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As part of a joint initiative with agencies in the USA and UK the Metropolitan Police Fraud Squad has issued warnings against a type of scam known variously as High Yield Investment fraud, Prime Bank fraud, or Advanced Fee fraud.
These schemes often refer to "Prime Banks" and offer excessively high rates of return in comparison with those that can be obtained in the legitimate financial market. Other claims include the ability to "block" the investor's funds in a bank account without risk for use in trading debentures and that Standby Letters of Credit can be discounted or traded for profits. Such schemes claim to operate with the full backing of the US Federal Reserve, IMF, World Bank, and so on. These statements are UNTRUE despite any claims to the contrary.
The following are typical features of such fraud:
- A non-returnable up-front payment or deposit will be required
- All dealings will be through agents
- Documentation cannot be verified
- All correspondence and documentation is sent by fax
- The deal involves complex and unusual financial instruments
- The purported principal is overseas and his identity cannot be revealed
- The agent is hurrying to conclude the deal
Other typical indicators are common terms and phrases found in high yield investment fraud documentation. Some of these terms may be correct banking expressions or close derivations of them, others are just meaningless or nonsensical. However, they have been used so many times over the years that they themselves have gained some history and credibility. The inclusion of several of these expressions in any document being examined should give cause for concern:
- 108 Bank to Bank certificate which guarantees the principal + 8% annual interest.
- 5,10,20 years etc. plus one week or one day.
- Bank Debenture Roll Programs.
- Bank hard copy / Menu / Paper.
- Bank or Federal Reserve will deny any involvement in these programs.
- Bank responsible commitment of funds.
- Bank-to-bank transaction.
- Banking Co-ordinates.
- Blocked Funds Letters or Investment Programs.
- Blocking of Assigned Treasury Securities, "Limited Edition" or De-Facto Treasury Securities.
- C&F ASWP.
- Callable Conditional Sight Drafts.
- Cash Wire Transfer.
- Certified Bank invoice.
- Client Company Principals.
- Closing Bank.
- Collateral First Debentures.
- Collateral First Transaction.
- Collateral Houses / Collateral Source / Collateral Supplier / Collateral provider.
- Collateral Purchase Orders.
- Comfort Letter.
- Conditional S.W.I.F.T. payment.
- CUSIP Number.
- Cutting bank / Cutting house.
- Defacto Treasury Securities.
- Divisible, assignable and transferable letter of credit (LC).
- Discounted US Treasury Obligations, Renting or Leasing of Treasury Securities.
- Discounting L/Cs.
- Documentary Letters of Credit.
- Emissions, remission, commissions and fallout.
- Facilitator has access to the world's top "trader".
- Fiduciary Bank.
- Foreign Bank Advice.
- Fractional bank laws.
- Fractionalize or collateralize the funds.
- Freely negotiable, irrevocable, clear SWIFT wire transfers.
- Fresh Cut Paper or Bank Debentures.
- Fully binding commercial letter contract.
- Funds will remain in a bank account that only you are signatory on.
- Funds will be used only as collateral.
- Goo1d clean cleared funds of non-criminal origin.
- Grand Master Collateral Commitment.
- Guaranteed Bank Notes.
- Guaranteed by Top 100 World Prime Bank.
- High Yield Debenture Trading, Financial Programs.
- High Yield Investment Programs (HYIP).
- High Yield Asset management programs.
- High Yield Promissory Notes or Bank Notes.
- ICC (International Chamber of Commerce) 3034 or 3039 Letter of Credit.
- ICC (International Chamber of Commerce) 400.
- ICC 3032 London Short Form.
- ICC 3039 London Long Form.
- ICC 500 or 600 Bank Debenture Instruments.
- ICC Uniform Customs and Practices for Documentary Credit.
- IMF (International Monetary Fund) Stand-by Letters of Credit.
- IMF Backed Securities, Bill of Exchange, Bill of Equity, or Backed Bonds.
