Anyone involved in the non-ferrous scrap metal trade on a larger scale will certainly have come across offers to buy copper (e.g. Milberry or cathodes) originating from exotic countries – particularly from Africa or less developed regions of Asia. These are often offers that are unbelievably cheap, whilst at the same time backed up by assurances of legality and a willingness to cooperate. Almost everyone who has come across them has wasted at least their time – and, unfortunately, many have also lost money.
A few years ago, tempted by the prospect of quick and easy profits, I too fell victim to manipulation. Fortunately, I only lost time, not money. There is an important lesson to be learnt from that experience: There’s no such thing as easy money in business, and double-digit margins on legal copper are a myth. Despite this, many market participants continue to fall for the illusion of quick profits, thereby unwittingly supporting global criminal networks.
The pattern is usually the same. A so-called manufacturer or intermediary approaches a metals trading company, offering copper in the form of cathodes, wire rod or scrap. It often comes from „hard-to-reach” countries, and the price is significantly lower than the market rate.
The fraudster sends photos of the goods, often including the potential buyer’s name and the current date, suggesting that everything is prepared and ready for dispatch. In addition, they state their readiness to deliver to the port, offer the option of using independent inspectors and demonstrate a high level of commitment – all of which is intended to lend credibility to the entire transaction.
He doesn’t ask for money up front – he simply asks for the door to be opened letters of credit as forms of security.
A letter of credit (LC) is a commitment by a bank acting on behalf of the buyer (importer) to pay the seller (exporter) a specified amount, provided that documents complying with the terms of the letter of credit are presented. It is one of the most commonly used instruments in international trade, serving to secure transactions.
In a nutshell: If the seller provides a complete set of documents in accordance with the arrangements, the bank will pay them the money – regardless of whether the goods actually arrive.
The process for a legitimate letter of credit transaction is as follows:
- The buyer and the seller enter into a commercial contract.
- The buyer instructs the bank to open a letter of credit in favour of the seller.
- The buyer’s bank sends the letter of credit to the seller’s bank.
- The seller dispatches the goods and provides the required documents (invoice, consignment note, certificates).
- The bank checks the documents – if they are in order, it pays out the funds.
- The buyer receives the documents and collects the goods.
In the case of fraud, everything happens in almost exactly the same way – with the exception that:
- the goods are not dispatched at all, or
worthless material is being sent (e.g. steel wire instead of copper – you can see an example in the video: https://youtube.com/shorts/niSJCBoMAQg
A letter of credit is a fully legal and recognised banking instrument, which relies solely on documents. Fraudsters exploit this fact by presenting false or falsified consignment notes, invoices and quality certificates – and in this way obtain money legally. The crime is only uncovered when the buyer does not receive the goods – or receives something completely different.
Illegal use of letters of credit by criminal groups:
- Document fraud
Fake documents make it possible to defraud funds without any actual delivery. - Credit fraud
A fictitious letter of credit can be used as security for a bank loan. - Money laundering
Money is laundered through fictitious contracts and the circulation of documents. - The financing of criminal or terrorist activities
Complex corporate and transaction structures are used to conceal cash flows. - Circumventing economic sanctions
Letters of credit help to conceal the actual recipients or the origin of the goods.
In this age of globalisation, copper is a raw material that can be sold anywhere in the world – an honest seller there is no need to offer it below the market price. So, if you receive an offer to buy cathodes, scrap metal or wire rod from „exotic” locations at a suspiciously low price – treat it as a warning sign.
Before you invest your time, energy and trust in such offers – think twice, whether it’s worth it. Not only could you lose money, but you could also – without realising it – become part of a wider criminal scheme.
RM 07.2025
