To enter into a Structured Private Placement Opportunity is a privileged not a right and there is certain documentation that must be completed correctly, failing to disclose required information will lead to rejection by the compliance officer.
There are two types of KYC (Know Your Client) packages one for individuals and one for companies and the correct one provided by us must be used.
In the company KYC package a corporate resolution must be completed with the name of the person who is the authorized signatory for the company.
(1) Client fills out the compliance documents and provides proof of funds or bank instrument and passport copy
NOTE: Most of the assets which people try to apply with can not be used in any private placement program. These include the ITR (Irrevocable Trust Receipt), SKR (Safe Keeping Receipt), junk bond, asset backed bonds, hard assets, and more. In addition, most of the applications received for Private Placement Programs are fraudulent.
(2) Trade group submits the application to the compliance department at the bank.
NOTE: Within hours most real groups will know if the asset and owner are legitimate. If the client has over 100M, most of the time real trade groups have seen the application before. There is a very small circle of real traders, so when someone applies with large assets the word travels fast.
(3) Client passes through compliance and receives the contract
NOTE: Most clients have NEVER been through this process before. With that being said, they show the contract to their attorneys who have never been through this as well. This leaves a number of circumstances which can develop. Due to the private nature of the private placement program business, there is only so much information the trader can reveal to the client.
(4) Client signs the contract and the trader countersigns it
NOTE: Even after the client signs the contract, there are still a number of hurdles to overcome to close a deal. If a client signs the contract and does not complete the transaction, they will be reported to the proper authorities and will be permanently prevented from participating in any private placement program in the future.
(5) Client contacts bank to complete the transaction
NOTE: Banks are in the business of making money, and nothing else. When a client asks to block, conditionally assign, or transfer assets they are cutting into the pockets of the bank. If the bank loses that asset off their books, they actually lose 25x that amount since they leverage loans from the FED or ECB. With this in mind, most banks stall since that will frustrate most customers enough to kill the deal. This should never be the case, it is the clients money not the banks. With this in mind, you need a bull personality or a great relationship with the bank if you are a client who wishes to complete what is needed.
(6) Funds are blocked, conditionally assigned, or transferred to the trade group specific to the contract
NOTE: Very few trade groups call for the transfer of assets, if they do be very cautious. Most private placement program traders need conditional assignments, temporary beneficiary access, or the blocking of the assets in favor of them for the period of the trade.
(7) Trader accesses line of credit from the bank within 72-96 hours
NOTE: The trader is the only one who can access a line of credit against blocked assets. No bank will offer a line of credit for that amount to someone who they do not thoroughly trust.
(8) Trader uses line of credit to have bank instruments issued at a discount and makes trade
NOTE: The bank issues the instrument directly to the trader for a significant discount (ex. 55% of face value). The trader then has a contract with someone who has agreed to purchase it at a higher amount (ex. 62% of face value). The trader buys the instrument and then sells it to the “commitment holder”, who then sells it to their “commitment holder” for a higher price (69% of face value). This continues until someone purchases it with the intent to hold it and collect the coupon/interest.
(9) Client receives payments weekly according to contract
NOTE: Once everything it set up, it is a very smooth process. Typically the first payment is made within 5-7 banking days after trading has started. The client will receive disbursements to the provided bank account on a weekly basis. Most clients and brokers should set up offshore accounts, or have internal transfers sent to the bank where the trading is done. Otherwise, USA/EU authorities will flag accounts which is obviously not good.
(10) Client funds projects and retains the rest for personal use
NOTE: Most real private placement programs are intended to fund humanitarian projects. Typically 70% of the profits must go to projects, while the remaining 30% is for “administrative use”. In essence, the 30% is the clients to use freely. The platform does not regulate this. The trade program will run for either Forty Weeks or One year and can be renewed at the end of the term for up to Five years. During the period of the Trade, the Client may, at his discretion, elect to apply any returns to additional trades; however, these are subject to the same procedures and protocols as given above. .
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