Confirmed letter of credit: how confirmation works and how to check it
By the Vanguard Verify desk · Published 2026-10-24 · Updated 2026-11-04
Short answer: a confirmed letter of credit carries two bank promises. Under UCP 600 Article 2, confirmation is “a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation.” If the seller presents compliant documents, the confirming bank must pay even if the issuing bank or its country cannot.
When sellers ask for confirmation
Confirmation protects the seller against issuing-bank risk and country risk (for example, foreign-exchange controls or sanctions in the buyer’s country). Sellers of commodities such as sugar, fertiliser, cement or edible oils often ask for confirmation by a bank they know, usually in their own country or a major financial centre. See DLC MT700 explained for how the underlying credit is issued.
How it works, step by step
- The buyer applies to its bank, which issues the LC (MT700) and authorises or requests a named bank to add confirmation (field 49: CONFIRM or MAY ADD).
- The confirming bank decides whether to accept the risk. Under UCP 600 Article 8(d), if it is not prepared to confirm it must tell the issuing bank without delay and may advise the credit without confirmation.
- The confirming bank advises the LC with its confirmation added, and charges a confirmation fee, which the LC terms allocate to buyer or seller.
- The seller ships and presents documents to the confirming bank.
- The confirming bank pays a complying presentation and then claims reimbursement from the issuing bank.
Types of confirmation
| Type | What it is | Governed by UCP 600? |
|---|---|---|
| Open confirmation | Issuing bank authorises or requests confirmation; confirming bank adds it | Yes (Articles 2 and 8) |
| Silent confirmation | A bank agrees privately with the seller to pay, without the issuing bank’s request | No — it is a separate contract with the seller |
| Partial confirmation | Confirmation of only part of the LC amount | The confirming bank must state the amount it confirms |
Note: in Spain and Latin America, “confirming” is also the name of a supply chain finance product (reverse factoring). That is a different thing from LC confirmation.
How to check a confirmation is real
- Get the confirmation from the confirming bank through your own bank, not as a PDF from the buyer or a broker.
- Check the confirming bank’s SWIFT BIC and licence on its regulator’s register.
- Read the exact wording: “we add our confirmation” is confirmation; “we advise without engagement” is not.
- Check the expiry, place of presentation and documents required are things you can actually meet.
Red flags
- “Confirmation” offered by a non-bank, a broker or a “financial institution” with no banking licence.
- A “confirmation” sent as an MT799 free-format message (see MT799 meaning) — that is not a payment undertaking.
- A confirming bank in the same weak jurisdiction as the issuing bank, which adds little protection.
- Requests to pay “confirmation fees” to a private account.
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FAQ
Who pays the confirmation fee?
Whoever the LC terms say. Often the seller pays because confirmation protects the seller, but it can be negotiated onto the buyer.
Is silent confirmation covered by UCP 600?
No. Silent confirmation is a private agreement between a bank and the seller, made without the issuing bank's request. It is not a confirmation under UCP 600 Article 8.
Can a bank refuse to confirm an LC?
Yes. Under UCP 600 Article 8(d) a bank asked to confirm that is not prepared to do so must inform the issuing bank without delay and may advise the credit without confirmation.
What is LC confirmation?
A second bank, usually in the seller's country, adds its own promise to honour or negotiate a complying presentation on top of the issuing bank's. Under UCP 600 Article 8 the confirming bank is irrevocably bound from the moment it adds its confirmation.
Letter of credit confirmation vs advising: what is the difference?
An advising bank only checks that the LC appears authentic and passes it to the seller; it does not promise to pay (UCP 600 Article 9). A confirming bank promises to pay in its own right.
How do I check a confirmed letter of credit is real?
Ask the bank named as confirming bank, using contact details you find yourself, to confirm in writing that it has added its confirmation to that LC number, or ask your own bank to check through SWIFT. A PDF forwarded by the buyer or an intermediary proves nothing.
Vanguard Verify is run by Vanguard Trade Capital Goods Wholesalers DWC-LLC, Dubai South, Licence 14282. This answer is general information, not legal or financial advice.