Fraud And Risk ControlL In Letter Of Credit Transactions

Letter of credit has been widely used in international trade as a effective settlement tool in these days. In fact it is an arrangement of payment, involving a series of contract payment terms. Nowadays more than 70 percent of international trade has been done under letter of credit. As a result letters of credit is playing an important role in international trade. In the macro environment like this, our country’s export-import companies and banks involved in international settlement are all facing with tremendous opportunities. But there are still a variety of risks existing there, especially the frauds in letter of credit transactions. These frauds not only have seriously harmed the smooth development of letter of credit transactions, but also have disrupted the international financial orders, affecting people’s confidence in the modern financial settlement systems. These frauds make all parties involved in letter of credit transactions loss money and limit our country’s further economic development. There are significant meanings in study the risk control against the fraud in letter of credit transactions. It will help us to identify and prevent fraud in letter of credit transactions. It will lead people to face risk lies in letter of credit, strengthen preventive measures, the use of letters of credit toward the right track.In this thesis, Ⅰ do the research not only from the normative aspect but also from the empirical direction. Ⅰ focus on the definition and concept of the letter of credit. Then Ⅰ analyze in the forms fraud in letter of credit transactions. Combined with the specific features and case analysis, Ⅰ explore how to identify these forms of fraud, how to prevent the occurrence of such fraud, protect the interests of the relevant parties, especially from the banks’aspect on how to guard against fraud in letter of credit transactions and avoid losses. At last Ⅰ conclude that the relevant parties under the letter of credit must be careful to follow the norms and professional to deal with the basic principles of the letter of credit business. As an important role in the letter of credit business, the commercial banks should strengthen their internal control management and standardize operational processes in should strengthen cooperation, improve the legislative system, and work together to prevent the occurrence of fraud in letter of credit transactions.