Issuing bank appoints reimbursing bank
The LC/reimbursement structure identifies how a nominated/claiming bank can obtain funds.
Correspondent banking · URR / MT740 / MT742
LC Reimbursement Procedure
Follow the bank-to-bank funding leg behind a documentary credit.
Reimbursement authorization
The issuing bank sends/establishes authorization, potentially using MT740 and potentially subject to URR 725 when expressly incorporated.
Nominated bank acts under LC
After honour/negotiation or according to the LC arrangement, the bank becomes entitled to claim reimbursement if conditions are met.
Reimbursement claim
A claim may be sent using MT742 or another applicable mechanism under the authorization.
Reimbursing bank checks claim under authorization
It checks the claim against its authorization/rules rather than necessarily repeating the full commercial-document examination.
Settlement
Funds move through correspondent accounts/payment rails and the issuing bank is debited/reimburses according to its arrangement.
What can change from bank to bank?
The commercial objective may be similar while the bank’s internal route differs. Credit approval, collateral, compliance review, legal wording, message choice, fees and cut-off times can all vary. Always distinguish those bank-specific steps from the incorporated rules and the purpose of the SWIFT message.
Reviewed: September 2026Standards and bank policy can change.How MyGreed classifies proceduresOfficial-source directory
Procedure ruleThis is a typical learning flow. Exact sequencing, messages, approvals and documents can vary by bank, rules, law and negotiated transaction.