Documentary letter of credit
fraud under criminal law regime
in England and China
Department of Law, University of Eastern Finland, Joensuu, Finland
Purpose – The purpose of this paper mainly is to examine the relevant rules concerning documentary
letter of credit (L/C) fraud under criminal law in England and China.
Design/methodology/approach – The paper analyses the regulations about such crime and
Findings – The similarities and differences of such rules have been identied briey. L/C fraud is
considered a conduct crime; and unspecic or vague provisions concerning this crime may cause
difculties of application in judicial practice in both England and China. But the possible punishment
for L/C fraud criminals under Chinese criminal law seems more severe than that under English law.
Dealing with L/C fraud in international trade under national criminal laws is not effective. Regional and
international efforts on legal assistance in cross-border criminal cases still remain to be improved.
Research limitations/implications – The limitation is that it examines merely relevant substantial
rules in legislation. This opens the paths to future research on the approach towards L/C fraud
demonstrated in court cases in England and in China.
Social implications – The research underlies the need to take serious attitude and make more
effective efforts towards cross-border criminal cases, although different countries may have different
rules concerning specic economic crimes.
Originality/value – This paper lls the gap of a comparative study on how L/C is regulated under
criminal law regime in England and China.
Keywords Fraud, China, England, Criminal law, EU, Documentary letter of credit, Fraud Act 2006,
Legal assistance, CCS, UN
Paper type Research paper
Documentary letter of credit (also documentary credit, or more often letter of credit,
hereinafter L/C) is a well-known payment and nancial instrument in international
trade. Its documentary character facilitates international commercial transactions, but
makes it easy to be abused by fraudsters. The costs for victims from fraud can be
tangible and intangible; in addition, fraud can also lead to signicant social costs
(Cohen, 2005). In addition, fraud threatens international trade and battens on trust in the
This article derives partly from the author’s PhD dissertation “Approaches to Resolving the
International Documentary Letters of Credit Fraud Issue”, which was published by University of
Eastern Finland in January 2011 (Publications of the University of Eastern Finland, Dissertations
in Social Sciences and Business Studies No 15). The author is very thankful to Professor Matti
Tolvanen (University of Eastern Finland) and Professor Soili Nystén-Haarala (University of
Lapland) for their comments.
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Journal of Financial Crime
Vol. 21 No. 4, 2014
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