I have a large industrial customer who desires a letter of credit in relation to a company in Nigeria who distributes their product(s). What concerns do I need to have? and What information do I need on the Nigerian entity?

Thanks.

Do you have a 3rd party relationship that issues your foreign letters of credit? Do you routinely issue foreign letters of credit? If so, what information do you require for those and why do you feel you would need addditional for one out of Nigeria? Concern about validity of the business and/or business relationship?

This is what your internal procedures should detail. I would be asking for very detailed documentation which details who the Nigerian company (including their BofD and Executive Management) is, what products they distribute, a list of their customers, a selection of invoices to review and how long has your customer been doing business with this entity.

If your bank does not regularly do international trade letters of credit, it should not do this without a documented process with policies and procedures. You need due diligence to ensure that the transaction is legitimate, credit worthiness of customer, etc.

Much also depends upon which entity will be your customer in the LC, whose credit you are backing.

You also need to be familiar with the import and export rules (depending on which way the subject goods are traveling) of the country they are dealing with.