POF, BCL, RWA and MT799: what bank letters really prove

Sellers want to know a buyer can pay, so buyers are asked for "POF" before anything else. That demand created a market in fake and meaningless bank letters. Here is what the common ones are worth.

The common documents

Proof of funds (POF). A bank statement or letter showing a balance. It shows money was there on a date. It doesn't commit the bank to anything, and balances move.

Bank comfort letter (BCL). A letter saying the bank knows the client and believes they can do a transaction of a certain size. It is not a guarantee, and the wording is usually careful to say so.

Ready, willing and able (RWA) letter. A letter, sometimes from a bank officer, saying the client is ready, willing and able to proceed. It commits nobody to anything.

MT799. A free-format SWIFT message between two banks. It can carry a confirmation of funds, but it is not a payment instrument and creates no obligation to pay. Many "MT799s" shown in copper deals are screenshots of text that never went through SWIFT.

MT760 and MT700. These are real instruments: MT760 is used for guarantees and standby letters of credit (SBLC), and MT700 issues a documentary letter of credit. They are bank-to-bank messages, so the beneficiary's bank receives them directly. See letters of credit.

How to check a bank document

• Bank to bank. The only reliable check is through your own bank, which contacts the issuing bank through its own channels.
• Look at the details. Wrong SWIFT code formats, a bank officer with a free-mail address, logos pasted at the wrong resolution and spelling mistakes in the bank's own name are common in fakes.
• Ask what it commits. If the letter doesn't commit the bank to pay against documents, it is information, not security.

What sellers should really ask for

A seller doesn't need a buyer's bank balance. A seller needs to know that payment will arrive. Agree the payment method first (letter of credit, standby letter of credit, payment after inspection in a bonded warehouse, or escrow), and ask for proof that the buyer can open that instrument with a named bank. See payment terms that close deals.

For buyers

Don't send bank statements to people you haven't checked. Your statement shows your bank, your account and your balance, and it can be reused to build fake documents in your name. Share capacity bank to bank, at the stage of the deal where it is needed.