GENERAL PROCEDURES FOR PROJECT FUNDING (PPP + BANKING COMPLIANT)
1. Project Submission & MOU
The Client submits full project documentation. ADP reviews and issues the draft MOU. Upon mutual agreement, both Parties sign and lodge the MOU with their banks for compliance.
2. Legal & Technical Documentation
The Client provides all required documents: SDG‑aligned project proposal, business plan, ICB package, legal authorization, bank reference, and board resolutions naming authorized signatories.
3. Final Agreement & Banking Preparation
After verifying all documents, ADP issues the final PPP Funding Facility Agreement within 15 working days. The Client then issues MT‑799 Pre‑Advice followed by MT‑760 SBLC as per agreed terms.
4. SBLC Conditions
The SBLC must be revolving, valid until project(s) completion, renewed annually, and returned without deductions once all contractual obligations are fulfilled.
5. Fund Activation & Disbursement
Upon authentication and acceptance of the SBLC, ADP initiates fund disbursement. The first tranche is released within 25–35 international banking days, followed by scheduled installments.
6. Funding Period
All disbursements are executed within a regulated 28‑ to 36‑calendar‑month funding term. Any adjustment to the disbursement schedule may be requested in writing by the Client and shall only take effect upon formal approval by ADP in accordance with banking compliance and PPP governance standards.
7. Completion & Return of SBLC
After successful project completion, the SBLC is returned to the Client free of liens, claims, or encumbrances.
8. Ownership & Grant Conditions
ADP retains no ownership or profit share in the project. The Client is not required to return any portion of the grant funding, provided the project meets approved terms and SDG compliance.
Why the Collateral or SBLC is Mandatory?
1. Protection of Project Funds (IMF & Basel III Compliance)
Without a bank‑issued guarantee, no financial institution or private facilitator is legally allowed to reserve or allocate large‑scale project funds. SBLC/BG ensures the project funds cannot be misused, diverted, or fraudulently accessed.
Legal Basis: IMF Project Finance Guidelines, Basel III Risk‑Weighted Asset Regulations.
2. Assurance of Project Completion (Global Project Finance Protocols)
SBLC/BG legally binds the client to complete the project as approved. It protects the facilitator and the funding bank from project abandonment or non‑performance.
Legal Basis: International Project Finance Association (IPFA) Completion‑Risk Standards.
3. Prevention of Financial Crime & Misuse (FATF Compliance)
Funding without collateral is considered a high‑risk transaction under FATF anti‑money‑laundering rules. SBLC/BG verifies that the client is not engaging in illegal placement programs or unauthorized financial activities.
Legal Basis: FATF Recommendations 10, 22 & 26 (Customer Due Diligence & Risk Mitigation).
4. Legal Requirement for Private Platforms (Non‑Sovereign Funding Rules)
A private platform cannot legally reserve or deploy project funds without a confirmed financial guarantee. Doing so violates international banking laws and exposes the platform to regulatory penalties.
Legal Basis: Non‑Sovereign Lending Regulations, IFC Private Sector Funding Standards.
5. Protection Against Default & Non‑Payment (Banking Risk Mitigation)
SBLC/BG acts as a default‑protection instrument. If the client fails to meet obligations, the bank guarantee covers the financial exposure.
Legal Basis: ICC Uniform Customs & Practice for Documentary Credits (UCP‑600).
6. Verification of Client’s Financial Integrity (KYC/AML Requirements)
SBLC/BG confirms the client’s legal identity, financial capacity, and compliance with international KYC/AML standards. Without it, the facilitator cannot legally proceed.
Legal Basis: Global KYC/AML Regulations, FATF Recommendation 12.
7. Mandatory for PPP Funding Structures (UNECE PPP Standards)
Under Public‑Private Partnership rules, the private facilitator must secure a financial guarantee before committing any funding. This protects public interest and ensures lawful project execution.
Legal Basis: UNECE PPP Standard 3.0 – Financial Sustainability & Risk Allocation.
8. Prevention of Fraudulent Funding Requests (Anti‑Fraud Banking Protocols)
SBLC/BG filters out fraudulent applicants, political actors, government employees, and individuals involved in illegal business or criminal activity.
Legal Basis: International Anti‑Fraud Banking Protocols, FATF Red‑Flag Indicators.
9. Ensuring Transparency & Accountability (Global Governance Standards)
SBLC/BG creates a transparent financial trail, ensuring that every step of the funding process is documented, auditable, and compliant with international governance laws.
Legal Basis: UN Convention Against Corruption (UNCAC), Article 7 & 9.
10. Guarantee of Non‑Diversion of Funds (Strict Use‑of‑Funds Control)
SBLC/BG ensures the client cannot use the funds for any purpose other than the approved SDG‑aligned project. This protects the facilitator from legal liability.
