In the general sense and the most known nomenclature, private investment programs are mostly capital raised to expand working capital and the upward trend towards strengthening a company's balance sheet. More times than naught, private trade programs encompass the development of new products as well as technologies. Whereas in this article, we will be discussing Private Trade Programs, which is an entirely different investment channel generating great returns for small and large investors alike. Individuals and companies alike have minimal choices regarding investing in the high-yield markets of Private Trade Programs. Unless they have liquidity in the hundreds of millions, most others who have lesser evaluated amounts to put an investment find themselves sitting on the sidelines without choices. In this article, the expansion of knowledge concerning private trading, MTN, BG, and other instrument facets will explain why and where individuals are willing to invest from $10M on up. Sometimes, $1M can participate in this Private Trade game as well. Why is there such a demand for investing in Private Trades? From early 1996 to the present, Private Trade Programs' total investment dollars have escalated from a trace-able phase of just over $10 billion in 1996 to a current level of well over $75 billion through the third quarter of 2008. There have been roughly 6,500 private trade programs done through the third quarter of 2008. From a low of fewer than 2,500 in all of 1996, you can see that the interest towards Private Trade Programs gains when markets and the economy as a whole degrades. Institutional investors and wealthy individuals are often attracted to these Private Trade Programs. Large corporations, institutions, certain hedge funds, and high net-worth individual investors have their blocked funds either go into a conglomerated leveraged program or, if individually large enough, enter into a Private Trade Program by themselves. Their blocked funds represent these Private Trade Programs and are an economic stimulus in their own right by the generation of monies that is inevitable from these programs. Often, the derived profits, as well as the leveraged amount of the blocked funds, will go into further capitalization of new companies believed to have significant growth possibilities in industries such for instance: healthcare bio-technologies software/hardware telecommunications and others. These Private Trade Programs add value to these companies and further compel advancements in those particular sectors. Without Private Trade Programs and the profits derived from such, many of the participants of these programs would never launch over the first tier regarding the programs they are included in. Typical Minimum Investment Requirement Private Trade Programs and investing are not easily accessible to the typical investor or corporation unless they are either introduced to the trading platform from a referring client or through a series of referral educational sites where the client can thereafter request admission. Most Private Trade Programs typically accept investors who are willing to commit as much as $25 million to have blocked for leverage. Although some firms have dropped their minimums to $250K, this is still out of reach for most people. Fund of Funds A fund of funds holds the leveraged funds of many private partnerships that invest in private trades. It provides a way for firms and individual participants to increase cost-effectiveness and reduce their minimum investment requirement. Since a fund of funds is leveraging against those original funds, sometimes up to 20 to 50 times, the accumulated return for that specific funds of funds becomes much more lucrative. Besides, because of its size and diversification, a fund of funds has the potential to offer higher returns than you might experience with an individual Private Trade Program; this only holds to those Private Trade Programs that are under the 100 million dollar level though, since most times, the lesser amounts are leveraged through funds of funds or similar means. If it could be considered such, the disadvantage is that there is an additional layer of fees paid to the fund of funds manager. Though typically $10 million and up, Minimum investments can, on occasion, allow $250,000 - $1 million to the respective participants. For those smaller amounts under $10 million, the platform manager may not let you participate unless you have a net worth between $1.5 million to $5 million. Is it worth it? There are several key risks in any Private Trade program. As mentioned earlier, the fees of Private Trade Programs that cater to smaller investors can be higher than you would typically expect with traditional investments, such as mutual funds. With a pre-established return rate on these smaller (less than $100M) funds, usually in the high double to low triple digits, the promulgation of these fees is irrespective and of little consequence to the investor. In a market as volatile as the one we currently face, it is much harder to find streamlined programs that offer little risk. Transferring of investors' funds is not evidenced in these Private Trade Programs at or above $10 million. A block is placed on the client's funds within their account for the trading period's duration. Hence, the safety the client experiences remains secure with the leveraged program they enter.

When investors hear about the opportunity to earn high profits, the first reaction is almost inevitably to assume that the risks must be commensurably high. Otherwise, one assumes that every investor would place funds in such programs. The risk to the investor’s capital in a properly structured Bank Credit Instrument trading program is almost nil. The means employed to eliminate risk vary with the type of program and include: 1. Investor’s funds are deposited in the investor’s name and own account in the trade bank and cannot be removed without the investor’s instruction or hindered in any way. The investor is the sole signatory on the account. The investor does not place his/her funds with the Program Manager or Introducing Broker. The bank holds the funds throughout the investment. 2. Investor gives the bank or the Program Manager a minimal power of attorney, which authorizes the purchase and resale of specific types of bank instruments from a particular category of banks. The Program Manager can have no further influence over the funds. 3. The bank will typically offer a CD, U.S. Treasuries, or a Bank Guarantee, which it holds in custodial safekeeping. These instruments pay a modest money market rate of interest to the investor at maturity (usually one year and one day from the deposit) in addition to any profits derived from the trading program. The investor holds the safekeeping receipt. In instances where the investor purchases and owns the credit instrument, i.e., “direct programs,” ownership is typically limited to a matter of hours, or at most a few days before the instrument is resold. These credit instruments' price is not known to fluctuate significantly, even with sizable changes in interest rates or bond prices. Given these very secure procedures, why then isn’t everyone investing in these programs? There are several reasons: Most programs operate with $100 million or more and are meant for large investors. Relatively few programs have been structured to accept small investments of $1 million or less. The banks bind Program Managers and Investors to stringent confidentiality agreements and; it is challenging to find the Program Managers or Investors willing to disclose their activities. Most programs are operated in the top European banks or domestic branches of top European banks. Therefore, they are harder for U.S. citizens to access, research, and invest in with confidence. Investor behavior depends on “perceived” risk rather than actual risk. While the actual risk may be shallow, the “perceived” risk of a little known and somewhat obscure sounding business dissuades many investors from getting involved. This is especially true because only specialized backroom departments of the bank are involved with these transactions. Most bank officials do not know of them, particularly in the United States. Knowledgeable banking officials are sworn to secrecy and would never divulge this market's existence for fear of disturbing large depositors who would clamor for higher deposit yields. There have also been several highly publicized instances of fraud, which has prompted the SEC and Federal Reserve to issue warnings. Although to our knowledge, no fraudulent programs have been discovered that utilize the secure investment procedures outlined in this report. The fraudulent activities usually arise when investors give up control of their funds to phony trade managers who use Ponzi scheme type payouts like those employed by Madoff. While the risk to principal can be eliminated, there may be no guarantee that the profits will actually be fully earned, i.e., best efforts trading. In some programs, this presents a potential interest or dividend earnings loss from when funds are placed in the program until the date of the first payout. Typically this period is only two to three weeks. In programs for small investors, it can be as long as eight weeks. For large investors, this potential earnings loss presents a real risk. Often, a minimum return secured by a bank guarantee is used to offset this risk factor. Good trading programs are difficult to find, costly, and time-consuming to verify, quickly oversubscribed, and frequently closed before interested investors can arrange the necessary funds. Literally, dozens, perhaps hundreds of programs are offered annually. Many are non-existent repackaging of the same programs by different people or first-time efforts that never get off the ground. The fundamental question - which should be asked by a potential investor when reviewing program procedures - is: “How does this program protect my principal investment from loss?” If complete protection of principal as provided for in the procedures, the potential investor has established a sound basis for moving forward.

