MT 720 Transfer of a Documentary Credit :

Swift is a provider of secure message platform for financial institutions mainly for banks. Swift messages send and received by banks in encrypted forms. As a result swift messages are accepted as a valid and reliable way of communication between banks. For example, an issuing bank send a swift message to an advising bank in order to inform issuance of a documentary credit. Similarly advising banks send their acknowledgement via a swift message. Swift messages play a key role not only in letters of credit but also other payment methods in international trade such as cash in advance paymentdocumentary collections, open accounts and bank payment obligations.

What is MT 720 Transfer of a Documentary Credit in trade finance?
MT 720 is a special swift message type that is used with transferable letters of credit only. MT 720 swift message is used by the transferring banks to advise the transfer of the documentary credit, to the bank advising credit to the second beneficiary. It is used to advise the second beneficiary about the terms and conditions of the transferred documentary credit, or part thereof. Transferring banks use MT 720 Transfer of a Documentary Credit swift message type to advise the receiver about the terms and conditions of the transferred documentary credit.  On below table you can find detailed explanations of fields used under MT 720 swift messages

MT 720 Transfer of a Documentary Credit rules in trade finance
  • When the documentary credit message exceeds the maximum input message length, additional documentary credit information should be transmitted via one or more MT 721s. 
  • Unless otherwise specified, a documentary credit advised to the beneficiary or another advising bank based on a SWIFT message constitutes an operative credit instrument.
  • For freely negotiable documentary credits, the Receiver must add sentences to the effect that:
  • The advice to the beneficiary must be presented at each negotiation.
  • The negotiating bank must note each negotiation on that advice.
  • To avoid misunderstandings, where possible, banks are to use Bank Identifier Codes rather than expressions such as ourselves ,yourselves ,us, or you.
  • If this message is used to transfer a non-bank issued documentary credit, field 50B must be present.
  • The transferring bank must transfer the documentary credit, including all its details, in a way that is clear and unambiguous to the beneficiary.

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What does MT 720 Transfer of a Documentary Credit swift message mean? 
MT 720 is a type of swift message which is used by banks when transferring a letter of credit. MT 720 swift message is sent by the transferring bank to the advising bank that will be advising the credit to the second beneficiary. You can find detailed information about MT720 and its sub-fields.

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          MT 720 Network Validated Rules
  • C1 Either field 39A or 39B, but not both, may be present
  • C2 When used, fields 42C and 42a must both be present
  • C3 Either fields 42C and 42a together, or field 42M alone, or field 42P alone may be present. No other combination of these fields is allowed.
  • C4 Either field 44C or 44D, but not both, may be present
  • C5 Either field 52a "Issuing Bank" or field 50B "Non-Bank Issuer", but not both, must be present