Unconfirmed Letter of Credit Risks for Exporters
The risks an exporter keeps when a Letter of Credit is not confirmed, and how to reduce them.
Reviewed by LCCheck team (owner-approved) · 2026-10-12
Short answer
With an unconfirmed Letter of Credit, the exporter relies solely on the issuing bank's undertaking. If that bank fails, delays, or cannot transfer funds because of country restrictions or sanctions, the exporter may not be paid despite compliant documents. Discrepancy risk is the same either way.
| Relies on | Issuing bank only |
|---|---|
| Main risks | Bank failure, country transfer risk, sanctions |
| Mitigation | Confirmation, credit insurance |
Risks
- Issuing bank insolvency.
- Foreign exchange or transfer restrictions.
- Sanctions or political events.
- Slow reimbursement.
Reduce them
- Ask for confirmation (field 49).
- Check the issuing bank's standing.
- Consider export credit insurance.
Sources
General guidance, not legal advice. Your bank examines documents independently.
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