In the business, the term "TRADER" is used regularly in speech and writing. Sometimes the word is misused to create perception and gain an unfair advantage..., but this should not be new to you. Not many know what a trader does. One thing sure is that the trader is NOT a magician with a magic wand that can make money out of thin air. Surely not! Experienced traders can generate healthily, sometimes totally astounding, profits for the investor. What is essential to realize and understand is that they do it the old fashioned way, which is the same way asset managers, securities firms, and banks do it; by prudent management of the client's funds. Now we can hear you ask what it is that a trader do? Let's see what services a trader, after signing a contract with the investor, routinely will provide. Arranges for secured, non-principal-depleting credit facilities for trading purposes via the closing bank. Provides access to paper supply contracts (MTN's "AA" credit-related or better) Allows access to exit buyers for 100% of the existing supply contracts Orchestrates the execution of the paper supply contracts for trading via the closing bank (some will say a trading bank) Provides compliance; clearing and settlement support Takes responsibility for invoicing and trading activity Responsible for settlement of profits and weekly accounting Let us have a close look at what a non-principal-depleting credit facility is. The trader typically arranges a credit facility to facilitate the "buy-sell" trading operation with the outcome of a non-restricted credit line held on deposit in a trading account at the closing bank. The credit line is maintained in a non-principal-depleting status at all times. It means that the balance of the cash on deposit plus the value of the AA-rated instruments on deposit in the trading account (at market value) WILL NEVER BE LESS than the total of all proceeds held on deposit in the account, hence the fact that the proceeds from the credit facilities are never put at commercial risk. Nor will the funds (or instruments) used to collateralize the facility in the first place be put at risk. All of this confirms and highlights the secure nature of these situations.

Below we have listed innumerable acronyms, phrases, and other unique terms commonly used in the financing and investment community. Scroll down, it’s a long page, but it will prove invaluable in your journey to success! BCL (Bank Comfort Letter): A letter was written by a bank officer on behalf of a consumer, attesting to the current weight and excellent permanent account holder. BG (Bank Guarantee): A Debt Instrument Issued by Banks (ex. MTN, BG) bank instrument, guaranteeing a certain face value for an investor, while collecting an annual appeal before expiring upon maturity. CD (Certificate of Deposit): A fiscal product offered by banks to account holders who agree to leave their funds on deposit for a pre-defined cycle. This allows investors to assemble a higher annual appeal while securing their money in a low-risk venture. CIS (Client Information Sheet): One of the compliance ID typically required for placement programs. This document questions for basic information such as personal details and line of business the applicant is in. CMO (Collateralized Mortgage Obligation): A finance-backed, investment-grade bond that separates finance pools into uncommon maturity lessons. By making a Collateralized Mortgage Obligation CMO, the bond issuer can assemble a critical hub. Simultaneously, the purchaser gets the bond at a discount from face value and collects annual appeal. Even if these bonds are often found in the placement affair, most of them are worth no more than 10% FV or worthless since the financial crisis hit. DTC (Depository Trust Committee): A third party companionship that provides clearing and settlement services by immobilizing securities and making “book-entry” changes to the ownership of assets. This standard is used in placement programs to conveying/assign assets to a trader from an investor. FPA (Fee Protection Contract): An authoritative document outlining all fees due to intermediaries upon completing a transaction. This is vital for any placement broker to be with you and utilize. ITR (Irrevocable Trust Receipt): A receipt confirming and detailing the deposit of specific assets into a trust. Even if the ITR contains all asset details, banks typically will not assign a value to it since the asset is NOT deposited in a credible bank but rather trust. JV (Joint Venture): An contract between two entities outlining compensation, fees, and the obligations of both parties in family members to a specific affair venture. This is the most common legal organization for placement programs. ​ KYC (Know your Client): The activities of customer due diligence that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. In some cases, this form will substitute for the Client Information Sheet. LOI (Letter of Intent): A letter provided by investors interested in a placement program, defining their unsolicited appeal to enter the investment transaction. This document can also be used for areas further than placement, especially where solicitation laws apply. LTV (Loan to Value): This is the loan value that a bank/lender will provide after evaluating an asset's worth. Usually, this is used for hard/illiquid assets and is confirmed in % in family member to the asset’s appraisal value (Loan/Appraisal Value = LTV %). MTN (Standard Term Note): A tradable and discountable debt instrument issued by banks, collecting an annual appeal before expiring upon maturity with a specified face value. NCND (Non-Circumvention, Non-Disclosure Contract): An contract between two parties defining the boundaries and limitations of their relationship. Typically, this contract is used by placement brokers to “protect” from future circumvention. POF (Proof of Funds): The administer of allowing another individual to, for the interim, show your assets as their own, with the fee needy upon the time it’s utilized. This axiom can also refer to a bank statement, or another fiscal document, proving the assets of a prospective investor. PPM (Private Placement Thought): A formal description of an investment chance produced to comply with innumerable federal securities set of laws. This outlines all details of the “placement” offered, and the obligations of both parties caught up. PPP (Private Placement Program): A investment program that trades discounted bank instruments (MTN/ BG ) for profit in the secondary market. ​ RWA (Ready, Willing, and Able): Axiom used by placement brokers confirming the readiness of an investor to fit supplies and move forward with a chance. This statement can also be made in the form of a document, which some programs may require. ​ SBLC (Stand by Letter of Credit): A document issued as a guarantee of payment by a bank on behalf of a client. This is used as “payment of last resort” if the client fails to fulfill a third party's contractual commitment. SKR (Safe Keeping Receipt): A document produced by a bank on behalf of its consumer specifies all details of an asset and confirms its current deposit existence. T-BILL (Reserves Bill): A small-term debt obligation in the form of an appeal accruing note, backed by the U.S. government with a maturity of less than one year. T-NOTE (Reserves Note): A money-making U.S. government debt wellbeing containing a fixed annual appeal and a maturity between one and 10 years. T-STRIP (Reserves Strip): This is a “zero ticket” bond issued by the U.S government whose yield is based upon the variation between the discounted price it is bought at and its face value at maturity (ex. 10M Note, buy at 85% of face, worth 100% at maturity). VOD (Verification of Deposit): This is a signed document provided by a fiscal institution, verifying an account holder's current weight and history. This is similar to a Bank Comfort Letter (BCL), but the verbiage may be uncommon. ​ OTHER KEY TERMS IN TRADE MARKET Administrative Hold: A term usually referred to by brokers. It refers to the investor’s bank reserving funds in favor of another