7 Checks Before Trading ICUMSA 45 Sugar From Brazil

Verify the contractual seller

Start with the company that will sign the SPA and receive payment, not the broker who introduced the deal.

Obtain the seller's full legal name, CNPJ, registered address, shareholders or administrators, authorized signatory and operating contact information.

For a Brazilian company, check the corporate information through official records rather than relying on registry extracts, certificates or screenshots supplied by the seller.

Review:

• CNPJ status;
• legal company name;
• registered address;
• shareholders and administrators;
• registered business activities;
• the authority of the person signing the contract;
• sanctions and adverse media;
• the company's stated role in the export chain;
• the proposed bank account beneficiary;
• independently sourced telephone and email details.

A real CNPJ only proves that a legal entity exists. It does not establish that the person emailing you represents that company.

Corporate identities are easy to copy. Fraudsters can use the name, registration details, address and executive names of a genuine business while communicating through a lookalike domain or unrelated telephone number.

Establish who actually controls the sugar

A legitimate company can still offer sugar it does not own, control or have authority to sell.

Determine exactly where the contractual seller sits in the supply chain.

Is it the mill? A producer? A trading house purchasing from mills? An exporter with contracted supply? An offtaker? Or an intermediary several steps removed from the party that controls the commodity?

If somebody claims to be a mandate, determine what the mandate actually authorizes.

Authority to introduce a buyer does not automatically give the intermediary authority to negotiate price, execute an SPA, nominate the beneficiary or dispose of the principal's cargo.

The principal should be verified independently.

Volume matters as well. A seller offering 100,000 MT every month is making a substantial claim about supply, logistics, storage and working capital.

The transaction file should explain how the sugar moves from the producer or supplier through storage, transport, port and vessel.

Reconstruct the economics of the trade

Fraudulent commodity offers often survive because buyers focus on documents before testing whether the economics of the shipment are possible.

Rebuild the transaction using the proposed price, quantity, Incoterm, load port, destination, freight, insurance, handling, inspection, financing costs and expected margin.

A CIF price cannot be assessed intelligently without realistic freight. An FOB price cannot be compared directly with a delivered price. A supposed mill discount is irrelevant if the complete trade cannot work at that number.

Check whether:

• the price is plausible for the stated Incoterm;
• the freight assumption is realistic;
• the quantity fits the proposed shipment method;
• the load port fits the supply chain;
• the shipment window is realistic;
• the packaging matches the logistics;
• inspection and port costs have been included;
• the seller's margin remains commercially possible;
• the payment tenor fits the physical trade cycle.

A transaction can have a professional-looking SPA and still fail immediately once freight and transaction costs are included.

Build the KYT file before approaching the bank

Basic KYC identifies the parties. KYT — Know Your Transaction — tests the commercial transaction itself.

That distinction is important because a genuine legal entity can appear inside a fabricated trade without knowing anything about it.

The transaction file should show who is buying, who is selling, where the commodity comes from, how the seller controls it, where the cargo is going, which parties handle the shipment and how payment will occur.

KYT requirements for a Brazilian ICUMSA 45 transaction

The KYT file should tell one consistent story from buyer and seller through to cargo, logistics, documents and payment.

If the explanation changes every time another document arrives, the transaction is not ready for financing.

Verify material documents through the real issuer

The seller should never control both the evidence and the process used to authenticate that evidence.

If a certificate claims to come from an inspection company, locate the inspection company yourself.

If a document claims to come from a mill, identify the mill independently and contact it using genuine corporate channels.

Apply the same standard to banks, warehouses, carriers, freight forwarders and other organizations named in the transaction.

Use particular caution with:

• POP packages;
• allocation letters;
• mill authorization letters;
• inspection certificates;
• warehouse receipts;
• previous bills of lading;
• bank comfort letters;
• export documents;
• corporate registration PDFs;
• screenshots of supposed banking messages.

A POP package is not an independent verification system

Proof of product is a broad market term. It is not one universally standardized document.

In a genuine transaction, different evidence becomes available at different stages.

Before shipment, you may be able to verify the seller, contractual rights, source of supply and proposed logistics.

As shipment approaches, inspection appointments, vessel nominations, freight arrangements and export information should become more specific.

After loading, shipment-specific documents become available.

Fraudulent transactions frequently try to replace that sequence with one thick POP package containing everything the buyer expects to see.

The number of documents proves nothing by itself.

Do not use the Letter of Credit as proof that the cargo is real

A documentary Letter of Credit deals with payment against compliant documents.

It does not establish that the seller had the right to offer the commodity when negotiations started.

The same distinction applies to SBLCs, bank comfort letters and SWIFT traffic.

A bank instrument addresses a banking obligation. The underlying cargo still has to be verified separately.

Before an LC is issued, agree the documentary conditions around the actual shipment.

Depending on the transaction, those documents may include:

• commercial invoice;
• packing list;
• clean onboard bill of lading;
• certificate of origin;
• quality certificate;
• weight or quantity certificate;
• insurance certificate where applicable;
• export documentation;
• sanitary or phytosanitary documentation where required;
• destination-specific import documents.

Every documentary condition should have a purpose and should be capable of being produced during the real shipment.

Payment instructions also need independent verification.

The beneficiary should fit the commercial structure. If money is being paid to somebody other than the contractual seller, understand the reason before accepting the arrangement.

Financely has published a Brazilian sugar Letter of Credit case study showing how the commercial trade and documentary payment structure can be aligned.

Continue checking the transaction as shipment evidence appears

Verification does not end when the SPA is signed.

A genuine transaction should produce stronger and more specific evidence as it moves toward shipment.

The file should become more specific as the transaction advances.

A vessel screenshot supplied months before loading means very little. Once a vessel has genuinely been nominated, the vessel, route and timing can be checked independently.

The same applies to bills of lading.

An old bill of lading may prove that a vessel carried sugar in the past. It does not prove that the person sending it controls the cargo being offered today.