American Bankers Association CRCM Exam - Topic 1 Question 24 Discussion

Question

First National Bank opened a letter of credit in favor of ABC Co., a U.S. company, for ABC's sale of goods to Country X, a foreign country that participates in a boycott. The letter of credit contains no boycott provisions, but First National Bank knows that ABC Co. has agreed to supply a certification to Country X that ABC has not dealt with any blacklisted firms as a condition of receiving the letter of credit in its favor. What should First National Bank do?

Eun · Accepted Answer

C) Not implement the letter of credit

Eun · Answer

A) Implement the letter of credit because there is no boycott language on its face

Eun · Answer

B) Require ABC to indemnify the bank against any potential loss for participation in a boycott

Eun · Answer

D) Have the letter of credit confirmed by a bank in Country X