Article 9, UCP 600-Advising of Credits and Amendments

An ‘advising bank’ is the bank that advises the credit or amendment upon request of an issuing bank. For an international transaction, an issuing bank will usually electronically transmit a documentary credit to a bank in the beneficiary’s country with which it maintains a correspondence banking relationship, requesting to advise it to the beneficiary.

A documentary credit is sent to an advising bank usually in the form of MT700 (SWIFT) but it could also be transmitted by telex, fax, email or letters, depending upon the arrangements that are in place between the two banks for advising of an amendments and credit.

Article-9, UCP-600

a. A credit and any amendment may be advised to a beneficiary through an advising bank. An advising bank that is not a confirming bank advises the credit and any amendment without any undertaking to honour or negotiate.

A credit and any amendment may be advise to a beneficiary directly or through an advising bank, in most of the cases it is an usual practice to use an advising bank and that if an advising bank agrees to advise the documentary credit, or any amendment, it advises without any undertaking to honour or negotiate a complying presentation made by beneficiary or on behalf of beneficiary, this sub-article explains us that there is no obligation to advise a credit or an amendment if receives by an advising bank and they may choose to advise at their own discretion.

b. By advising the credit or amendment, the advising bank signifies that it has satisfied itself as to the apparent authenticity of the credit or amendment and that the advice accurately reflects the terms and conditions of the credit or amendment received.

Apparent Authenticity: An instrument of being genuine and being able to be verified and trusted; confidence in the validity of a transmission, a message, or message originator.

Primary responsibility of an advising bank is to check the apparent authenticity of the credit or amendment and completeness which is provided through field 27 in a credit, a letter of credit once receives by an advising bank, one must need to ensure whether the complete credit is received or a part of the credit (which is usually issued in the form of MT701 as the continuation of the credit) yet to be received, the reason of the continuation message may be the big content of a letter of credit, and reason behind why a beneficiary usually wants it be advised thru an advising bank is to ensure that whether the credit or an amendment are not fraudulently issued, complete credit or an amendment received and if any ambiguity or workability issue are there, may be taken care at their end, however, workability check is not one of the responsibility of an advising bank and they do at their own discretion acting as a good bank which also ensure and help them to negotiate later if it is freely available or available with them by negotiation.

An advice of amendment that contains no comment as to the apparent authenticity of the amendment or advice will be deemed to be an indication that the bank has satisfied itself as to the apparent authenticity of the amendment or the advice, there is no need of specific notification while advising the credit or an amendment. All credits or an amendment receive by an advising bank through SWIFT are authenticated.

c. An advising bank may utilize the services of another bank ("second advising bank") to advise the credit and any amendment to the beneficiary. By advising the credit or amendment, the second advising bank signifies that it has satisfied itself as to the apparent authenticity of the advice it has received and that the advice accurately reflects the terms and conditions of the credit or amendment received.

A second advising bank may be a bank utilized by the advising bank to advise the credit or any amendment to the beneficiary, need of a second advising bank arises when there is no direct corresponding relationship between an issuing bank and preferred beneficiary’s bank and beneficiary wants it to be advised through that bank; in that case beneficiary may ask applicant strictly to use their "specific bank" as an advising bank. Another reason could be from a revenue generation perspective and a channel branch may be used by an issuing bank located in other country if no instruction given for an advising bank in letter of credit issuance application.

Main difference between sub-article 9(b) and (c) is; an advising bank satisfies with the completeness and apparent authenticity of letter of credit sent by an issuing bank whereas; a second advising bank ensures completeness of letter of a credit or an amendment as well as an authenticity of an advising bank.

d. A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same bank to advise any amendment thereto.

When a credit has been advised to the beneficiary through an advising or second advising bank, an issuing bank must need to use the same advising bank, and the advising bank must use the same second advising bank to convey the amendment to the beneficiary, reason for this sub-article to avoid confusions between the banks and frauds; In case, freely available credit wherein, an amendment as well advised through bank “A” located in USA, later on another amendment issued by an issuing bank and advised to bank “B” in same country or another country, which will not be aware of the authenticity, completeness and other sanctions, boycott or money laundering checks which may not be performed in credit and first amendment, acquiring the information from other bank before advising the second amendment also may become a challenge if two seperate banks are used to advise a credit and amendment.

e. If a bank is requested to advise a credit or amendment but elects not to do so, it must so inform, without delay, the bank from which the credit, amendment or advice has been received.

There is no obligation on an advising bank to advise a credit or an amendment, If a bank decides that it is not willing to advise an amendment, they must require to inform the bank from which it received the credit or amendment. There is no requirement to indicate the reason(s) for not advising a credit or an amendment. However, such reason(s) may include a breach of any sanction or regulatory requirement, or non-compliance with bank policy.

f. If a bank is requested to advise a credit or amendment but cannot satisfy itself as to the apparent authenticity of the credit, the amendment or the advice, it must so inform, without delay, the bank from which the instructions appear to have been received. If the advising bank or second advising bank elects nonetheless to advise the credit or amendment, it must inform the beneficiary or second advising bank that it has not been able to satisfy itself as to the apparent authenticity of the credit, the amendment or the advice.

Although the main requirement for an advising bank or second advising bank is to determine the apparent authenticity of the credit or an amendment or the apparent authenticity of the advising bank’s; However, in case, one not able to satisfy with the apparent authenticity of the credit or an amendment; must need to inform the issuing bank or advising bank (in case of second advising bank involved), Even though, an advising bank or second advising bank may still advise the credit or amendment mentioning on their cover letter advise clearly that the authenticity has not been satisfied or similar word;.

Important points to note:

Society for Worldwide Interbank Financial Telecommunication (SWIFT) MT700 message usually used for a transmission of a credit, MT701 continuation message in case content of a credit are not able to cover through one advice, similarly MT707 used for an amendment and MT708 is used for continuation message of an amendment. An advising bank uses MT710 to send a credit to second advising bank if SWIFT format is used. 

Other than these dedicated formats; free format (MT799) message may be used as well.