000,000 DATE : CURRENT DATE
DATE OF ISSUE : DATE PLACE
OF ISSUE : COUNTRY
MATURITY DATE : DATE ISSUE
NUMBER : NUMBER
WE, THE UNDERSIGNED
AUTHORIZED BANK OFFICERS OF FULL LEGAL NAME OF BANK,
LOCATED AT FULL LEGAL ADDRESS OF BANK, ON THE
INSTRUCTIONS OF THE “DRAWEE”, FULL LEGAL NAME OF THE
DRAWEE, HEREBY PROMISE TO PAY TO THE ORDER OF THE “PAYEE”, NAME OF FUNDING SOURCE, OR ANY BONA FIDE HOLDER OF
THIS DEMAND DRAFT, THE SUM OF FIVE HUNDRED MILLION EURO
DOLLARS (€500,000,000), ON THE MATURITY DATE.
EFFECTIVE PAYMENT
WILL BE IN EUROS, THE LAWFUL CURRENCY OF THE EUROPEAN UNION, WITHOUT DEDUCTION
FOR AND FREE OF ANY PRESENT OR FUTURE TAXES, IMPORTS, COLLECTION CHARGES, LEVIES,
OR DUTIES OF ANY NATURE THEREOF.
THIS DEMAND DRAFT IS
PAYABLE AT:
FULL LEGAL NAME OF BANK
FULL LEGAL ADDRESS OF BANK
CITY, COUNTRY
THIS DEMAND DRAFT IS
UNCONDITIONAL, IRREVOCABLE, NEGOTIABLE, ASSIGNABLE AND TRANSFERRABLE AND SHALL
RANK PARI PASSU WITH ALL OUTSTANDING OBLIGATIONS OF THIS BANK. THIS DEMAND DRAFT SHALL BE GOVERNED BY COUNTRY LAW.
FOR AND ON BEHALF OF FULL LEGAL NAME OF BANK, LOCATED AT FULL LEGAL ADDRESS OF BANK, WITH TELEPHONE NUMBER FULL NUMBER OF BANK.
_________________________
(SIGNATURE)
BY: TYPE NAME OF
OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
__________________________
(SIGNATURE)
BY: TYPE NAME OF
OFFICER
CODE: TYPE OFFICER’S CODE
TITLE: TYPE TITLE OF OFFICER
PHONE: TYPE PHONE NUMBER
EMAIL: TYPE EMAIL ADDRESS
|
