INTERNATIONAL COMMERCIAL & BUSINESS FINANCE
RULES OF THE ROAD
It is a "privilege" to be invited to participate in a Private Placement Transaction Program. It is in all cases not a Investors "right." to participate without invitation. These programs deliver unparalleled yields in combination with absolutely no program-related risk. The trading administrators and managers have a virtually endless supply of financially qualified applicants. All things considered, the trading administrators and their banks will favour the applicant who provides the best paperwork in a timely manner.
An applicant should never underestimate what the trading entities know about him. Failure to provide full disclosure will disqualify the disingenuous.
Generally, these programs exist to finance humanitarian projects, not to generate more money for the wealthy. Clients who have such projects usually receive preferred treatment and the highest yields.
Clients must first prove that they are qualified, not the other way around. Until the client is accepted by Compliance, the Traders, and Trading Banks, no placement can occur. The Due Diligence Convention and the Federal Banking Commission Circular of December 1998, concerning the prevention of money laundering, and Article 305 of the Swiss Criminal Code and the Money Laundering Regulations 2007 (UK) has introduced obligatory stringent compliance procedures, which lengthens the time required to receive clearance. Clients will always need to confirm their Assets, Funds, and Collaterals with Swift Confirmation MT760 after receipt of trading contract.
Face-to-face interviews with compliance officers and program management are occasionally required, but generally not necessary, only conference call between client and trading group, and clients may be required to enter a JV with the group to participate in the program.
Any arrogant or demanding personality will be guaranteed to be rejected and reported to the authorities and Trading community.
Once a contract is agreed during a meeting or conference call with the trader the signed copy must be returned within 48 – 72 hours or the contract will be cancelled.
By individual Investors, only the principal owner of funds is required as signatory, no lawyers, mandataries, etc.. Corporations must empower an Officer or Director as sole, exclusive signatory by using a Corporate Resolution.
Not only do the funds have to be on deposit in a top bank; it must also be in an acceptable Western (preferably) jurisdiction. If not, the funds must be moved to an acceptable jurisdiction, or else responsibly endorsed by an acceptable bank in an acceptable venue.
It is fraud to submit documents or financial instruments that are forged, altered or counterfeit. Such papers are promptly referred to the appropriate law enforcement agencies for immediate criminal prosecution and the client and his facilitators will be immediately “black Listed” .
The practices, procedures and rules are determined by the US Federal Regulatory Authorities, Western European Central Banks program management, licensed traders and trading banks. It is their decision whom to accept and whom to reject. Contract terms, yield, schedules, etc., are made to fit their needs and schedules and not the caprices or demands of the investors and/or intermediaries.
This marketplace is highly regulated and strictly
confidential, and absolute confidentiality by the investor is a key element of
virtually every contract. A CLIENT WHO BREAKS CONFIDENTIALITY WILL PRECIPITATE INSTANT CANCELLATION OF HIS CONTRACT , OFTEN WITH SEVERE LEGAL CONSEQUENCES.
Submission of the application documents to more than one management group at a time is termed "shopping." If an investor "shops" he can expect that this fact shall be quickly disseminated and known among the program management groups who maintain close communication, and he will then be accepted by none – and rejected by all as "blacklisted".
Licensed traders and trading banks do not accept applications direct from clients but rely on a select group of brokers and compliance organisations to thoroughly vet each and every client before accepting or inviting them to participate to avoid any fraudulent or criminal applications.
We are often asked “Are you authorised to act for the trader”, that is not how the system works. Licensed Traders, trading banks and management groups do not authorise anyone to act on their behalf, but work with and rely on a select group of brokers and compliance organisations they can trust to introduce only genuine clients that are able to perform and meet their strict criterion.
To start the process there are standard paperwork required for application. Further, the requirements for 2012 have been stepped up by revision of the rules of due diligence required for clients, including a personal phone contact with the principal applicant and very stringent verification and explanation of Proof, Source and History of Funds.
Upon acceptance of the application for processing we must be in direct contact with the applicant.
Document List is as follows: these forms must NOT be altered – all forms and questions must be completed in detail
Application Documentation:
1. Client Information Form – Corporate and Individual
2. Letter of Request for Information & Non-Solicitation
3. Letter of Intent
4. Authorisation to Verify Funds
5. Origin and History of Funds (NOTE: this MUST be fully DETAILED)
6. Resolution of Board of Directors
7. Letter of Confirmation
8. Affidavit of Non-Submittal to Others
9. Exclusivity Letter
10. Comfort Bank Letter by BG’s Cash Backed
11. Proof of Funds (NOTE: we need a current TEAR SHEET or ACCOUNT STATEMENT issued by the bank as well as the POF letter NO OLDER THAN 5 DAYS)
12. Copy of Principal’s Passport
13. MT760 confirmation letter of emission
14. Verbiage of MT760 (NOT TRANSFER!)
The starting point is at the least to provide a proper “tear sheet”, or a current Account Statement showing ownership of the funds by the applicant and a copy of the applicant’s passport. As discussed, all investment is on a “non-depletion” basis – funds never leave the investor’s account.
NON-SOLICITATION AND NON-DISCLOSURE
As a direct consequence of the PPOP’s environment where this business has to
take place, a non- solicitation agreement has to be strictly followed by all
parties involved. This agreement strongly influences the way the participants
can interact with each other. Sometimes non-solicitation agreements foster scam
attempts, due to the fact that at an early stage it is often difficult for the
clients to recognise reliable sources to be in contact with.
