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Actual SBLC Process (Draft → Final → Activation)

SBLC PROCESS EXPLAINED: FROM DRAFT TO FULL ACTIVATION (WHAT MOST PEOPLE DON’T KNOW)

Many people think an SBLC becomes active immediately after MT760 is issued…
In reality, several critical steps must be completed before it is truly valid.

ACTUAL FLOW (STEP BY STEP)

STEP 1 – Buyer Applies for Draft SBLC
The buyer applies for a Draft SWIFT MT760 SBLC through the issuing bank.

STEP 2 – Draft Issued by Issuing Bank
The issuing bank prepares and releases the draft → the buyer forwards it to the seller.

STEP 3 – Seller Submits for Review
The seller forwards the draft to: 
Receiving Bank / Beneficiary for preliminary review

STEP 4 – Receiving Bank Review
The receiving bank will: 
  • Review the wording and structure
  • Request amendments (if required)
  • Or approve the draft

STEP 5 – Approval to Proceed with Final SBLC
Upon approval:
The seller will instruct the buyer to proceed with the Final SWIFT MT760 SBLC issuance

STEP 6 – Final SBLC Issued
The buyer provides a copy of the Final SBLC to the seller for verification.

STEP 7 – Submission to Receiving Bank
The seller forwards the final SBLC copy to:
Receiving Bank / Beneficiary for further processing

STEP 8 – Compliance & Regulatory Checks
The receiving bank will conduct:
  • AML / KYC verification
  • Internal compliance procedures
  • Central bank regulatory checks
This is a critical stage often overlooked

STEP 9 – Hard Copy Requirement
Once compliance is cleared:
The receiving bank will request the original Hard Copy SBLC via secure courier

STEP 10 – SBLC Activation
Only after:
  • Hard copy is received
  • All compliance checks are successfully completed
The SBLC is considered fully activated within the SWIFT system

KEY POINT
An SBLC is NOT automatically active upon MT760 issuance.
It must be: 
  • Verified by the receiving bank
  • Cleared under AML/KYC regulations
  • Supported by the original hard copy

COMMON MISCONCEPTION
Many buyers assume:
Once the SBLC is issued = POP / PB should be released immediately

In reality:
POP / PB will only be released after:
  • Full verification by the receiving bank
  • Completion of compliance procedures
  • Confirmation of hard copy receipt

CLOSING
In international trade, success is not determined by speed… but by strict adherence to proper banking procedures.

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