Study Of Credit Fraud

Whereas letter of credit is the most popular settlement instrument in international trade, Letter of Credit Fraud is the thesis of this article. The article starts from the analysis of the characters and principles in the letter of credit system. Referring to many cases on fraud in letter of credit (hereinafter called LC), the article has summarized LC fraud forms and concluded the causes. Through comparative and analytical approaches, based on every country's legal practices and statutes on LC, this article makes a comprehensive and profound study on the problem of LC fraud, and argues about some remedies and prevention methods.LC is a prior settlement method for banking credit. The rules for LC settlement have been determined in the Uniform Customs and Practice for Documentary Credits (UCP) set by the International Chamber of Commerce (ICC). Many countries have been subject to UCP, and their domestic written laws and legal precedents guide the regulations, procedure, remedies and protection methods in the application of LC. This signifies that the system for LC has established all over the world. After inquiring the LC system, we have found three basic principles: "principle of independence", "principle of facial compliance" and "principle of fraud exception". It is just these three principles that support LC to make sure that the international settlement smoothly carries on.While LC inputs "life blood" into international trade settlement mechanism, the massive fraud in LC occurs frequently, which has done harm to the international trade activities. The basic principle of independence in LC causes the possibility of fraud, and there are still other causes to produce fraud.There is no way to eradicate fraud, so that the prompt remedies and advance protection methods are necessary for LC security. The main remedies include bank rejection, injunction or freezing order from court, and litigation. Our country should learn from the advanced litigation practices of other countries. This article also gives...