Compliance & Risk check0 / 1 answered · 0 correct
Check 1
Can a genuine LC still be difficult to finance because of issuer risk?
Country, Bank and Counterparty Risk
Why a technically good instrument can still be unattractive to a bank.
Country risk
Political instability, exchange controls, sovereign events, sanctions exposure and legal enforceability can affect whether a bank accepts risk connected to a country.
Bank risk
An issuing bank’s credit quality, jurisdiction, ownership, correspondent access and operating history can matter to confirmation or financing decisions.
Counterparty risk
The buyer, seller, provider or financier may introduce performance, fraud or repayment risk even when a bank message itself is authentic.
Risk is priced or declined
A bank may charge more, require confirmation/collateral, shorten tenor or simply decline. “Valid instrument” does not force a bank to take the exposure.
Standards / source note: For live transactions, compliance decisions depend on applicable law, sanctions regimes and each bank’s KYC/AML policy. FATF guidance provides risk indicators, not automatic verdicts.
Remember thisFinanceability is partly a question of whose risk the financier is actually taking.
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