What is International trade fraud

What is International trade fraud?


International trade fraud international trade fraud usually refers to the behavior that one party intentionally fabricates false information or conceals the true information in the process of international trade in goods, shipping, insurance and settlement, and swindles the other party’s goods, money or ships by illegal means.

Categories of international trade fraud

According to the main process of import and export business, international trade fraud can be divided into the following aspects:

1、 International Maritime Fraud

(1) Forged bill of lading. Bill of lading is one of the important documents in international trade and international payment, and it is also an important document of real right in maritime transportation. Therefore, some foreign illegal businessmen forge bills of lading for fraud.

In 1984, a company in China and a company in a foreign country signed a contract for the sale of imported steel, with a quantity of 9000 tons and a price condition of CFR Wenzhou, with a total price of US $2.295 million. The shipper (seller) made up the contents of the contract and collaborated with the owner of cede shipping company in Italy to issue a false bill of lading, which directly caused us $2.295 million in economic losses.

(2) Use of illegal B / L. Mainly through the advance bill of lading, reverse bill of lading or letter of guarantee in exchange for clean bill of lading fraud.

Advance bill of lading refers to the bill of lading issued by the carrier in advance at the request of the shipper when the marine cargo has not been loaded or not loaded at all; reverse bill of lading is the bill of lading signed by the carrier according to the date of loading required by the letter of credit because the actual date of loading of the cargo is later than the date specified in the letter of credit, so that the exporter does not affect the settlement of foreign exchange; the bill of lading delivered by the shipper to the carrier In case of any defect in the main mark, number of packages or appearance of the goods, the shipper shall issue a letter of guarantee and the carrier shall issue a clean bill of lading to facilitate the smooth settlement of foreign exchange, which is to exchange the letter of guarantee for a clean bill of lading. The above three acts are all the illegal acts of the carrier and the shipper conspiring to cheat the third party.

On December 17, 1998, a company was entrusted by a client to sign a contract with an American company for the import of 1500 tons of chemical products. The delivery port is Dashan, South Korea, and the destination port is Jiangyin, China. The latest shipment date is February 25, 1999. According to the routine, the shipping time of this section should be 3-4 days, and the shipment date reported by foreign businessmen by fax is February 24, 1999. Our company reckons that the cargo ship should arrive in Jiangyin before February 28. However, the ship actually arrived at the port of destination on March 4. Through investigation, our foreign trade company concluded that the date of B / l was countersigned by the foreign collusion shipping company, which caused a loss of 500000 yuan to our customer. After negotiation, the foreign party shall compensate the loss of our foreign trade company.

(3) Insurance fraud. The main reason is that the shipowner and the shipper (the seller) deliberately destroy the ship and goods in order to obtain high premium.

In 1986, a company of our country hired “prosperity” ship to carry the imported goods, and then the seller and the ship side insured the high price of the ship and goods, and then sank the ship, and then claimed the loss of 4.1 million US dollars from the insurance company, which also caused a large amount of indirect loss to our import company.

For the international maritime fraud, our foreign trade enterprise should know the credit status and strength of the shipping company in many ways when negotiating with foreign investors, or directly require the foreign party to hire the foreign shipping company with good reputation and strong strength that we are familiar with to carry goods. In addition, we’d better adopt FOB mode when importing goods and CIF or CFR mode when exporting goods. If FOB price is adopted for import, our importer can own the chartering and booking of shipping space. The seller must ship according to our instructions. The carrier shall accept the seller’s goods according to the provisions of the name, quantity, quality, number of pieces, shipping period and loading and unloading port in the transportation contract signed with us. If the goods meet the requirements of the contract, the carrier shall issue a bill of lading. China’s exporters should try their best to export by CIF or CFR, and arrange the shipping companies we know to transport goods, so as to prevent the occurrence of maritime fraud.

3、 International trade settlement fraud

(1) Forge the letter of credit. The main reason is that the foreign buyer, in collusion with some unknown small banks with poor reputation, opened a fake L / C to our export company to defraud us of shipment of goods and fled without payment after obtaining the B / L through the “issuing bank”.

(2) Letter of credit with “soft terms”. Some importers often require the bank to add some “soft clauses” in the L / C that are not easy for the exporter to detect or meet, so as to increase the risk of the exporter, so as to put themselves in a favorable position and require our exporter to reduce the price of the goods. Common soft terms are as follows:

1. The dates stipulated in the letter of credit are tight. The date of L / C business mainly includes the validity of L / C, the latest shipment date of goods and the presentation date of export documents. If the above main dates stipulated in the L / C are relatively short, it will be difficult for our exporter to complete the delivery and presentation of documents within the stipulated time, which will result in the inconsistency of documents and affect the collection of foreign exchange.

2. The requirements of L / C for documents are very strict and complicated. When the importer receives the documents, he will be picky, picky and pick out some unimportant defects as discrepancies. In the face of this situation, it will be more difficult for our exporter to meet the requirements of “document conformity”, which will further affect the safe collection of foreign exchange.

3. The letter of Credit stipulates that an original ocean bill of lading shall be sent by the exporter directly to the importer after shipment. In this way, our exporter will lose control of the goods, and the buyer can take the goods without paying the ransom order.

4. The letter of Credit stipulates that the buyer’s notice of receipt shall be one of the documents presented by the seller for negotiation. The buyer’s purpose is to make the seller unable to settle the foreign exchange without receiving the notice of receipt. Then the buyer will ask the seller to reduce the price of the goods according to the notice of receipt.