individual, lacking in fact encumbering or moving the asset. Asset-Backed: Refers to a note or Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument which is collateralized by hard assets, not liquid assets. This can be gems, gold, art, diamonds, or other rare valuables. Assignment: Transferring ownership, or rights to use the collateral, to another individual for a specific cycle of time. Some traders require this for placement funds. Bank Instrument: A debt instrument issued by banks to door critical liquidity, providing an annual appeal and face value for the purchaser. Bank Guarantee BG’s and MTN’s are common examples. Bank to Bank: A phrase typically used by brokers, referring to the verification of assets from the investor’s bank officer to the trader’s/seller’s bank officer. Beneficiary; The individual listed as the owner of a debt instrument, such as standard term notes (MTN’s) or bank guarantees (BG ’s). Best Efforts: This is a term used in any real placement contract. It states that the trader, or investment administrator, will use their best efforts to achieve high profits. For example, a contract may say, “profits will be achieved on a best efforts basis.” Blocked Funds: A general axiom that refers to blocking liquid assets in favor of another self. This is most commonly achieved via Swift MT 760 Broker Chain: Also known as a “daisy chain,” this often-used term describes the “layers” of brokers that one must go owing to before they reach a trader. Unfortunately, there are usually several placement brokers caught up in any deal. ​ Bullet Program: Axiom produced by brokers that describes “small-term” placement programs, gifted high returns in less than 30 days. Cash Backed: Assets backed by cash, making them far more appealing for banks and placement traders. Cash Poor: This refers to an individual that is “asset rich, but cash poor.” Even if they may have millions in hard assets, they may have modest to no liquidity to engage in innumerable transactions. ​ Circumvention: Cutting out the people who introduced you to the chance or broker, with no intent to reward them if you are successful. Collateral: An asset guaranteeing the line of credit the bank gives, which can be seized upon defaulting from the loan terms. Bank instruments, cash, and Swift MT 760 Blocks your Funds in Favor of Another MT 760s are examples. Commission: Payments that can be earned by introducing a benefit provided to a prospective client. ​ Commitment Holder: An individual/institution who is contractually constrained to buy a Debt Instrument Issued by Banks (ex. MTN, BG) bank instrument at an agreed-upon value. Lacking “prior commitment,” the seller of the Debt Instrument Issued by Banks (ex. MTN, BG) bank instrument would never have bought the note because their intent was trading for profit. This term is also similar to the axiom “exit buyer.” Compliance: The administer of carrying out due exactness on a new placement investor. At this time, the investor must complete the required documentation, usually referred to as the “compliance package.” Corporate Resolution: A compliance document that questions the client to formally state their relationship to the affair entity they speak for. Cutting House: Term referring to a bank that makes, issues, and backs discounted bank instruments. The instruments are “cut” and sold to traders at discounts, who then sell them at a higher price to “exit buyers.” Discount: The thought that bank instruments can be bought at a discount from face value, leave-taking the chance to profit from the resale or the variation between face. Due Exactness: Axiom referring to the administer of qualifying people by verifying and investigating their background. This is used mutually by placement traders and investors. Escrow: An escrow benefit is a licensed and regulated companionship that collects, holds, and sends money according to conditions specified by both the consumer and benefits provider. Once the conditions of the consumer are met, funds are at once released to the benefit provider. Typically, in the placement affair, escrow is used to pay upfront fees for “sketchy” services such as leased bank instruments, funding opportunities, and others. Euroclear: The world’s largest settlement system for securities transactions, covering bonds and equities, as well as bank instruments. This vital and efficient standard allows transactions to be concluded in the least while ensuring safety for both the buyer and seller of the asset. Exit Buyer: A term used very often, referring to the “buyer in place” purchasing the Debt Instrument Issued by Banks (ex. MTN, BG)”>bank instrument at a higher value from the current owner. Fishing: When a “prospect” contacts a placement broker with modest to no intent to go forward, but plenty of detailed questions to “fish” for information. Free and Clear: Also known as “unencumbered,” it means there are no liens or current debt obligations associated with that particular asset. Fresh Cut: Axiom referring to a recently issued Debt Instrument Issued by Banks (ex. MTN, BG) bank instrument has had only one owner over its existence. Usually, they are accessed at a steep discount from the face. Funding: A shorter way to allusion “project funding,” usually referred to by those with an insufficient hub to fund their project owing to placement programs. Gate-Keeper: An individual who claims to be “direct” to a trader with a placement program. Hypothecate: The administering of assigning a monetary value to an illiquid asset and then extracting liquidity in the form of a loan, using the illiquid asset as collateral. In-Ground Assets: Land areas that have been appraised based upon ecological assessments of the assets which lie beneath. Many in the placement affair try to enter programs with land containing precious metals, energy equipment, and more. Unfortunately, most have no luck due to the current worldwide liquidity crisis and the high dig costs to detach the asset. Intermediary: Anyone caught up in a placement transaction, either owing to introduction or compensation, who is NOT the trader or client. Joker Broker: Term used to describe inexperienced placement brokers who do nothing but waste your time. Junk Bond: A bond issued by companionship or an institution with poor fiscal integrity makes the bond effectively worthless. Some examples which placement brokers may encounter are Venezuelan bonds, Brazilian bonds, gold bearer bonds, certain corporate bonds, and many others. Ledger to Ledger: This axiom refers to a conveying between two accounts held by the same bank. For example, a trader may have an HSBC account and send the profits to a client with an uncommon HSBC account. This is far more efficient and avoids doable problems associated with outdoor transfers. Letter of Consent: A compliance document required for all placement investors, allowing the trade group to verify the investor’s assets bank to bank. This is also known as the “Consent to Verify.” Line of Credit: Even if it may sound fancy, it’s just a bank loan. Usually, this refers to the loan given to the trader right before trading starts in the placement world. Managed Buy/Sell: Another synonym for placement programs. It refers to the managed buying and selling of bank instruments by a placement trader. Mandate: Another term important someone is “direct” to an investment chance or client. Usually, this term is used by brokers. MT 103: This is an improved version of the first swift MT 100, similar to a wire conveying. Even if it is a direct conveying, the MT 103 has many options that describe conditions and instructions for how the payment should be made. MT 760: This swift thought is used to block funds in favor of someone other than the investor, collateralizing the asset while allowing for loans against it. MT 799: This swift thought is used between banks to converse in written form and is usually referred to as “pre-advice.” Typically, the Swift MT 799 is a Written Thought Bank to Bank”>MT 799 will be needed frankly before the Swift MT 760 Blocks your Funds in Favor of Another”>MT 760 Is issued. Non-Depletion Account: A term used