Invalid Letters of Credit Traced To Chinese Investors

After discovering fake letters of credit had been used on its platform, Israel-based Vesttoo Ltd. is in discussions with potential investors concerning alternative collateral for its clients. Vesttoo uses AI and provides insurers with access to insurance-linked securities, often backed by collateral in the form of letters of credit as reinsurance. If the securities aren’t valid, insurers need to find replacement cover or pay claims in full. According to Artemis, China-based investors are behind collateralized reinsurance transactions by Vesttoo in which the letters of credit guaranteeing the limits have been deemed invalid. Artemis claims that two investors are capital providers in every case where an LOC is alleged to be fraudulent, or invalid. China Construction Bank and (Chinese) Standard Chartered, may be implicated as well. Artemis previously reported that some parties to transactions said they checked the validity of letters of credit with bank employees, and that they had appeared to be real employees of the banks in question.