Introduction
The MT799 is a free-format SWIFT pre-advice message widely used in trade finance to communicate intent, readiness, or preliminary fund confirmation between banks.
Although non-binding, its secure transmission and correct verification are critical: a properly handled MT799 reduces uncertainty, prevents fraud, and sets the stage for irrevocable instruments (e.g., MT760 SBLC or MT700 LC) that may follow.
Keywords: SWIFT secure message, interbank communication, message authentication, verification steps, compliance checks.
I. Transmission Process
The MT799 transmission follows a standardized operational flow through the SWIFT network to ensure confidentiality and traceability.
Step-by-step flow:
Client Instruction
The applicant (buyer) instructs its bank to prepare an MT799 as pre-advice to a beneficiary’s bank.
Message Drafting
The issuing bank drafts the MT799 content — typically Field 20 (transaction reference), Field 79 (narrative) with beneficiary details, amount, currency, and intended instrument.
Internal Pre-Send Checks
The bank performs KYC checks on the applicant, screens for sanctions/AML flags, and validates that the message wording is compliant with internal policy.
SWIFT Sending
The message is transmitted via the sending bank’s SWIFT gateway using standard encryption and authentication protocols.
Delivery to Recipient
The beneficiary’s bank receives the MT799 through its SWIFT terminal and logs the incoming message for processing and verification.
Example: A buyer’s bank sends Field 79: “Pre-advice: funds available for issuance of MT760 SBLC in favour of ABC Ltd for USD 2,000,000.” The beneficiary’s bank receives and records the message as a preparatory notice.
II. Verification and Authentication
Verification is the critical second stage — the receiving bank must confirm authenticity and assess any risk before acting on the pre-advice.
Key verification steps:
SWIFT Source Authentication
Confirm the message originates from an authorized SWIFT BIC and an RMA-approved correspondent.
Message Integrity Check
Ensure no truncation or tampering occurred in transit (SWIFT cryptographic checks, internal message hashes).
Cross-Reference Fields
Match Field 20 with internal references or related correspondence; ensure beneficiary identity and account details are accurate.
Compliance Screening
Run automated sanctions, PEP and AML screens against applicant and beneficiary names, countries, and transaction descriptors.
Operational Validation
Confirm the bank has capacity/mandate to accept subsequent instruments (e.g., can act as advising or confirming bank).
Request Clarification (if needed)
If any ambiguity or red flag exists, request a clarifying MT799 or supporting documents before proceeding.
Tip: Treat MT799s as informative, not contractual — any commitment must come from a following irrevocable instrument (MT760/MT700).
III. Compliance and Risk Management
Robust compliance and monitoring reduce the chance that MT799 messages are used to launder funds, mislead counterparties, or facilitate fraud.
Critical controls:
KYC / Enhanced Due Diligence
Confirm ultimate beneficial owners and transaction purpose, especially for high values or high-risk jurisdictions.
Sanctions & PEP Screening
Run real-time checks against global sanctions lists and PEP databases before acknowledging any readiness claim.
Transaction Monitoring
Flag unusual patterns (repeated pre-advice without follow-through, mismatched amounts, unfamiliar counterparties).
Recordkeeping & Audit Trails
Keep full logs of MT799 messages, internal reviews, and any follow-up communications for regulatory audits.
Escalation Protocols
Route suspicious cases to compliance/financial crime teams for investigation prior to any commercial action.
Risk Example: An MT799 claiming funds availability from an unknown offshore bank should trigger enhanced due diligence and possibly refusal to act until verified.
IV. Coordination Between Banks
Effective interbank coordination accelerates safe deal execution and prevents misunderstandings.
Best operational practices:
RMA (Relationship Management Application) Management
Ensure RMA permissions are current so only authorized institutions exchange free-format messages.
Use Clear, Consistent Wording
Standardize narrative templates (while preserving necessary transaction specifics) to reduce ambiguity.
Confirm Channels for Follow-Up
Agree in advance whether confirmations, MT760 issuance, or queries will use SWIFT, secure emails, or phone (with verification).
Pre-arranged Matching
For recurring counterparties, maintain standing data (beneficiary BIC, account details, authorised signatories) to speed verification.
Training & Escalation
Operations, trade finance and compliance teams should run joint drills and know escalation paths for suspicious or urgent MT799s.
Example: Two correspondent banks agree that an MT799 pre-advice will be followed by a phone verification and then an MT760 within 48 hours for large infrastructure deals — reducing processing delays.
V. Best Practices for Issuers and Recipients
Be Precise but Conservative in Wording
State intent and amount, but avoid language that could be misconstrued as a binding commitment.
Always Run Full Compliance Checks Before Acknowledgement
Even if from a long-term client — re-verify sanctions/AML status for each transaction.
Log and Retain All Message Metadata
Save Field 20, timestamps, BICs and any routing info for traceability.
Use MT799 as Part of a Staged Workflow
Treat MT799 as a preparatory step — require formal MT760/MT700 for payment/guarantee commitments.
Train Frontline Staff
Ensure operations and relationship managers understand the technical and legal limits of MT799.
Conclusion
The MT799 transmission and verification process is a low-risk, high-value preparatory tool in trade finance when handled correctly.
Secure SWIFT transmission, rigorous authentication, comprehensive compliance screening, and clear interbank coordination turn a non-binding pre-advice into an effective enabler of subsequent irrevocable instruments — while protecting banks and clients from fraud and regulatory exposure.
FAQ: Transmission Process and Verification of MT799
Q1 — Is an MT799 legally binding?
No. MT799 is an informational, non-binding SWIFT pre-advice and does not create a payment or guarantee obligation.
Q2 — How does a bank verify an MT799’s authenticity?
Through SWIFT source authentication (BIC/RMA), message integrity checks, and cross-referencing internal records and client files.
Q3 — What compliance checks are mandatory on receipt?
Sanctions screening, AML/PEP checks, KYC validation, and transaction monitoring for unusual patterns.
Q4 — Can an MT799 be used to trigger an MT760 automatically?
No — MT799 may precede an MT760, but the issuing bank must independently approve and issue an irrevocable MT760; the MT799 alone isn’t sufficient.
Q5 — What red flags should recipients watch for?
Unverified issuing banks, inconsistent beneficiary details, repeated pre-advice without follow-up, and transactions involving high-risk jurisdictions.
Q6 — How long should banks retain MT799 records?
Retention should meet local regulatory requirements (commonly 5–7 years) and be sufficient to support audits and investigations.