in placement contracts that guarantees the client's funds will never be depleted by the trader. Non-Solicitation: A compliance document that protects the consultants by having the investor-state they were not solicited. Paper: A synonym used by placement brokers referring to bank instruments such as bank guarantees or standard term notes. Paymaster: An individual voted by intermediaries will accept all commission payments on a placement transaction and then deliver them by the contract between the parties. This can be an attorney, one of the brokers, or anyone else the intermediaries feel comfortable with. Participant: An individual who, with permission, represents the assets/services of another self, entity or themselves, by executing all contractual agreements and related obligations. Piggyback Program: A newly produced axiom referring to the concept of “pooling” investors to meet the minimum hub supplies of a placement program. For example, 10 investors with 10M would try to meet the 100M minimum, which most placement traders require. Ping: This term refers to a type of placement program which allows investors to leave funds in their account while the trading bank verifies the full weight is still present on a daily or weekly basis. By all accounts, traders can draw a loan against this “ping”/verification of funds and start trading on the client's behalf. Beware of these programs, as most never go as promised. Platform: Another synonym for placement programs, which refers to the corporate organization of the trade group. Power of Attorney: A document signed by the account holder gives authority for someone to act on their behalf, as specified in the contract. Program Administrator: An individual who claims to be “direct” to a trader with a placement program, accepting all applications and questions from prospective investors. Promissory Note: In the end, it’s an IOU given from one party to another, stating debt refund obligations and terms. In all actuality, it is really worth nothing to third parties. Seasoned: Common term that refers to bank instruments, such as standard term notes (MTN’s) and bank guarantees ( Bank Guarantee”>BG’s), which several uncommon beneficiaries over their existence have owned. Shopping: When an expressive/broker sends out an investor’s compliance package to several “program managers” simultaneously. This is momentously frowned upon and can ruin relationships with real traders. Slightly Seasoned: A Debt Instrument Issued by Banks (ex. MTN, BG) bank instrument has been traded, having more than one owner over its lifespan before maturity. This is usually a Debt Instrument Issued by Banks (ex. MTN, BG) bank instrument which is discounted moderately, sold at a value of 70-85% of face. Swift: A system of interaction between banks, allowing account holders to block, conveying, or assign assets as per their question. Examples are the swift MT 100, MT 103, Swift MT 760 Blocks your Funds in Favor of Another”>MT 760, and Swift MT 799 is a Written Thought Bank to Bank”>MT 799. TTM - Table-top Meeting: A term that refers to a face to face meeting between a buyer/investor and a seller/trader. Trade Program: A synonym of the term “placement program,” this axiom is often substituted by brokers in the affair. Trader: A self directly relates to a bank that is issuing discounted bank instruments, which will later be sold to a pre-defined “exit buyer” at a higher value. Trading Bank: This is the bank where the trader receives the collateral, or assignment thereof, from the investor. Also, this bank provides a line of credit to the trader. ​ Unencumbered: This means the referenced asset has no liens or debt obligations to any third party.

What are Offshore Companies? An offshore company is a company that does not conduct substantial business in its country of incorporation. They are sometimes known as non-resident companies. BENEFITS Offshore companies may bring several benefits to individuals or companies. Taxation - businesses may be structured so that profits are realized in ways that minimize their overall tax liability. Simplicity - except for regulated businesses, such as banks or other financial institutions, some jurisdictions make it relatively simple to set up and maintain companies. Reporting - the level of information required by the registrar of companies varies from jurisdiction to jurisdiction. Asset protection - it is possible to organize assets and transactions so that assets are shielded from future liabilities. Anonymity - by carrying out transactions in the name of a private company, the underlying principle's name may be kept out of documentation. Having said that, current anti-money laundering regulations often require banks and other professionals to look through structures. Thin capitalization - offshore jurisdictions tend not to impose "thin capitalization" rules on companies (except for regulated entities such as banks and insurance companies), allowing them to be formed with a purely nominal equity investment. Financial assistance - offshore companies are usually not prohibited from providing "financial assistance" to acquire their own shares, which avoids the need for "whitewash" procedure in certain financial transactions. Offshore Banking An offshore bank is a bank located outside the depositor's country of residence, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These advantages typically include: Greater privacy (see also bank secrecy, a principle born with the 1934 Swiss Banking Act) less restrictive legal regulation Low or no taxation (i.e., tax havens) Easy access to deposits (at least in terms of regulation) Protection against local political or financial instability While the term originates from the Channel Islands "offshore" from Britain, and most offshore banks are located in island nations to this day, the term is used figuratively to refer to such banks regardless of location (Switzerland, Luxembourg, and Andorra, in particular, are landlocked). ADVANTAGES OF OFFSHORE BANKING Offshore banks provide access to politically and economically stable jurisdictions. This may be advantageous for those residents in areas where there is a risk of political turmoil who fear their assets may be frozen, seized, or disappear (see the corralito, for example, during the 2001 Argentine economic crisis). However, developed countries with regulated banking systems offer the same advantages in terms of stability. Some offshore banks may operate with a lower cost base and can provide higher interest rates than the home country's legal rate due to lower overheads and a lack of government intervention. Advocates of offshore banking often characterize government regulation as a form of tax on domestic banks, reducing interest rates on deposits. Offshore finance is one of the few industries, along with [tourism], in which geographically remote island nations can competitively engage. It can help developing countries source investment and create growth in their economies and redistribute world finance from the developed to the developing world. Interest is generally paid by offshore banks without tax deducted. This is advantageous to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest income. Some offshore banks offer banking services that may not be available from domestic banks, such as anonymous bank accounts, higher or lower rate loans based on risk, and investment opportunities not available elsewhere. Offshore banking is often linked to other structures, such as offshore companies, trusts, or foundations, which may have specific tax advantages for some individuals. Many advocates of offshore banking also assert that the creation of tax and banking competition is an advantage of the industry, arguing with Charles Tiebout that tax competition allows people to choose an appropriate balance of services and taxes. However, critics of the industry claim this competition as a disadvantage, arguing that it encourages a "race to the bottom" in which governments in developed countries are pressured to deregulate their own banking systems in an attempt to prevent the offshoring of capital.

