NIBAF Foreign Trade key terms

A bank or financial institution licensed by the central bank to buy and sell foreign currency and to handle foreign trade transactions on behalf of customers. Only ADs may issue import letters of credit and process export proceeds.

Pakistan's principal statute governing dealings in foreign currency, restricting transactions to authorised persons and empowering the central bank to regulate payments, imports, exports and remittances. Breach can attract penalties.

A government notification issued under the Imports and Exports (Control) Act that lists restricted, banned and regulated goods and sets conditions for importing them. It is updated periodically and must be consulted before contracting imports.

A compendium of instructions issued by the State Bank of Pakistan telling banks, importers and exporters how foreign exchange transactions must be conducted and reported. It supplements the statute with detailed operational rules.

An electronic declaration filed with the authorised dealer through the central bank's trade portal that records the terms of an import and authorises the bank to remit foreign exchange for it.

A preliminary invoice from the seller stating goods, quantity, price and terms, sent before shipment so the buyer can arrange a letter of credit or remittance. It is not a demand for payment.

The seller's final bill describing the goods, unit prices, total value and payment terms; customs and banks use it to check value and to release documents. It is a core document in every credit or collection presentation.

A transport document issued by a carrier acknowledging receipt of goods for shipment and serving as receipt, contract of carriage and document of title. As a title document it controls delivery to the holder.

A document, usually issued or certified by a chamber of commerce, stating the country in which the goods were produced. It supports customs valuation, preferential duty claims and import policy compliance.

The internationally agreed Harmonized System number that classifies a product for customs duty, trade statistics and regulatory controls. Misclassification can change the duty rate or make an import impermissible.

The electronic customs document filed by an importer or clearing agent declaring goods, value, duty and HS code so that assessment and clearance can proceed. In Pakistan it is processed through the customs computer system.

Standard trade terms published by the International Chamber of Commerce that allocate costs, risks and delivery obligations between buyer and seller, for example FOB or CIF. They do not govern payment or transfer of title.

The electronic declaration filed by an exporter through the central bank's trade portal recording shipment details of an export, used by banks and regulators to monitor realisation of export proceeds.

The document submitted to customs by an exporter declaring the goods, value and destination for which export clearance is sought. It forms the basis of the customs export assessment.

An unconditional written order from one party, the drawer, to another, the drawee, to pay a stated sum at sight or on a future date. In trade it is used to obtain payment under collections and credits.

The receipt of foreign currency from an overseas buyer for exported goods, which the exporter must arrange within the permitted period and then report through its bank. Failure may attract regulatory action.

The agreement between exporter and overseas buyer setting goods, price, delivery terms, payment method and dispute resolution. Banks and regulators rely on it to judge whether a transaction is genuine.

The ICC's Uniform Customs and Practice for Documentary Credits, the rulebook that governs letters of credit by default. It defines the obligations of issuing, confirming, advising and nominated banks and the standards for examining documents.

A presentation of documents that meets the credit terms, UCP 600 and international standard banking practice. Only a complying presentation obliges the issuing bank to honour.

A difference between the presented documents and the requirements of the credit or the applicable rules. A discrepancy entitles the issuing bank to refuse payment until the applicant waives it.

A bank, usually in the exporter's country, that adds its own undertaking to honour or negotiate under a credit at the request of the issuing bank. It gives the beneficiary a second payment risk.

Under UCP 600, the purchase by a nominated bank of drafts or documents under a complying presentation, advancing funds to the beneficiary before reimbursement. It is one of the ways a credit may be made available.

A credit that expressly allows the first beneficiary to make it available, in whole or in part, to one or more second beneficiaries, typically suppliers. It is common where the seller acts as an intermediary.

The bank that authenticates and passes a credit to the beneficiary without adding any payment undertaking unless it also confirms. It must satisfy itself of the apparent authenticity of the credit.

A process in which the seller's bank forwards documents to the buyer's bank with instructions to release them against payment or acceptance, with no bank undertaking to pay. It is governed by URC 522.

A collection instruction under which the presenting bank releases shipping documents to the buyer only after the buyer pays the draft. Risk stays with the seller until payment is received.

A collection arrangement in which documents are released once the buyer accepts a time draft promising to pay later. The seller then carries the buyer's credit risk until maturity.

The ICC's Uniform Rules for Collections, which define the duties of remitting, collecting and presenting banks and the handling of documents in documentary collections. Banks act on instructions only and give no payment guarantee.

A written undertaking by a bank to pay a stated amount to a beneficiary if the applicant fails to meet a contractual obligation. It may be payable on first demand or on documentary conditions.

A credit-like undertaking used mainly as a guarantee, payable on presentation of specified documents evidencing default. It is often governed by ISP98 rather than UCP 600.

The outright purchase, usually without recourse to the exporter, of medium-term receivables from export sales, often evidenced by accepted drafts or promissory notes. It turns deferred payment exports into immediate cash.

A bank's account held in a foreign currency with a correspondent bank abroad, used to make and receive payments in that currency. The word means 'ours' from the account holder's viewpoint.

A standard interbank message instructing a single customer payment, carrying ordering and beneficiary details and a value date. It is the usual channel for cross-border remittances between banks.

An arrangement in which one bank holds accounts and provides payment, clearing or trade services for another bank in a different country. It underpins cross-border settlement and is a focus of AML supervision.

Money sent home by workers living abroad, usually through banks and exchange companies. It is a major source of foreign exchange and is subject to AML checks and purpose verification.

Moving value across borders through mispriced, misdescribed or fictitious trade transactions so that illicit funds appear to be legitimate trade payments. Detection relies on comparing documents, values and goods.

The natural person who ultimately owns or controls an account or corporate customer, or on whose behalf a transaction is made. Identifying them is a core customer due diligence requirement.

A confidential report filed by a financial institution with the financial intelligence unit when a transaction appears linked to crime or terrorism financing, without tipping off the customer.

An informal value transfer system in which funds are settled through trusted intermediaries and netted across locations, leaving no formal banking trail. It is illegal for regulated remittance and trade channels and is a laundering risk.

The risk that a buyer cannot pay, or that funds cannot be transferred, because of conditions in the buyer's country such as exchange controls, political instability or sovereign default. It is distinct from the buyer's own creditworthiness.