EURO EXIM BANK
Blocked Fund Services
This is a confirmation letter with a hold attached. On your instruction we place your own funds or facilities on administrative hold for an agreed period, and we confirm to the party who needs to know that we have done it.
A plain confirmation of funds describes where things stood on the day it was written. It says nothing about the following Monday. For some purposes that is fine. Where a counterparty is being asked to commit before payment falls due, a snapshot is not what they are after. They want to know the position will still be there when they get to it, and that is what the hold is for.
The letter states the amount, the account and the length of the hold. For that period the funds or facilities will not be changed, altered, amended or pledged unless you instruct otherwise. It is irrevocable and valid for the stated term. Where the hold is placed in favour of a named beneficiary, the letter says so and the beneficiary is named on it. Release then happens in accordance with the terms of the letter, subject to compliance and to our credit terms. Where it is not, release follows your own correctly authenticated instruction.
Either way the funds stay yours until the terms of the letter are met. We do not monetise them, trade them, or lend against them, and we do not release them to a party who is not named on the letter. If someone has told you that a blocked funds letter can be turned into cash by a third party, they are describing something we do not do.
The receiving bank can verify the letter through SWIFT, bank to bank. KYC is completed before issuance.
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Frequently asked questions
How is this different from a proof of funds letter?
A confirmation of funds describes where things stood on the day it was written. A blocked funds letter adds a hold, so the position is committed for an agreed period rather than described once. If your counterparty needs to know the funds will still be there when they get to the point of relying on them, that is the difference they are paying for.
Can the hold be placed in favour of someone outside the transaction?
No. Where a hold is placed in favour of a named beneficiary, that beneficiary has to be the counterparty to the underlying transaction, meaning the party you are trading with or carrying out the project with. A hold in favour of a funder, lender or introducer who has no trading relationship with you is not something we issue.
Can a third party draw on the funds or turn them into cash?
No. The funds remain yours and we do not monetise them, trade them, lend against them, or release them to anyone who is not named on the letter. If you have been told a blocked funds letter can be converted to cash by an outside party, that is not a description of this product.
What happens at the end of the hold period?
The hold lapses and the funds or facilities are yours to use as normal. During the term they will not be changed, altered, amended or pledged unless you instruct otherwise, and the letter is irrevocable for that period.
Do I pay KYC again for each product?
No. KYC is completed once. Having been through it for one product, you do not repeat it or pay for it again when you come back for another.