A bank decides whether to issue, confirm or finance a trade by asking one question: is this a real transaction between real companies at a credible price, and can we prove it to our regulator? Everything below is how banks answer it.
What a bank checks
| Area | What they look at |
|---|---|
| Know your customer (KYC) | Registry extract, articles, directors, shareholders, ultimate beneficial owners, source of funds, business activity matching the product |
| Counterparty | The other side's identity, country, bank, and whether it really owns or buys the goods |
| Sanctions | Parties, owners, banks, vessels, ports and origin screened against UN, EU, UK and US lists |
| Goods | Whether the product, origin or end use is controlled (dual-use, conflict minerals, EUDR products) |
| Price | Whether the contract price is plausible against the market; large deviations trigger trade-based money laundering checks |
| Shipping | Vessel identity (IMO number), owner, flag, tracking history, ports of call, ship-to-ship transfers |
| Documents | Consistency across contract, LC, invoice, B/L and inspection reports |
What makes a deal financeable
- A signed contract with clear specification, quantity, price, Incoterm and delivery period
- A seller with title or a documented chain to the goods
- A buyer with a track record in the product and audited financial statements
- Independent inspection at loading, ideally at both ends
- Insurance of the cargo and, where needed, credit or political-risk insurance
- Collateral or structure: LC, receivables, warehouse receipts, collateral management
- Price and volume in line with the parties' size and history
Why small deals get stuckTrade finance has a fixed compliance cost per client. A first shipment from a newly formed company with no accounts, a seller that is not the owner, or an intermediary-led structure rarely passes, however good the price. Start with a trial lot on secure terms and build a record.
Official sanctions lists
TradeScout24 Trade Desk · General information, not banking or legal advice · Last reviewed 25 Oct 2026