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Compliance Companion®
Standard Procedures Manuals (SPM)
 

Letters of Credit June 2022


The Letters of Credit Manual provides bankers with a comprehensive source of information regarding the legal requirements and use of both Commercial Letters of Credit and Standby Letters of Credit.

The Manual discusses the various sources of rules that govern letters of credit:

  • International Standby Practices (ISP98)
  • Uniform Customs and Practices for Documentary Credits – UCP 500 (1994 revision)
  • Uniform Customs and Practices for Documentary Credits – UCP 600 (2007 revision)
  • eUCP, which governs the electronic presentation of documents under letters of credit, which supplements UCP 600
  • Division 5 of the California Uniform Commercial Code.

Additionally, the Manual explains the basics of letters of credit and the role of each party to a letter of credit, as well as their rights and responsibilities. The Manual also provides detailed discussions of the operation of a Commercial Letter of Credit transaction and the operation of a Standby Letter of Credit transaction. In addition, the Letters of Credit Manual discusses how to structure and document Commercial Letters of Credit and Standby Letters of Credit.

The Manual also provides a discussion of ancillary lending issues affecting letters of credit, such as:

  • Regulations governing financial institution guaranties
  • Treatment of letters of credit under lending limit regulations
  • Risk-based capital guidelines
  • OFAC regulations
  • Anti-boycott laws
  • Insolvency issues affecting letter of credit transactions

In addition to explaining letters of credit, the Manual includes discussions of Bankers’ Acceptances and Documentary Collection procedures.

The main text of the Manual is 258 pages, plus 26 pages of appendixes.

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Compliance Companion

Compliance Companion® is a one-stop regulatory compliance resource for financial institutions. This online compilation of 19 industry-leading compliance manuals, including this SPM #13, Letters of Credit, takes the legalese out of federal and California laws and regulations, making it easier to understand and keep up with ongoing compliance developments.

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SPM 13
* Janet Bonnefin is retired from the practice of law with the firm.
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