The Libyan Customs Authority announced yesterday the adoption of security paper for official letters related to the settlement and closure of Documentary / Letters of Credits (LCs) issued for local companies and submitted to banks. The measure aims to enhance transparency and prevent forgery.
The Customs Authority disclosed that recent monitoring revealed violations, including forged letters submitted to banks, to falsely confirm the arrival of imported goods. In response, the authority introduced specialized security paper with technical features that make forgery difficult and improve the reliability of official documents.
Customs centers where goods enter the country have also been authorized to issue settlement letters directly to ensure more accurate verification of the arrival of goods.
These measures, the Customs Authority added, are part of broader regulatory efforts to strengthen oversight of documentary credits and protect the national economy, particularly as such credits are granted in foreign currency according to the official rate set by the Central Bank of Libya.
LC fraud
It will be recalled that since the 2011 revolution and the onset of weak Libyan state institutions, Libya has experienced a huge increase in LC fraud. There are at least two main ways in which LC fraud is transacted.
First, there is the case where companies, who are granted LCs at the official and lowest foreign exchange rate in Libya through their bank, either import lower valued goods than is quoted in their proforma invoice and keep the balance of the money out of Libya, or they repatriate the difference and sell it on Libya’s black-market foreign exchange.
The other even more fraudulent technique is that companies open a large one-off LC in the millions in hard currency and never import any goods into Libya. The owner/owners of such a company are happy to migrate and not return to Libya to face the law.
Companies are supposed to present a letter from the customs authority proving that they had imported the goods they presented in their proforma invoice when opening an LC.
However, as the need for the use of secure paper indicates, companies had started to issue forged Customs Authority letters supposing that they had indeed imported goods.
11 companies referred for LC fraud
As a recent example of LC fraud, on 15 January this year, the Customs Authority announced the detection of 11 companies that obtained Letters of Credit at the official (and lower) exchange rate without importing any goods.
Investigations showed that US$ 54 million was transferred to foreign beneficiaries without actual imports.
The Customs Authority said legal procedures have been completed, and the case has been referred to the Public Prosecutor’s Office. The Customs Authority reaffirmed its commitment to combating financial corruption and protecting public funds and the national economy.
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