Bank Guarantee Fraud & How to Avoid It

1 Bank Guarantees in Plain English

A bank guarantee (BG) or standby letter of credit (SBLC) is a written promise from a regulated bank that it will pay if its customer fails to perform or settle. Because the liability sits on the bank’s balance-sheet, a genuine BG or SBLC effectively swaps the buyer’s credit for the bank’s, letting unfamiliar counterparties transact with confidence. Authentic instruments travel over SWIFT as MT 760 messages and follow internationally recognised rulebooks such as URDG 758 or ISP 98.

2 How Fraudsters Create a Fake BG

External forgery is still the most common tactic: scammers copy a well-known bank’s logo and letterhead, draft a polished PDF, invent an MT 760 reference, then demand a small “activation” or “insurance” fee—usually one to three percent of face value—before value can allegedly be confirmed. Because the document never entered the SWIFT network, it has no legal standing even though it looks convincing.

3 Seven-Step, Ten-Minute Verification Routine

Step	What to Do	Time Needed	Fail Result
Licence search	Look up the issuing bank on its home regulator’s register.	< 2 min	Bank not listed – stop.
BIC validation	Check the SWIFT/BIC on swift.com.	1 min	No hit – likely fake.
Pull SWIFT header	Ask your bank to retrieve the MT 760 header.	2 min	No header – message never sent.
Confirm UETR	Field 20 must show a 36-character reference.	30 s	Blank or duplicated – fabricated.
Rule check	Field 40G should cite URDG 758 or ISP 98.	30 s	Missing rules – unenforceable.
Independent call-back	Phone the bank via a number from its public website.	3 min	Bank can’t trace – stop.
Escrow fees	Hold any fees in escrow until value is verified.	—	Refusal – walk away.

4 Behavioural Red Flags Specific to BG/SBLC Scams

• Guaranteed high yields: the instrument is sold as a no-risk investment promising extraordinary returns.
• Countdown pressure: the offer expires within 24–48 hours and must be “activated” immediately.
• Up-front charges: sizeable insurance, registration, or monetisation fees demanded before any bank-to-bank verification.
• Untraceable payment instructions: fees routed to private accounts, fintech wallets, or crypto addresses instead of the bank’s own account.
• Unverifiable signatories: names on the guarantee are not listed as authorised officers when you call the bank’s main switchboard.
• No underlying transaction: the BG/SBLC is presented as free-standing collateral with no clear contract or project behind it.

5 Deep-Dive Due Diligence

After a BG or SBLC clears the basic checks, continue with corporate registry searches, litigation reviews, and reference calls. Confirm the signatories’ authority directly with the bank—not with the email address on the PDF. For large advance payments, insist on escrow: funds are released only after your bank authenticates the MT 760.

6 Why Verification Matters

Forged guarantees are uncommon, but a single fake can wipe out the value of a full shipment or project milestone. Always treat a BG or SBLC as unverified until your own bank or a trusted trade-finance adviser confirms authenticity via the SWIFT network. A few minutes of checks cost far less than the losses triggered by a fraudulent instrument.