- Instruments delivered free of all liens and/or encumbrances.
- Interest at seven and one half per cent, payable annually in arrears.
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- Interest rates guaranteed from 6% to 100% to 1000% per month.
- Intermediate Bank Notes.
- International Banking Days.
- International Certificate of Deposit (ICD).
- Invested funds fully secured by a Bank Endorsed Guarantee.
- Irrevocable Bank Purchase Order (IBPO).
- Irrevocable Corporate/Confirmed Purchase Order (ICPO).
- Irrevocable Pay Orders.
- Irrevocable Prime Bank Commitment.
- Irrevocable, Divisible, Assignable, Transferable, Fractionable, Revolving, Confirmed L/C. Payable 100% At Sight.
- Irrevocable, irretractable commitment of funds to purchase instruments.
- Issuing Bank.
- Key Tested Telex (KTT).
- Leading Bank, Funding Bank, Closing Bank.
- Limited Edition Treasury Securities.
- Live prime bank instruments.
- Mandate Agent.
- Master collateral commitment.
- Millions or Billions of US dollars with rolls and extensions.
- Money Centre Bank.
- Non-circumvention and Non-Disclosure agreements.
- Obtain proceeds through Visa debit cards.
- Off balance sheet programme.
- Pooled funds.
- Pre-advise issued by bank.
- Prime Bank Debenture Trading / Guarantees (PBG's).
- Prime Bank Instruments (PBI's), Notes, Guarantees, Trades or Letters of Credit.
- Prime European Bank Letters of Credit.
- Prime World Bank Debentures or Financial Instruments.
- Principal is guaranteed and/or secured by letter of credit.
- Private Placement Programs.
- Private Trading Programs.
- Program developed to level out the yo-yo syndrome in the banking industry.
- Proof of Funds.
- Proof of Product.
- Ready Willing and Able.
- Roll Program.
- Seasoned Bank Debentures.
- Seasoned Paper.
- Soft Probe.
- Spot Trading.
- The way all banks or big banks make their money.
- Top 100 Prime Bank
- Trader, Facilitator, or Broker.
- Trader, Trading Bank, Exit Buyer.
- Transaction parameters.
- Transaction Tranches.
- UCC (Uniform Commercial Code) Form references.
- Unconditional S.W.I.F.T. Wire Transfer.
- US Dollar Bonds, Federal Notes, Medium or Mid Term Notes or Bank Notes.
- US Government Agencies attempt to seize the funds for themselves.
- US Government will deny the existence of these programs because the Government does not want your money to leave the US.
- Validation of the MCC (Master Collateral Commitment).
- Window time.
- With full corporate and legal responsibility.
- Zero Coupon L/C.
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There are a number of common statements used as inducements to invest. Be suspicious if someone you are considering doing business with uses any of these statements:
- "This is a secret trading program, backed and approved or sanctioned by the Federal Reserve Bank (FED), The International Monetary Fund (IMF), The World Bank"
- "The program was established originally by the elite families such as the Rockerfellers, Gettys, Rothschilds, Carnegies, etc."
- "A percentage of the yield must be used for charity, social programs or humanitarian aid."
- "The funds will remain in a bank account that only you will have signatory powers to"
- "The funds will remain in a bank account which is blocked, can be withdrawn at short notice and will not be at risk. They are only to be used as collateral to enable the trader to embark on a trading program"
- "The information contained in this document is for information purposes only and is not intended as a solicitation nor an offer to sell any form of securities"
- "Only five to ten traders in the world have access to this program"
- "The trades will only be conducted with one of the top six domestic banks or top twenty European Prime Banks"
- "The trader will only perform 40 trades a year"
- "The funds for investment must be good, clean funds of non-criminal origin derived from legitimate business, without liens, unencumbered and available for investment"
- "This is how all the big banks make their money"
Full details can be obtained from the New Scotland Yard Fraud Squad
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