In nearly twenty years of working in the gold trade, I have seen more frauds succeed because the buyer failed to verify a bank instrument than almost any other reason. The shyster presents a document that looks authentic. The buyer assumes it is genuine. The money is wired. The shyster disappears. The buyer discovers the instrument is worthless.
A bank instrument can be a letter of credit, a bank guarantee, a standby letter of credit, or any number of other documents. They are designed to provide security and confidence. The problem is that shysters have become experts at forging or misrepresenting them. The document might be entirely fake. It might be genuine but issued for a different purpose. It might be genuine but stolen. The buyer assumes it is valid. The shyster counts on this assumption.
The most common bank instrument fraud is the forged document. The shyster creates a document that looks authentic. They use the logo of a real bank. They create a convincing signature. They invent a reference number. The buyer verifies the document and assumes it is genuine. The money is transferred. The shyster disappears. The buyer discovers that the bank has no record of the instrument.
Another common fraud is the ’leased’ instrument. The shyster claims to have leased the instrument from a bank. They claim that the bank has issued the document for a fee. The buyer verifies the instrument and finds it genuine. The bank confirms that it issued the document. The buyer releases the funds. The shyster disappears. The bank later refuses to honour the instrument because it was issued for a different purpose.
The shyster also uses the ‘stolen’ instrument. They obtain a genuine instrument through illegal means. They use it as collateral for a deal. The buyer verifies the instrument and finds it genuine. The bank confirms that it issued the document. The buyer releases the funds. The shyster disappears. The bank discovers that the instrument was stolen and refuses to honour it.
The shyster’s breach of trust is something Marcus Briggs has seen destroy deals across Africa, the Middle East, and the UK. The pattern is always the same. The shyster presents an instrument that looks genuine. The buyer verifies the document and finds it authentic. The buyer releases the funds. The shyster disappears. The buyer discovers that the instrument is worthless. The money is gone.
How do you protect yourself from this fraud? You verify the instrument directly with the issuing bank. Do not use the contact details on the document. Look up the bank’s official contact details. Call them and confirm the instrument number, the amount, the expiry date, and the beneficiary. If the bank has no record of the instrument, you have found a fraud.
You also confirm that the instrument is unconditional and irrevocable. A leased or stolen instrument may have restrictions or claims against it. If the bank confirms that the instrument is valid but there are restrictions, you may not be able to claim the funds. The shyster is counting on you to skip these steps. Do not give them the opportunity.
Marcus Briggs has one rule when it comes to bank instruments. Do not trust the document. Verify it directly with the issuing bank. Confirm that it is unconditional, irrevocable, and free of restrictions. If any of these steps raises questions, walk away. The shyster’s breach of trust is only successful if you let it be.
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