The Provider and the Beneficiary are the two companies that sign a Collateral Transfer Agreement, where the Beneficiary effectively leases a Bank Guarantee, from the Provider. The two banks that execute the agreement are the Provider’s bank, (the Issuing Bank) and the Beneficiary’s bank, (the Receiving Bank), utilising the bank to bank platform referred to as SWIFT.
For further details on the Provider, please go to “Who Are Providers And What Are Their Benefits From Leasing Bank Guarantees”.
SWIFT, (“Society for Worldwide Interbank Financial Telecommunications”), is a global membership bank to bank platform, used for sending secure and authenticated messages between banks and financial institutions, and facilitates the transfer of Bank Guarantees and other banking instruments. It is essential that both the Beneficiary and the Provider are aware that their banks are members of swift before signing a Collateral Transfer Agreement.
Before executing the Collateral Transfer Agreement via the bank to bank platform, SWIFT, both the Issuing Bank and the Receiving Bank will carry out extensive due diligence on the contract, also ensuring that all international and financial regulations are being followed.
Under the Terms and Conditions of a Collateral Transfer Agreement and by utilising the bank to bank platform, Swift, the Issuing Bank, taking instructions from the Provider, will transfer by SWIFT, a Bank Guarantee to the Receiving Bank for application to the Beneficiary’s account. It is usual for the Issuing Bank to pre advise by Swift the arrival of the Bank Guarantee to the Receiving Bank.