WHAT IS SWIFT? SWIFT stands for the "Society for Worldwide Interbank Financial Telecommunication." SWIFT is a network of over 8,300 banks, securities, and corporations located in over 208 countries. SWIFT allows for the exchange of millions of standardized financial messages between financial institutions throughout the world. SWIFT was created in 1973 by bankers who required a more efficient and secure system for interbank communications and transfer of funds and securities. Banks will have a trained SWIFT operator responsible for managing SWIFT messages, both out-bound and in-bound. In smaller Private Banks, this may be one single individual. Larger banks will have SWIFT operator departments. Before SWIFT, all communication between banks was done by telephone, telex, courier, or mail. Before SWIFT, messages between banks contained no instructions past the basic fund's transfer itself; however, SWIFT allows the banks to attach messages and conditions to funding transfers. Each SWIFT message is a condition of Wire Transfer. ​ SWIFT CODES SWIFT Codes are actually very easy to understand, despite their unfathomable appearance. The ‘MT’ at the beginning of the code stands for ‘Message Type,’ and the number indicates one of the many standardized message formats which comprise the SWIFT messaging system. ​ What does the SWIFT MT799 option provide?​ An account with the SWIFT MT799 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds in compliance with the SWIFT Category 7 "Treasury" Markets & Syndication" message types. ​ MT799 is a simple text message sent bank to bank. This is used for a bank to bank proof of funds only. The MT799 is not a form of payment, and it is not a bank undertaking or promise to pay. It is simply a bank to bank confirmation of the funds on deposit, nothing more. What does the SWIFT MT760 option provide? ​ An account with the SWIFT MT760 capability allows bank-to-bank SWIFT electronic verification of the account and will include a blocked funds provision. ​ Correspondent Bank? The correspondent bank appears when The Investor makes a Telegraphic (Wire) transfer. If The investor's bank does not directly correlate with the Trader's bank, the Investor's bank pays through their correspondent (Intermediary) banks. The correspondent banks make a charge for this service. ​ Some Other SWIFT codes with Description Customer Payments and Cheques MT 101 Request for Transfer MT 102 Multiple Customer Credit Transfer MT 102+(STP) Multiple Customer Credit Transfer (STP) MT 103 Single Customer Credit Transfer MT 103+(REMIT) Single Customer Credit Transfer (REMIT) MT 103+(STP) Single Customer Credit Transfer (STP) MT 104 Customer Direct Debit MT 105 EDIFACT Envelope MT 107 General Direct Debit Message MT 110 Advice of Cheque(s) MT 111 Request for Stop Payment of a Cheque MT 112 Status of a Request for Stop Payment of a Cheque MT 190 Advice of Charges, Interest and Other Adjustments MT 191 Request for Payment of Charges, Interest, and Other Expenses MT 192 Request for Cancellation MT 195 Queries MT 196 Answers MT 198 Proprietary Message MT 199 Free Format Message More about Swift MT199 Message bank letter A Swift Message Type 199 Is A Interbank Message Used Between Two Banks To Transmit The Value Of A Bond Or An Skr Or A Free Format Message Engaging 2 Banks Readiness To Move Forward With A Transaction. Usually A Private One. An Mt199 Swift Message Is Easily Explained As A “Chat” Message. Basically, You Use This Format: • When A Transfer Order Has Been Sent, And You Want To “Notify” The Beneficiary Bank To Sort Out Something, • Or To Find Out If Funds Have Been Applied, • Or Basic Other Info. For Example, A MT199 Could Go; "We Refer To Our Mtxxx, Date Xxxxxx, (Input Information Regarding The Orderer And Beneficiary. The amount, Dates, And So On) And Then, Straight To The Point, You Just Simply Type The Text Of Your Question, Or Demand, Or Whatever, Like, “Our Customer Reports Funds Have Not Been Applied Yet; Please Confirm‍ Transfer Status” Kind Regards, (Whoever)" The Other Bank Will Reply To You Using The Same Format (Most Likely), So Sooner Or Later, You Will Have An Incoming Mt199 From Them, Like; "We Refer To Your Mt199 Date Xxxxx And Our Mtxxx Date Xxxx Information, Codes, Etc… “We Are Holding Funds, Request (Whatever Additional Information) To Apply Funds To Beneficiary Minus Our Charges. Please Confirm‍ Iban Number (For Example).” So Basically, A MT 199 Is One Banker Or Security Officer “Talking” To Another. Financial Institution Transfers MT 200 Financial Institution Transfer for its Own Account MT 201 Multiple Financial Institution Transfer for its Own Account MT 202 General Financial Institution Transfer MT 202+(COV) General Financial Institution Transfer (COV) MT 203 Multiple General Financial Institution Transfer MT 204 Financial Markets Direct Debit Message MT 205 Financial Institution Transfer Execution MT 205+(COV) Financial Institution Transfer Execution (COV) MT 207 Request for Financial Institution Transfer MT 210 Notice to Receive MT 256 Advice of Non-Payment of Cheques MT 290 Advice of Charges, Interest, and Other Adjustments MT 291 Request for Payment of Charges, Interest, and Other Expenses MT 292 Request for Cancellation MT 295 Queries MT 296 Answers MT 298 Proprietary Message MT 299 Free Format Message ​ Treasury Markets, Foreign Exchange, Money Markets, and Derivatives MT 300 Foreign Exchange Confirmation MT 303 Forex/Currency Option Allocation Instruction MT 304 Advice/Instruction of a Third Party Deal MT 305 Foreign Currency Option Confirmation MT 306 Foreign Currency Option MT 307 Advice/Instruction of a Third Party FX Deal MT 320 Fixed Loan/Deposit Confirmation MT 321 Instruction to Settle a Third Party Loan/Deposit MT 330 Call/Notice Loan/Deposit Confirmation MT 340 Forward Rate Agreement Confirmation MT 341 Forward Rate Agreement Settlement Confirmation MT 350 Advice of Loan/Deposit Interest Payment MT 360 Single Currency Interest Rate Derivative Confirmation MT 361 Cross Currency Interest Rate Swap Confirmation MT 362 Interest Rate Reset/Advise of Payment MT 364 Single Currency Interest Rate Derivative Termination/Recouponing Confirmation MT 365 Single Currency Interest Rate Swap Termination/Recouponing Confirmation MT 380 Foreign Exchange Order MT 381 Foreign Exchange Order Confirmation MT 390 Advice of Charges, Interest, and Other Adjustments MT 391 Request for Payment of Charges, Interest, and Other Expenses MT 392 Request for Cancellation MT 395 Queries MT 396 Answers MT 398 Proprietary Message MT 399 Free Format Message ​ Collections and Cash Letters MT 400 Collections: Advice of Payment MT 405 Collections: Clean Collection MT 410 