Warning about trade fraud in some Middle Eastern countries

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Vietnamese businesses when dealing with foreign businesses need to be cautious and negotiate payment terms carefully. Photo: Internet

Transactions showing signs of fraud from the same buyer

According to a report by the Vietnam Pepper Association (VPA), recently, businesses that are members of VPA have traded and exported agricultural products to UAE includes pepper, cinnamon, anise, cashew nuts. However, these companies said the transactions showed signs of commercial fraud from the same buyer and the same bank based in Dubai, UAE.

Previously, there were 4 containers, worth $ 400,000, lost at Jebel Ali port, UAE. Currently, there is 1 container of anise flowers that is likely to be lost (the goods are expected to arrive at the port on July 26, 2023) with the same scam.

Specifically, according to the payment terms specified in the contract, all shipments are paid under the terms of payment for collection (D/P). This means that the original documents will be transferred by the seller's bank to the buyer's bank, then the buyer will pay the buyer's bank. After the buyer's bank receives the full amount, it will simultaneously transfer the money to the seller's bank. Only then, the buyer's bank is allowed to hand over the original documents to the buyer to receive the goods.

However, if the buyer's bank has not transferred the money to the seller's bank, the buyer will not be able to get the original documents to pick up the goods at the port. Thus, the above transactions have signs of fraud occurring at the bank where the Vietnamese company sent the D/P documents. These bank officials may be involved in this case.

Immediately after receiving the notices of the above units, the Asia-Africa Market Department, the Ministry of Industry and Trade sent a Note to the UAE Embassy in Hanoi and requested the Embassy to notify relevant authorities to consider and handle the case.

On July 25, 2023, the Ministry of Industry and Trade had an urgent meeting including: UAE Ambassador in Vietnam, representatives of the following units: State Bank of Vietnam, Vietnam Pepper Association, Import-Export Department and businesses that own export shipments to Dubai.

The Ministry of Industry and Trade has directed the Vietnam Trade Office in UAE to soon handle the above case. The deal has sent a Note to the UAE Ministry of Foreign Affairs, Dubai Police, UAE Central Bank and a number of related banks and shipping lines; work with the relevant bank branches in Dubai; work with Dubai Police and file a case report; Work with shipping lines and authorities of Jebel Ali port.

Scam over payment terms

In order to avoid unfortunate losses, the Ministry of Industry and Trade advises businesses on transactions of payment invoices, etc in high-risk markets.

Accordingly, at present, fraud in the Middle East market has appeared more than before, mainly concentrated in small-scale trading companies. The most common form of fraud today is that foreign businesses when signing sales contracts with Vietnamese companies often ask for TT payment terms or issue checks to the mortgage seller. These are the two most risky forms. By TT payment, it means that the buyer will receive the goods and then pay the seller.

The buyer issues a check valid for a certain period of time and then gives it to the mortgage seller, this is a risky method such as: the buyer issues a check without money in the account; The seller cannot go to the buyer's bank to receive the money because there is no identification card. The seller also cannot check the account information of the buyer because banks in some Middle East countries do not provide customer information to 3rd parties.

Therefore, the Ministry of Industry and Trade recommends that Vietnamese businesses when dealing with foreign businesses need to be cautious and carefully negotiate payment terms to ensure the safest. Notably, payment methods such as opening LC, or business representative to deliver documents and receive money.

Besides, the D/P payment method is also safer than TT payment and check, but note that the seller's banks must ensure safety when transferring documents to the buyer's bank, avoid situations like the ones mentioned above.