5. Using L / C clauses to increase the export cost of exporters. When the letter of Credit stipulates that all bank charges shall be borne by the exporter or all bank charges outside the importing country shall be borne by the exporter, the above clauses are very unfavorable to the exporter. It is impossible for the exporter to know exactly the bank charges involved in the L / C business, which will increase the expenses and export costs.

(3) The issuing bank is picky when examining the documents, refuses to pay for the goods and issues the documents without authorization. On September 12, 1994, a grain and oil import and export company of our company and Hong Kong bides Enterprise Co., Ltd. reached a transaction confirmation on the sale of milk flower kidney bean. On September 24, the Bank of Holland opened a letter of credit in favor of grain and oil company. Our grain and oil company will ship the goods before the time of shipment stipulated in the L / C and submit the full set of documents that meet the requirements of the L / C to the negotiating bank within the validity period stipulated in the L / C on October 10 of the same year. On October 17 of the same year, ABN AMRO put forward the so-called “non conformity point” to the negotiating bank and refused to pay, and released the bill to the buyer without authorization. In the end, our company took ABN AMRO to court and won the case.

(4) Fraud in settlement methods such as wire transfer, letter transfer or D / P. This kind of settlement method is often used in export business because of its low cost and convenience. However, this kind of payment is entirely based on the reputation of both parties, which is very risky. For telegraphic transfer and mail transfer, the biggest risk is that the seller refuses to pay or the seller does not deliver the goods after the buyer takes delivery of the bill of lading and other documents of title to the buyer. For D / P, the buyer is likely to ask the seller to reduce the price of the goods or to change the D / P to D / A and further cheat the seller. Therefore, in the import and export business, unless there is a special agreement or long-term cooperative relationship, the above settlement methods should not be used.

Causes of international trade fraud

There are many reasons for international trade fraud, which can be summarized as follows:

1. Interest driven. Financial obsession is the root cause of trade fraud. As Mr. Yang Liangyi, an expert in civil and commercial law of Hong Kong, pointed out in the explanation of cases of fraud in bills of lading, speculation and fraud are the ways to get rich. The well-organized maritime fraud often brings good luck to the cheaters? The success of fraud and the subsequent desire for continuous fraud in the summer of prosperity, the vicious circle is endless. Then came the victims’ cries or the confusion of international trade. Some people describe “the bill of lading is a key to open the floating gold warehouse, which shows how profitable it is to forge the bill of lading.”.

2、 There are always loopholes in the current international trade. The loopholes in the current international trade practices give criminals a chance. For example, in the current international trade, a large number of L / C settlement methods are used, while the current 1993 Revision of the uniform practice for r-document L / C stipulates that l / C is a pure document business, and all aspects concerned deal with documents rather than goods. As long as the beneficiary provides the documents which are in full conformity with the stipulations of the L / C, the issuing bank shall be obliged to pay, regardless of the authenticity of the documents: even if the documents are forged by the seller, the bank shall also be obliged to pay for the documents which are in conformity with the surface of the L / C. This feature of L / C provides the seller with the advantage of fraud by using forged documents.

3. It is difficult to control the performance of international trade contracts. International trade is based on the mutual sincerity and trust between the two parties. Generally speaking, it is very difficult for one party to cheat the other openly in the negotiation stage of international trade platform. However, in the stage of performance after the conclusion of the Taiwan strait cooperation, the buyer and the seller are far away from each other, live in different places, do not meet each other, and perform their respective obligations. Therefore, to a large extent, they act on their own will. It is difficult for either party to control the other party’s performance, which provides the possibility for one party to cheat the other party objectively.

4. The fight against international trade fraud is not effective. Although the fraud of the international lawbreakers has seriously damaged the normal international trade order, caused huge trade losses, and aroused great indignation in the international economic and trade circles. However, due to the fact that international trade fraud is a kind of non violent illegal act, people do not think it is a serious international criminal act, which has not attracted enough attention. In 1980, the United Nations Conference on Trade and Development held two conferences in Geneva to discuss international trade fraud. However, due to the great divergence of views, it failed to reach any agreement on combating international fraud. Although some countries and regions have formulated laws and regulations on the punishment of fraud, due to the fact that international trade fraud is carried out in two or more countries or regions, and the laws of each region can only be in its own country, and the jurisdiction within its own region, there are legal obstacles in the fight against cross-border trade fraud.

Prevention of international trade fraud

First of all, when our foreign trade enterprise negotiates the export contract with the foreign party, it shall require the importer to take the bank that has the agency relationship with our bank or the internationally famous and reputable big bank as the issuing bank. For letters of credit from other banks, our bank shall identify the authenticity by checking the seal, secret pledge, etc. And it’s better to ask well-known big banks to add insurance to the L / C opened by foreign banks.

Secondly, we should carefully examine the letter of credit and pay attention to whether it contains “soft terms”. If the credit contains “soft terms”, the issuing bank shall be required to modify or delete them. In addition, when our foreign trade company is the issuer of the L / C, it shall carefully check the authenticity and validity of the documents submitted by the beneficiary. In case of any fraud, it shall immediately notify our bank and require it to stop payment. If necessary, it can also issue a stop payment order to the bank through the court.

Finally, for new customers and some customers from underdeveloped countries and regions, it is better to choose L / C for settlement. For some long-term customers with good credit, you can choose a more convenient method of payment and presentation or telegraphic transfer for settlement. As for the method of D / A, it should be avoided as much as possible.

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