Collections: Acknowledgment MT 412 Collections: Advice of Acceptance MT 416 Collections: Advice of Non-Payment/Non-Acceptance MT 420 Collections: Tracer MT 422 Collections: Advice of Fate and Request for Instructions MT 430 Collections: Amendment of Instructions MT 450 Cash Letters: Cash Letter Credit Advice MT 455 Cash Letters: Cash Letter Credit Adjustment Advice MT 456 Cash Letters: Advice of Dishonor MT 490 Advice of Charges, Interest and Other Adjustments MT 491 Request for Payment of Charges, Interest, and Other Expenses MT 492 Request for Cancellation MT 495 Queries MT 496 Answers MT 498 Proprietary Message MT 499 Free Format Message ​ Securities Markets MT 500 Instruction to Register MT 501 Confirmation of Registration or Modification MT 502 Order to Buy or Sell MT 503 Collateral Claim MT 504 Collateral Proposal MT 505 Collateral Substitution MT 506 Collateral and Exposure Statement MT 507 Collateral Status and Processing Advice MT 508 Intra-Position Advice MT 509 Trade Status Message MT 510 Registration Status and Processing Advice MT 513 Client Advice of Execution MT 514 Trade Allocation Instruction MT 515 Client Confirmation of Purchase or Sale MT 516 Securities Loan Confirmation MT 517 Trade Confirmation Affirmation MT 518 Market-Side Securities Trade Confirmation MT 519 Modification of Client Details MT 524 Intra-Position Instruction MT 526 General Securities Lending/Borrowing Message MT 527 Triparty Collateral Instruction MT 528 ETC Client-Side Settlement Instruction MT 529 ETC Market-Side Settlement Instruction MT 530 Transaction Processing Command MT 535 Statement of Holdings MT 536 Statement of Transactions MT 537 Statement of Pending Transactions MT 538 Statement of Intra-Position Advice MT 540 Receive Free MT 541 Receive Against Payment Instruction MT 542 Deliver Free MT 543 Deliver Against Payment Instruction MT 544 Receive Free Confirmation MT 545 Receive Against Payment Confirmation MT 546 Delivery Free Confirmation MT 547 Deliver Against Payment Confirmation MT 548 Settlement Status and Processing Advice MT 549 Request for Statement/Status Advice MT 558 Triparty Collateral Status and Processing Advice MT 559 Paying Agents Claim MT 564 Corporate Action Notification MT 565 Corporate Action Instruction MT 566 Corporate Action Confirmation MT 567 Corporate Action Status and Processing Advice MT 568 Corporate Action Narrative MT 569 Triparty Collateral and Exposure Statement MT 574 (IRSLST) IRS 1441 NRA Beneficial Owners List MT 574 (W8BENO) IRS 1441 NRA Beneficial Owner Withholding Statement MT 575 Statement of Combined Activity MT 576 Statement of Open Orders MT 577 Statement of Numbers MT 578 Statement of Alignment MT 579 Certificate Numbers MT 581 Collateral Adjustment Message MT 582 Reimbursement Claim or Advice MT 584 Statement of ETC Pending Trades MT 586 Statement of Settlement Allegements MT 587 Depositary Receipt Instruction MT 588 Depositary Receipt Confirmation MT 589 Depositary Receipt Status and Processing Advice MT 590 Advice of Charges, Interest and Other Adjustments MT 591 Request for Payment of Charges, Interest, and Other Expenses MT 592 Request for Cancellation MT 595 Queries MT 596 Answers MT 598 Proprietary Message MT 599 Free Format Message ​ Treasury Markets, Precious Metals MT 600 Precious Metal Trade Confirmation MT 601 Precious Metal Option Confirmation MT 604 Precious Metal Transfer/Delivery Order MT 605 Precious Metal Notice to Receive MT 606 Precious Metal Debt Advice MT 607 Precious Metal Credit Advice MT 608 Statement of a Metal Account MT 609 Statement of Metal Contracts MT 620 Metal Fixed Loan/Deposit Confirmation MT 643 Notice of Drawdown/Renewal MT 644 Advice of Rate and Amount Fixing MT 646 Payment of Principal and/or Interest MT 649 General Syndicated Facility Message MT 690 Advice of Charges, Interest and Other Adjustments MT 691 Request for Payment of Charges, Interest, and Other Expenses MT 692 Request for Cancellation MT 695 Queries MT 696 Answers MT 698 Proprietary Message MT 699 Free Format Message Treasury Markets, Syndication MT 700 Issue of a Documentary Credit MT 701 Issue of a Documentary Credit MT 705 Pre-Advice of a Documentary Credit MT 707 Amendment to a Documentary Credit MT 710 Advice of a Third Banks Documentary Credit MT 711 Advice of a Third Banks Documentary Credit MT 720 Transfer of a Documentary Credit MT 721 Transfer of a Documentary Credit MT 730 Acknowledgment MT 732 Advice of Discharge MT 734 Advice of Refusal MT 740 Authorization to Reimburse MT 742 Reimbursement Claim MT 747 Amendment to an Authorization to Reimburse MT 750 Advice of Discrepancy MT 752 Authorization to Pay, Accept or Negotiate MT 754 Advice of Payment/Acceptance/Negotiation MT 756 Advice of Reimbursement or Payment MT 760 Guarantee When banks interact with each other, they use special codes that indicate specific actions that the other bank should take. One of these codes is MT760, which places a hold on a certain amount of money in a client’s account to ensure they can’t spend it. This type of MT760 bank guarantee can help you prove that you have a certain amount of assets so you can get a loan or enter into another type of financial agreement without actually giving you access to the funds. MT 767 Guarantee Amendment MT 768 Acknowledgment of a Guarantee Message MT 769 Advice of Reduction or Release MT 790 Advice of Charges, Interest and Other Adjustments MT 791 Request for Payment of Charges, Interest, and Other Expenses MT 792 Request for Cancellation MT 795 Queries MT 796 Answers MT 798 Proprietary Message MT 799 Free Format Message The MT-799 is a free format SWIFT message type in which a banking institution confirm‍s that funds are in place to cover a potential trade. On occasion, this can be used as an irrevocable undertaking, depending on the language used in the MT-799, but is not a promise to pay or any form of bank guarantee in its standard format. The function of the MT-799 is simply to assure the seller that the buyer does have the necessary funds to complete the trade. What does the SWIFT MT-799 option provide? An account with the SWIFT MT-799 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds compliance with the SWIFT Category 7 “Treasury Markets & Syndication” message types. Often there is a misconception that a particular circumstance requires a SWIFT MT760message when the SWIFT MT-799 format provides the required bank confirmation for the application. There is a $1 million minimum account size for a SWIFT MT-799, and additional costs apply. The MT-799 is usually issued before a contract is signed before a letter of credit or bank guarantee is issued. After the seller’s bank has received the MT-799, it