How to check a proof of funds (POF) before you send an LOI

Before you send a Letter of Intent (LOI) or an ICPO to a buyer or seller, you want to know they are real and that the money exists. A proof of funds (POF) is meant to answer the money question. The problem is that most "POFs" circulating in commodity deals prove nothing at all. This guide explains what a real POF looks like, why screenshots and PDFs are not enough, and why you should check the other side before your own documents leave your hands.

Who provides a POF?

Proof of funds comes from the buyer, because the buyer is the one who pays. A seller shows proof of product, not proof of funds. If a seller is waving a bank statement at you, or a buyer is asking you for a POF, the roles are mixed up and you should slow down.

What a real POF looks like

A proof of funds that means something comes in one of two forms:

• Bank to bank. The buyer's bank confirms the funds directly to your bank, for example through an authenticated SWIFT message or a formal bank confirmation that your own bank receives and checks. You do not depend on anything the buyer sends you.
• A bank letter you confirm yourself. The buyer gives you a letter on bank letterhead. You then call the bank on its official number (found on the central bank's register or the bank's own website, never on the letter) and confirm that the letter was issued, by whom, for which client and for what amount. Many banks will only confirm with the account holder's written authority, so ask the buyer to sign one.

Either way, the confirmation has to come from the bank through a channel you chose, not through the buyer or a broker.

Why screenshots and PDFs alone prove nothing

A screenshot of an online banking screen, a PDF bank statement or a scanned "balance confirmation" can be edited in minutes. Even a real statement only shows a balance on one day. It does not show that the money is free to use, that it belongs to the company in your deal, or that it will still be there next week.

Common tricks include:

• Balances changed in an image editor, with fonts that do not quite match.
• Real statements from a different company, with the name swapped.
• Letters from "banks" that are not on any central bank's list of licensed banks.
• Bank "officers" whose phone number is printed on the letter and who confirm everything instantly.
• An MT799 presented as proof that funds are blocked. An MT799 is a free-format message and does not block or guarantee anything.

If the only evidence is a file that the other side sent you, treat it as a claim, not proof.

Your LOI gives away your company

Many traders worry about whether the other side is real, but forget what they are handing over. An LOI or ICPO usually carries your company name, registration number, address, phone, email and signatory. A full corporate information sheet (CIS) can add passport copies and bank details.

If the other side is not real, those documents can be reused: to make offers in your name, to issue purchase orders you never signed, or to convince someone else that a fake deal has a genuine buyer behind it. Once a document is out, you cannot pull it back.

That is why the order matters: check the other side first, send your documents second.

A simple POF checklist

1. Confirm the counterparty is a real, registered company with a working website and an email on its own domain.
2. Ask how the POF will be delivered. Prefer bank to bank.
3. If you receive a bank letter, check the bank against the central bank's register of licensed banks.
4. Find the bank's official number yourself and confirm the letter with the bank, with the account holder's signed authority.
5. Ignore any phone number, email or "officer" supplied with the document.
6. Do not send your LOI, ICPO or CIS until the steps above are done.
7. Walk away from anyone who asks for a fee to "show" or "release" funds.

What a document check can and cannot do

A document check can catch edited files, scam wording, impossible bank references and documents already reported as fake. It cannot confirm that money exists. Only the bank can do that. Use the check to filter out obvious fakes quickly, then confirm the rest with the bank.