1) Notification of L/C
If the L/C is opened by telecommunication, the issuing bank will send the telecommunication documents directly to the notifying bank, which will verify the seal and inform the beneficiary in the form of advice of L/C. If the L/C is opened by mail, the issuing bank will generally send the L/C directly to the notifying bank or the forwarding bank, which will verify the authorization signature and forward it to the beneficiary, but sometimes the L/C will be sent directly to the beneficiary. Since the beneficiary cannot verify the authenticity of the authorization signature, he will also hand over the L/C to his correspondent bank or other banks that have an agency relationship with the issuing bank to verify the validity of the signature. Therefore, it is relatively rare for the L/C to be sent directly to the beneficiary as the recipient. The issuing bank generally transfers the L/C to the beneficiary through the notifying bank (including the forwarding bank).
2) Transfer of Letter of Credit
A bank that is required to notify or transfer a letter of credit is not obliged to follow the instructions of the issuing bank, but must promptly inform the issuing bank of the refusal to notify or transfer. If the notifying bank decides to follow the instructions of the issuing bank, it must first verify the authenticity of the letter of credit. In the past, some banks (especially those in Southeast Asia) believed that the responsibility of the notifying bank was only to transfer the letter of credit as it was, without verifying its signature or seal. In fact, this view is potentially dangerous because the beneficiary cannot verify the authenticity of the letter of credit and believes that the letter of credit transferred to him by the notifying bank should be authentic. Therefore, if the notifying bank does not explain the authenticity of the letter of credit, it is tacitly acknowledging its authenticity. If it happens to encounter a forged letter of credit, the beneficiary will face huge losses. In order to strengthen the protection of the beneficiary, “UCP600” clearly stipulates that unless the bank is not prepared to notify the letter of credit, it must verify its authenticity.
Who pays the handling fee of the notifying bank should be implemented according to the provisions of the letter of credit. Most letters of credit stipulate that bank charges incurred outside the country of the issuing bank, including notification fees, should be paid by the beneficiary, so the notifying bank should charge the beneficiary a handling fee. However, if the beneficiary refuses to pay, the notifying bank cannot withhold or refuse to notify the letter of credit. Because UCP600 stipulates that the person who issues the instruction should be responsible for the final payment of the expenses of the person who executes the instruction. Therefore, if the beneficiary refuses to pay the notification fee, the notifying bank should charge this fee to the issuing bank.