is then normally the seller’s bank's responsibility to send a POP (proof of product) to the buyer’s bank, at which point the trade continues towards commencement. The actual payment method commonly used is a documentary letter of credit or an MT-103 (wire transfer), which the seller presents to the issuing or confirm‍ing bank along with shipping documents. Once the bank confirms‍s the documents, the seller is then paid. An alternative method is to use a bank guarantee in place of a letter of credit. It is normally at the seller’s discretion which method of payment is used. ​ Travelers Cheques MT 800 T/C Sales and Settlement Advice [Single] MT 801 T/C Multiple Sales Advice MT 802 T/C Settlement Advice MT 824 T/C Inventory Destruction/Cancellation Notice MT 890 Advice of Charges, Interest and Other Adjustments MT 891 Request for Payment of Charges, Interest, and Other Expenses MT 892 Request for Cancellation MT 895 Queries MT 896 Answers MT 898 Proprietary Message MT 899 Free Format Message ​ Cash Management and Customer Status​ MT 900 Confirmation of Debit MT 910 Confirmation of Credit MT 920 Request Message MT 935 Rate Change Advice MT 940 Customer Statement Message MT 941 Balance Report MT 942 Interim Transaction Report MT 950 Statement Message MT 970 Netting Statement MT 971 Netting Balance Report MT 972 Netting Interim Statement MT 973 Netting Request Message MT 985 Status Inquiry MT 986 Status Report MT 990 Advice of Charges, Interest and Other Adjustments MT 991 Request for Payment of Charges, Interest, and Other Expenses MT 992 Request for Cancellation MT 995 Queries MT 996 Answers MT 998 Proprietary Message MT 999 Free Format Message What does the SWIFT MT-999 option provide? To know what an MT999 is, one must be familiar with an MT799; SWIFT classifies both as “free format message.” The difference is that for an MT799, banks must exchange a so-called BKE authenticator…which means a test key is automatically coded into the sent message and decoded at the receiving end. An MT999 is the same, just without this test code. Therefore it’s considered unauthenticated, and MT999 messages have no value whatsoever unless confirmed via a separate test key.

What is a Bank Guarantee? A Bank Guarantee is where one Bank (the Issuing Bank) issues an indemnity to another Bank (the Beneficiary Bank) or directly to a Beneficiary, on behalf of its account holder. The Issuing Bank will expect its account holder to pledge ‘assets’ to the bank for its issue. There are effectively two main types of Bank Guarantees, (1) A Direct Guarantee where the account holder instructs his bank to issue a Guarantee directly in favor of the Beneficiary, and (2) An Indirect Guarantee where a second bank is requested to issue a Guarantee in return for a counter-Guarantee. In this case, the Issuing Bank will indemnify losses made by this second bank in the event of a claim against the Guarantee. A Bank Guarantee is considered a “Demand Guarantee” and as such is governed by the International Chamber of Commerce (ICC) Uniform Rules for Demand Guarantees (URDG). Some Guarantees are written to guarantee rental payments; some are written to guarantee payments upon the meeting of certain conditions. Some are even issued to guarantee loans and credit lines. All of them are written for a specific purpose to a specific party. Each Bank Guarantee will be worded for the purposes it is intended. Some may be ‘callable upon demand,’ or some may only be ‘callable’ when the Beneficiary provides notice of satisfaction of a pre-determined condition. Currently, under the new Uniform Rules for Demand Guarantees (URDG 758), an underlying contract should be provided that states clearly the purpose of the Bank Guarantee and forms part of the Guarantee, for example, a Rent Agreement or Payment Obligation. Characteristics of Bank Guarantees Some important characteristics of Bank Guarantees should be noted: Bank Guarantees are written specifically for a purpose, where an account holder will instruct his bank to issue a guarantee to another bank on behalf of their account holder. The bank will hold adequate assets of the account holder as security for the Bank Guarantee. They cannot be bought or sold. They do not carry CUSIP or ISIN numbers and are not tradable securities. They are issued for a specific time period. Upon Expiry, Bank Guarantees are terminated; they are not traded. A Bank Guarantee has no end value and does not accumulate any investment element or maturity value. They should not be considered as ‘investment notes.’ They should not be ‘touted’ on the open market as the issue of a Bank Guarantee is between closed parties (the Issuer and Beneficiary only). Banks do not issue them to raise money and should not be confused with Medium Term Notes (MTNs). The strength of a Bank Guarantee is limited to the financial standing (and rating) of the Issuing Bank. Issuing A Bank Guarantee Any person or a corporate entity with an account held at a mainstream bank can apply to issue a Bank Guarantee. Provided they hold adequate assets to their account, there should be no reason why a Bank will reject an application to issue a Bank Guarantee for bonafide business purposes. The account holder will request his Bank to issue a Guarantee and supply them with the reasons behind its issue. The bank would have a simple application form for this service. The account holder will submit the bank the application containing details of the underlying commitment being entered into whilst supplying the bank with information such as; (a) how long the Guarantee should be for, (b) any conditions on the payment, (c) the amount and currency, and of course (d) details of the Beneficiary and their bank details, etc. The Bank, in turn, will request that the account holder enters into some form of pledge agreement with them. This means that before the bank agrees to issue a Guarantee, the Bank would require a pledge or lien over the account holder's assets to secure the Guarantee. The assets acceptable for a bank to issue a Guarantee are generally liquid assets such as cash at the bank, stocks and shares, and bonds. In other words, assets that can be instantly liquidated. It is increasingly less common for banks to accept less liquid assets such as real estate property, although the decision to accept the asset is ultimately that of the bank. In essence and for example, if an account holder wanted to issue a third party with a Bank Guarantee for US$50 million, it would be necessary to pledge cash, stocks, or bonds to his bank for a minimum of this amount. It is improbable that a bank would agree to issue a Guarantee on behalf of their account holder without holding assets of equal or higher value. It is ‘for value received…..’