MT 760

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Definition

MT 760. It is a SWIFT message format of a bank guarantee.

An account with the MT 760 capability allows financial institution-to-financial institution automatic verification of the account. It includes a blocked funds provision. It is a written guarantee honoring the commitments toa third party in certain circumstances, in the event that the buyer is unable to meet them. It is not a payment instrument. In the event of a default, the beneficiary can liquidate the said guarantee. The beneficiary would notify its demand via a free format MT 799 or MT 999.

Upon receipt of the written demand, the financial institution would remit proceeds via Swift format MT 103. Since financial institutions try hard not to put their money at risk, the customer's funds are blocked by the financial institution and held by the financial institution as a security (collateral) for the issuance of the guarantee. The transfer MT 760, therefore, is more than just an inter-financial institution message. It is a full-blown cash-backed negotiable instrument.