My understanding of bank guarantees is that, the bank opens a written certificate to the beneficiary at the consignor's request, the beneficiary being the seller (UK Based). As the guarantor, bank has the responsibilities to handle the debt or obligations instead of the consignor. The rights and obligations of both parties would be prescribed by the contract.

Above said, I am in the car export business and would like to offer my customers these scheme. To put it simply, my bank gets the notification from customer's bank that him/her has a certain amount of money to buy a certain motor, I would then use my money to buy the motor, ship it and upon production of export paperwork to customer's bank, the bank would release the money to my bank (those who know better, please correct me if I am wrong). The risk of my company “running away” with “your” money is minimised in this case and on my side, the risk of me losing my money once export paperwork is sent is minimised, this being an interbank transaction. More like Letter of Credit

I have been digging around to establish the potential problems with this but it seems very straight forward in my opinion, however, there are loopholes/fraud in all systems. Does anyone out there know of any possible problems/fraud that could arise from this, taking into consideration Kenyan/UK markets and financial systems and more importantly, is it worth it?

Also, would such a system work for import virgins (those afraid to import), giving them the guarantee they need? It is a fact that most people will never import because of the fear that they will lose their money.

Thanks for reading and providing me with your advice/comments

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