Having a professional that knows what banks are willing to issue a SWIFT MT-799 and what requirement they have will save you a lot of time and heartache. An arrangement is made with the purchasers’ bank to have an MT-799 wired to the seller’s bank.
Many banks are unwilling to issue MT-799′s, for there mere reason that doing so would make them liable for the full cost of the said transaction, leaving the bank liable for millions of dollars.
A bank will not issue an MT-799 without collateral to secure their interests. Bank charges and fees vary but be prepared, this process is certainly not free.
An MT-799 is essentially a complexly worded text message sent electronically from one bank to another bank. What this means is that although you may see the wording itself you will not actually see the SWIFT MT-799 itself.
Much like you wouldn’t see many of the actually transactions from one bank to another during the process of closing a standard mortgage. The paperwork required for an MT-799 is different from bank to bank, and depending on each type of transaction although there are some documents that are almost always required.
In all reality, although they may look quite complex, SWIFT Codes are fairly simple to comprehend. The first letters “MT” stands for ‘Message Type’ and the number refers one of several standardized message formats that comprise the SWIFT messaging system.
The MT-799 is a free format SWIFT message where one banking institution confirms that funds are available to cover a potential transaction. Depending on the language used and MT-799 can be used in many different ways but in itself is not an actual guarantee of payment. The primarily purpose of the MT-799 is simply to confirm to the seller that a buyer does have the adequate funds required to complete the said transaction.
The MT-799 is most often issued prior to a contract being executed and before a letter of credit (LOC) or bank guarantees (BG) is issued. The MT-799 is then received by the seller’s bank, and it is then (in most cases) the responsibility of the receiving banks (usually the seller’s) to send a proof of product (POP) to the buyer’s bank, allowing the transaction to move forward.
More simply put; The SWIFT MT-799 is a text like message sent between banks and is often referred to as “pre-advice”. An example would be, Bank 1 would send a SWIFT MT-799 to Bank 2 with language such as (this is over simplified): “Bank 1 confirms $1 on deposit and are prepared to block this $1 via SWIFT MT-760 in favor of account 12345 at your bank. Please confirm readiness and receipt.” Normally, the MT 799 is needed shortly before the SWIFT MT-760 is issued, and there are fees associated with it. Your account must meet the minimum requirement of 1 million dollars. Regardless of what some brokers will say, the swift MT 799 is NOT actually collateral, and may NOT be used for a private placement program. A SWIFT MT-799 is used for proof of funds only. A SWIFT MT-799 is not a form of payment and it is not a bank undertaking or guarantee to pay. It is nothing more than a bank-to-bank confirmation of the availability of funds on deposit.
The funds used to complete the transaction are often not the same funds guaranteed by the SWIFT MT-799. The payment method that is actually used is normally a documentary letter of credit (LOC), that the seller presents to the issuing (or confirming) bank in addition to other required and specified document depending on the type of trade or transaction that is being facilitated. At that time the bank confirms the documents and the seller is actually paid. Another popular method is to use a bank guarantee (BG) instead of a letter of credit (LOC).Most commonly it is up the seller to determine which method of payment is preferred.