. Once the bank has charged, lined, or blocked the assets on the account holder's bank account at the bank, the same bank will issue a Guarantee by their account holder's specifications. The Issuing Bank will remit the Bank Guarantee to the Beneficiary Bank initially by SWIFT. See SWIFT Normally, the Bank may pre-advise the Beneficiary Bank by sending a SWIFT MT799, which is only a notice outlining the Issuing Banks instructions to remit a Guarantee or verify information in advance of the issue. The Issuing Bank will then send the Bank Guarantee also by SWIFT MT760. See MT799 and MT760. Most banks will also send an original paper copy (which takes the appearance of a letter) by post to the Beneficiary Bank. It is courteous for the Beneficiary Bank to remit a message or letter back to the Issuing Bank confirming its safe receipt and acknowledgment. Receiving A Bank Guarantee If you are lucky enough to have a Bank Guarantee issued to you, you will certainly know what it is for. Most commonly, landlords may receive Bank Guarantees for rent deposits from their tenants, for example. If you have entered into a separate contract for an investor to issue you a Bank Guarantee to secure a credit line, then you would have certainly executed contracts with them by this stage. It is improbable that a Bank Guarantee will pop onto your bank account by surprise! If you do receive a Bank Guarantee and have no idea why you should contact your bank immediately. In receiving a Bank Guarantee, your bank will generally notify you and send you a copy of it (normally a SWIFT terminal printout) for your information. They will also inform you that it is verified and valid and will await your further instructions. If you plan to receive a Bank Guarantee, you must bank with a multi-national bank that understands them and can offer you a ‘private’ banking service. Generally, we would advise working with Swiss Banks who operate the procedure well. If you intend to receive a Bank Guarantee from an ‘investor’ to secure a credit line or loan, it is important to negotiate this facility with your bank before the Bank Guarantee arrives. This will save time and expenses. The Bank Guarantee will normally be posted to a separate account in your name that the bank will open upon its arrival. It will be held on this account until it is either called for payment or it expires. Financial Bank Guarantee and Performance Bank Guarantee It helps to have a third party’s vetting for your business. When running a business, you might come across a situation where your client may ask you to provide a third party's financial guarantee. In such circumstances, approach your bank and ask it to stand as a guarantor on your behalf. This concept is known as a bank guarantee (BG). This is usually seen when a small company deals with a much larger entity or even a government across the border. Let us take an example of a company, XYZ, bags a project from, say, Ethiopia's Government to build 200 power transmission towers. In this case, companies all over the world would have applied. The selection would be made based on the lowest cost and track record as submitted in the proposal form. However, the government has limited ability to assess all companies for financial stability and creditworthiness. To ensure the project is done satisfactorily and on time, the government puts a condition that company XYZ will have to furnish a guarantee given by one or more banks. In banking nomenclature, company XYZ is an applicant, its bank is the issuing bank, and Ethiopia's Government is the beneficiary. Usually, the BG is for a specified amount, a percentage of the total money required for the contract. Obviously, the bank will not just issue such a guarantee with its own due diligence. The bank does its own thorough analysis of company XYZ's financial well-being to assess the amount of guarantee it can issue. After all, the bank is at risk, too, in case the client defaults. This amount is called a limit. Here too, there is a catch. The bank will issue a guarantee provided the company has not exceeded its overall limit for BGs. And if the Government of Ethiopia is not satisfied with the contract's performance at a later date, it can invoke the BG. In this situation, the bank will have to release the BG amount to the government immediately. BGs can be broadly classified into Performance and Financial BGs. As the name suggests, Performance BGs are the ones by which the issuing bank, also known as the Guarantor, guarantees the applicant's ability to perform a contract to the satisfaction of the beneficiary. VARIATIONS Let us continue with our earlier example to understand the different types of performance BGs. XYZ might need to give a BG that guarantees it has the capability to do the project on winning the bid. This ensures only serious bidders are in the fray for the project. This is called a bid-bond guarantee. XYZ also might be getting an advance payment for buying materials, etc. Again, it will have to furnish a BG to the extent of the advance, called an advance payment BG. To secure the project even further, the Government of Ethiopia might insist on stage payment guarantees. This would have milestones like 20 percent, 40 percent, etc., and a period in which these have to be done. As and when XYZ does that part of the work, the BG would expire, thus freeing its limits with the bank (banks also charge for these services, typically as a small percentage of the BG amount, even as little as 0.05 percent). Another interesting use of the performance BG is in importing materials into the country. In this case, an importer might want to contest the amount of duty levied by the customs, and until the duties are paid, the goods are not released. In this case, the importer can present a BG for the amount of the duty (also known as customs guarantee) and get his goods released. Once the final decision is taken, the import duty is paid, and the BG is released. The other broader types of BGs are financial guarantees. These are used to secure a financial commitment such as a loan, a security deposit, etc. For example, guarantees of margin money for stock exchanges. These are issued on behalf of brokers instead of the security deposit that needs to be paid when becoming a member of the exchange. The applicant, XYZ, has to prove creditworthiness only to one party, his bank, and can bid for projects worldwide. The beneficiary, the Government of Ethiopia, does not have to analyze how financially sound the companies are and knows that in case something goes wrong, the bank will pay him.