There is another reason why so few experienced people talk about these
transactions: virtually every contract involving the use of these high-yield
instruments contains very explicit non-circumvention and non-disclosure clauses
forbidding the contracting parties from discussing or disclosing any
experienced contacts who are both knowledgeable and willing to talk openly
about this type of instrument and the profitability of the transactions in
which they figure. This is a highly private business, not advertised anywhere
nor covered in the press, and is closed to anyone but the best-connected, most
wealthy entities that can come forward with substantial cash funds.
WHO CAN AND HOW TO PARTICIPATE
Banks are not allowed to act as clients in such programs. However, they are
able to profit indirectly in different ways. Governments also can not act
directly as clients, but can through third party agreements, this fact permits
some private brokers and trading groups to assist clients to take part in this
process that otherwise would be a banking matter only. The assets coming from
private or corporate clients are necessary to start the process. These private,
large funds are the mandatory requirement for the buy/sell transactions of
banking debt instruments. Brokers are necessary to introduce and assist the
clients to the trading groups. Thus, each of the involved parties takes their
part in the sharing of the benefits, commissions for banks and brokers and
proceeds for trading groups and clients).
PROJECTS
The purpose of this type of trading is to finance projects, not generate
tremendous profits for the client. These may be for-profit or non-profit and
can be funded as a result of this trading.
Since this type of trading generates such large amounts of money on the market,
measures must be taken to keep the inflation low. One way to do this is to
adjust the interest rates, but this usually has little or no effect. A better
way to minimize inflation is to let some of the profit be used for different
projects that need funding, such as rebuilding infrastructure in regions of the
world that have experienced catastrophes or war.
PROCESS SYNTHESIS
The complete process involving the issuing of debt-notes, the arbitrage
transactions, the programs, and the projects is a result of combined market
forces. Banks have a method of increasing their revenues and profits, clients
are able to finance different ventures, and borrowers are able to access loan
funds. There is a supply and demand for such instruments, and as long as the
supply and demand exists then also this kind of trading will exist.
Procedures for Governments
To understand the options open to any government that requires funding for major humanitarian or infrastructure projects.
Option 1
Funding from International / Capital Market / Institutional Investors
The government could secure funding from the international markets by issuing government bonds which will have an interest rate dependent on the credit rating of the government.
The government engages with a contractor to complete the project and issue them with a Sovereign Guarantee that will be issued in the name of the contractor.
The contractor, will then either seek funding from international banks or if strong enough will fund the project themselves with the Sovereign Guarantee as security.
In either case the international banks or the contractor will check to ensure that the government has the capacity (funds) and reputation to repay the loan.
Option 2
Grant funding
In many cases option 1 is prohibitive either because the interest rate is too high or they are economically depressed and are unable to secure international funding as institutions may be concerned at the government’s ability to repay the funds.
However, if the Sovereign Guarantee is issued to the contractor as beneficiary of the guarantee, the contractor can use the sovereign guarantee as security to access grant funding through the trading groups in their name as a corporate entity.
The Sovereign Guarantee would be classified as an “Operative” or “Financial Instrument” provided:
(a) It is issued by a Government who is a member of the European Union and should have the backing or authority of the EU and IMF
(b) If issued by any other Government it may need cash locked or blocked in an account in the country’s central bank for about 20% of it’s value subject to a minimum of $100m USD or the Sovereign Guarantee will be discounted significantly.
(c) The minimum face value of a sovereign Guarantee must be $1BN USD
(d) It is issued by the government’s central bank by MT760 conforming to the International Chamber of Commerce (ICC) verbiage for operative financial instruments.
Provided the Sovereign Guarantee conforms to the ICC rules for Operative Financial Instruments it will have a value that can be accepted by financial institutions and trading groups as security.
In order to access this form of funding applications must adhere to strict protocols as laid down by the funding institutions and to conform to the “Non-Solicitation Act” as outlined above
GOVERNMENT APPLICATIONS WITHOUT A CONTRACTOR
Where a Government has one project it is appropriate to engage with a contractor as in options 1 & 2 above, however if the Government has several large projects and they do not wish to relinquish control of the project, contractor or the funding it may be appropriate to form an alliance / joint venture and receive the funding direct and disburse payments to the contractors on reaching specific milestones.
As mentioned above governments can not enter these programs directly they need to utilise a similar arrangement as that of using a contractor, that is, forming an alliance or joint venture with a third party.
This type of funding was initially set up under the Marshall Plan for Reconstruction after the second world war and has been around in one form or another ever since, but for the licensed traders and trading banks to distinguish applications from Governments and that of individuals or corporations applications for governments are entered under the title of the “Pure-Heart Facility”
The first thing to understand is that the Pure-Heart facility is not a physical entity or corporation but a grant type funding mechanism for Governments that is available only through the top traders with the capacity to handle these size of transactions.
For governments to be invited they are initially required to forward a “Letter of Interest” and a list of projects to be funded.
Thereafter we will assist the government in setting up the joint venture, full compliance procedures, application / invitation into the program and funding structure.
Where Governments are unable to provide the minimum $1BN as a sovereign Guarantee we can provide project funding for lower values from $100m plus, but the Government would need to provide a Bank Guarantee in tranches of $100m with the cash supporting the bank guarantee blocked in a international bank in the name of the government and blocked for the duration of the funding. The blocked funds should have 2 signatures (1 a government minister and 1 a bank manager) to prevent any movement or depletion of the account, otherwise the procedures and facility are the same as for the Sovereign Guarantee.
Prepared by
Keith Baker ISF MD
International Commercial & Business Finance Ltd
17 Bethesda Rd, Swansea, SA8 4QQ UK
Tel: +44 (0)1792 864699
Fax: 044 (0)1792 865792
E-mail: enquiries@icabf.com
