Checklist of Due Diligence Before Sending a T/T Payment to China

Checklist of Due Diligence Before Sending a T/T Payment to China
Sending money to China requires some due diligence, especially if you are using a T/T payment. 

When a Chinese supplier asks for a wire transfer, they’ll likely call it a T/T payment. China T/T Payments are the most common way to send funds to a partner or vendor in China - but they can also present some risk. Are you 100% sure the person you are talking to is the correct vendor, bank account owner and business license holder? Before sending a China T/T payment take a look at this handy checklist to be certain your payment is really going to the correct account.

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T/T?

The acronym T/T is for "Telegraphic Transfer", an international bank wire transfer made through the SWIFT system most of the time. It typically takes 3-5 working days to clear, and generally costs between 25 and 50 USD.

What’s the Risk with China T/T Payments?

Before sending a China T/T payment to your Chinese supplier, you should know the possible risks. In addition to vendor off-shore tax evasion or other non-transparent anti-money laundering related issues, your buyer could have been hacked and their invoices have the hacker’s bank info without their knowledge.

One common situation is when requested T/T payments actually get sent to individuals, third parties and entities registered offshore. There are a number of reasons to avoid this scenario, including best practice KYB / AML considerations.

The following checlist will help make sure your wire goes to the actual Mainland China-registered entity that you are dealing with.

China T/T Payment Checklist

#1: Is this an Individual or a Company?

When you are sending money to a Chinese company you want to make sure you are making payment to their corporate account, not the account of an individual.

View the banking details supplied by the vendor, and check if the payee is an individual or a company. To make sure it is a company name, look for the following suffix or ending to the name:

  • CO LTD
  • LTD.

Best practice is to avoid making any China T/T payments to individual accounts wherever possible.

#2: Is this the Correct Company?

You have been communicating with one Chinese company, but when it comes to making payment the payment details are for a different company. This can happen for a variety of reasons, many of them include situations you do not want to be party to. For best KYB / AML best practices, only wire funds to the company you have been dealing with.

Confirm that the name of the company provided as the payee on the bank details is identical to the name of the company you have been dealing with.

Where to find the company name: Website, Alibaba page, Estimates or Quotes, Invoices or POs, Brochure PDF, Certificates, licenses or test reports (if any), Email signature

If these do not all match, ask the vendor why. There may be a reasonable explanation, but it could be a red flag.

Here is a handy guide to look over the business license. You can also use the company name to perform a basic or advanced company report with Nuna Network.

Remember: only names in Chinese are official. However, in order to use the SWIFT system the company does need to provide an English name.

# 3: Where is the Bank?

For a Mainland China company you should be making your payment to a Mainland China bank account. Here is an article about Chinese Bank Account certificates for more info on how to read those documents, should your due diligence process require them.

Check the payment bank details for the name and address of their bank and local branch. Mainland China companies should have bank accounts with Mainland China banks, which should be located in Mainland China. Most of the time, the bank will be in the same province as the company.

#4: Is it Offshore?

While you may have cleared all of the previous checks, you still need to watch out for offshore accounts held by Mainland Chinese companies. The way to tell is the account number itself - it should be exactly 19 numbers, no letters.

Here are also some pre-fixes to watch out for that indicate an offshore account:

  • FTN (Free Trade Non-Resident)
  • OSA (Off-Shore Account)
  • NRA (Non-Resident Account)

If you wire payment to one of these accounts, you are actually sending your money to an offshore company - not the Mainland China entity. This is likely for tax avoidance purposes on behalf of the vendor, but it could lead to issues if you have any legal disputes with that vendor.

#5: Get a Nuna Network Company Report?

If this is your first time doing business with a vendor, Nuna Network can generate a report from over 150 data points to verify the partner before sending initial funds. A basic report for $30 will confirm their identity, while an $80 report will reveal abnormal business practices, environmental penalties and more.

Additional Resources

Still have questions? We’re here to help.

We’re the partner of choice and go-to resource for businesses or individuals seeking guidance in researching, developing, and establishing relationships with companies in China.

Nuna Network offers more than a one-time report, but a range of validation, verification, and diligence services that help you determine the authenticity of a Chinese company. Check out our valuable guides, helpful tips, and other practical information to help you navigate the complex landscape of Chinese Businesses.