When a bank confirms or advises a letter of credit, who should it treat as its customer for due diligence purposes?
Generally, the confirming and, except as provided in the next sentence, the advising bank should treat the issuing bank as its customer. In some circumstances, the beneficiary may be the customer of the advising bank, and, in such cases, the advising bank should already have focused its due diligence on the beneficiary. In cases where the bank to whom the beneficiary presents documents is a nominated bank that neither advised nor confirmed the letters of credit, the nominated bank should treat the beneficiary as its customer. In general, the relationship of the confirming bank to the issuing bank is comparable to that of a financial institution to a correspondent bank. Accordingly, the confirming bank or, when appropriate, the advising bank should consider, as part of the due diligence process vis-à-vis the issuing bank, the factors described in the Wolfsberg Correspondent Banking Principles and related FAQs.. The confirming bank would ordinarily not be viewed as having due diligence o
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