Legal Basis: IMF Use‑of‑Funds Restriction Policy, SDG Funding Governance Rules.
Criteria of Qualified Facilitator:
1. No upfront fees or charges.
2. Ability to confirm project cost against pre‑advice only, after full satisfaction of SBLC/BG.
3. Must meet clients face‑to‑face with legal address and registered license.
Client Risk Factors:
ADP’s structured funding model eliminates client risk. The client never uses cash to obtain a non‑interest, non‑recourse project loan. The client issues Pre‑Advice (MT‑799) to ADP’s bank, enabling ADP to reserve the required funds and confirm project cost via SWIFT from top Western banks. Upon full satisfaction, the client issues SBLC (MT‑760). After successful project completion, the SBLC is returned to the client’s bank without any encumbrance. This structure ensures zero percent risk for the client.
Why Arranged / Leased Guarantee or Leased SBLC Is NOT Acceptable?
1. Leased SBLC Has No Legal Ownership (ICC & UCP‑600 Violation)
A leased or arranged SBLC is not owned by the client; therefore, the client has no legal right to use it as collateral. Banks cannot rely on an instrument that the applicant does not legally own.
Legal Basis: ICC Uniform Customs & Practice for Documentary Credits (UCP‑600), Articles 2 & 4.
2. Leased Guarantees Cannot Be Used for Project Funding (IMF Lending Rules)
IMF and global project‑finance protocols prohibit the use of leased or arranged guarantees for funding because they do not represent real financial commitment or risk coverage.
Legal Basis: IMF Project Finance Guidelines – Collateral Ownership Requirement.
3. High Risk of Fraud & Misuse (FATF AML Regulations)
Leased SBLCs are widely associated with fraudulent schemes, illegal placement programs, and unregulated financial activities. Accepting them violates FATF anti‑money‑laundering standards.
Legal Basis: FATF Recommendations 10, 22, 26 & Red‑Flag Indicators.
4. No Bank Will Block or Reserve Funds Against a Leased Instrument (Basel III)
Under Basel III risk‑weighted asset regulations, banks cannot reserve or allocate project funds against a leased or arranged guarantee because it does not provide real risk mitigation.
Legal Basis: Basel III Capital Adequacy & Risk Coverage Framework.
5. Private Platforms Are Legally Prohibited from Funding Without Real Collateral
A private facilitator cannot legally reserve or deploy project funds without a confirmed, owned, and verifiable SBLC/BG. Leased instruments violate non‑sovereign lending regulations.
Legal Basis: IFC Non‑Sovereign Lending Standards.
6. Leased SBLC Cannot Be Verified Through SWIFT (Banking Compliance Failure)
Banks cannot authenticate leased SBLCs through SWIFT MT‑760 because the issuing bank does not confirm ownership or usage rights. This makes the instrument invalid for project finance.
Legal Basis: SWIFT Compliance Protocols for MT‑760 Guarantees.
7. No Legal Recourse in Case of Default (Zero Protection)
If the client defaults, a leased SBLC provides no legal protection to the facilitator or funding bank. It cannot be called, claimed, or liquidated.
Legal Basis: International Banking Risk Mitigation Standards.
8. Violates PPP Financial Integrity Requirements (UNECE PPP Standards)
PPP structures require real, owned, and verifiable guarantees to protect public interest. Leased guarantees violate transparency, accountability, and risk‑allocation principles.
Legal Basis: UNECE PPP Standard 3.0 – Financial Sustainability & Risk Allocation.
9. Leased Guarantees Are Classified as “High‑Risk Instruments” (Global Governance)
UN, IMF, and FATF classify leased SBLCs as high‑risk due to their association with illegal private placement programs and unregulated financial brokers.
Legal Basis: UN Convention Against Corruption (UNCAC), Articles 7 & 9.
10. Cannot Be Used to Secure Project Completion (Completion‑Risk Failure)
Leased SBLCs do not bind the client to complete the project. They provide no assurance of performance, making them unacceptable for SDG‑aligned development funding.
Legal Basis: International Project Finance Association (IPFA) Completion‑Risk Standards.
11. Violates “Use‑of‑Funds” Restrictions (IMF & SDG Governance)
Funding based on leased guarantees risks diversion of funds, misuse, and non‑SDG‑compliant activities. Regulators prohibit such instruments to protect development finance integrity.
Legal Basis: IMF Use‑of‑Funds Restriction Policy; SDG Funding Governance Rules.
12. Banks Consider Leased SBLCs as “Non‑Transferable & Non‑Assignable”
Because the client does not own the instrument, it cannot be transferred, assigned, or used as collateral for any project.
Legal Basis: ICC Banking Commission Opinions on Non‑Assignable Guarantees.