MT 705 PRE-NOTICE OF A DOCUMENTARY CREDIT

MT 705 is a type of SWIFT message used by banks when issuing a Letter of Credit Advance Notice. The SWIFT MT 705 message is sent from the buyer's bank to the supplier's bank.

SWIFT ( Society for W orldwide I nterbank F inancial T elecommunication ) is a provider of a secure messaging platform for financial institutions, primarily banks.

SWIFT messages are sent and received by banks in encrypted form. As a result, SWIFT messages are accepted as a valid and reliable way of communication between banks.

For example, a buyer's bank sends a SWIFT message to a supplier's bank to inform that a documentary credit has been issued. Similarly, the supplier's bank sends its confirmation via a SWIFT message.

SWIFT messages play a key role not only in letters of credit, but also in other payment methods in international trade, such as cash advances, documentary collections, open accounts and bank payment obligations.

What is MT 705 Pre-Notice of a Documentary Credit in Trade Financing?

MT 705 is a special SWIFT message type used by issuing banks when issuing a Pre-Notice of a Letter of Credit.

An issuing bank briefly sends the terms and conditions of the documentary credit with a SWIFT message type MT 705 Pre-Notice of a Documentary Credit.

The Pre-Notice is not an operational tool. Accordingly, the issuing bank, which has sent the Pre-Notice, must also send an MT 701 Issuance of a Documentary Credit to inform without delay the full terms and conditions of the Documentary Credit.

In the table below you can find explanations of the fields used in SWIFT MT 705 messages.

Rules of Pre-Notice of a Documentary Credit MT 705

• This message is sent from the issuing bank to the advising bank.

• This is a short notice of a documentary credit, full details of which will follow.

• The Pre-Notice is not an operational credit instrument. Unless otherwise indicated, the issuing bank must promptly forward the Operational Credit instrument, i.e. MT 701 Issuance of a Documentary Credit.

What do the current Letter of Credit Rules say about Prior Notice of a Documentary Credit?

Televised and pre-recommended credits and changes:

a. An authenticated teletransmission of a credit or modification will be considered the operational credit or modification and any subsequent confirmation by mail will be ignored.

If a teletransmission states "all particulars to follow" (or words of similar effect) or states that the confirmation by mail is to be the working credit or amendment, then the teletransmission shall not be considered the working credit or amendment. The issuing bank must then issue the working credit or amendment without delay on terms not inconsistent with the teletransmission.

b. A preliminary notice of the issuance of a Credit or amendment ("Pre-Notice") will be given only if the Issuing Bank is prepared to issue the Operating Credit or Amendment. The Issuing Bank giving a Pre-Notice undertakes irrevocably to issue the Operating Credit or Amendment, promptly, on terms not inconsistent with the Pre-Notice.