BCL, RWA and POF: How Banks Actually Confirm a Buyer's Readiness (MT799 Explained)

Three abbreviations appear in almost every offer for EN 590 or gold dore that reaches a trading desk: BCL, RWA and POF. The seller asks the buyer to provide a bank comfort letter, a "ready, willing and able" letter, or proof of funds, usually "by MT799". The requests sound like routine due diligence. In fact they describe documents that banks either do not issue or issue in a far more limited form. This article explains what BCL, RWA and POF are, what an MT799 can say, and how banks actually confirm a buyer's readiness.

What an MT799 is

MT799 is a free-format message in the SWIFT category 7 series. It is authenticated between the sending and receiving bank, so the receiver knows which bank sent it, but its content is plain text with no structured fields and no legal effect. Banks use it for pre-advice of a credit, queries about a guarantee and general correspondence. An MT799 can confirm receipt of a message or state that a customer holds an account. It cannot create a payment obligation, block funds, or "guarantee" anything. Those functions belong to MT700 for documentary credits, MT760 for guarantees and standbys, and MT103 for actual transfers.

Rule: an MT799 tells the receiving bank what the sending bank chose to write. It is a letter on authenticated stationery, not an undertaking, and no amount of wording inside it turns it into one.

Bank comfort letter (BCL)

A bank comfort letter is a statement by the buyer's bank that the buyer is a customer in good standing and has the financial capacity to enter into a transaction of a stated size. It is not a commitment to issue a letter of credit and not a guarantee. Banks issue comfort letters sparingly, after compliance review, and the text is cautious: it refers to the customer's standing and the availability of facilities, subject to final approval. It is sent by MT799 or on paper to a named bank, never to a trader by e-mail. A BCL addressed "to whom it may concern", or one that confirms "funds are blocked for this transaction", does not come from a regulated bank.

Ready, willing and able (RWA)

RWA letters are a creation of the intermediary market. The buyer is asked to have its bank confirm by MT799 that the buyer is "ready, willing and able" to purchase a cargo, sometimes with wording that the bank will "proceed to issue the SBLC upon receipt of POP". No bank can make the first statement, because readiness and willingness are commercial facts, not banking facts. No bank will make the second, because a conditional undertaking would be issued as MT760 if it existed. Where an "RWA MT799" is produced, it has either been issued by an unregulated entity with SWIFT access or has been edited after the fact.

Proof of funds (POF)

Proof of funds is a statement that an account holds a balance of a certain amount on a certain day. Banks issue account balance confirmations to their own customers; a customer may forward one. The balance can be withdrawn the next day, the letter is easy to forge, and a balance proves nothing about willingness to pay for a specific cargo. Institutional sellers do not ask for POF because they have a better instrument: the letter of credit. A buyer whose bank issues an MT700 has proved funds and commitment at once, with the seller's bank as the recipient of the authenticated message.

How a seller really checks a buyer

1. KYC on the buying entity: incorporation documents, ultimate beneficial owners, sanctions screening, audited financial statements for the last two or three years.
2. Trade references from suppliers or inspectors on previous cargoes.
3. A bank reference obtained bank to bank: the seller's bank asks the buyer's bank, by MT799 or by letter, whether the customer is known and whether facilities exist for the stated transaction. The reply goes to the seller's bank, not to the seller.
4. A draft letter of credit text agreed between the parties, so that the seller sees the buyer's bank, the applicant name and the document list before issue.
5. Issue of the credit by MT700, subject to UCP 600, after which readiness is no longer a question.

For gold, where the counterparty is often a refinery, step three is replaced by the refiner's onboarding under LBMA Responsible Sourcing requirements, and payment is typically by wire on assay rather than by credit.

Why intermediaries ask for BCL, RWA and POF

• A bank letter addressed to an unknown party discloses the buyer's bank, account and capacity to a chain of brokers.
• Each document is a step in a sequence in which the next step requires a fee: POF, then RWA, then "procedure fee", then the instrument.

What to answer when asked

A refinery or an LBMA-accredited refiner will accept this position without comment. A counterparty that insists on RWA or POF before producing a contract or a bank name is testing whether the buyer knows the difference between a message and an undertaking.