Authorization to Verify (ATV) letters are by far the most widely used tool that In3 clients use to show us they have capacity for CAP’s Security. However, some “sponsors” want to know more about In3 before putting their information in writing, which some regard as sensitive. This article will help.
Options for Confirming Security Availability
About ATV Letters
An ATV letter is preferred to show capacity and authenticate the involved bank/banker – stating that the banker is RWA (“ready, willing able”) to proceed once the project is under contract for the proposed funding. <– Start with this most widely used option, redacting info if or as necessary. Share the unredacted version with the involved banker.
How to start: Select the type of Security you see as best for your situation, mainly either 25-35% cash Surety deposit, 50-75% Standby Letter of Credit, or 100% Sovereign Guarantee or other assets (such as direct use of rated securities), then follow the associated steps to use the corresponding ATV letter sent by Email for In3’s review.
OTHER VERIFICATION OPTIONS:
- Direct Email between the Family Office gatekeeper and involved banker that is familiar with the account used for Security.
- Registered CPA firm or similarly licensed accounting firm’s audit report showing balance sheet depth and capacity, whether cash surety deposit or assets, from the client directly, or from a sponsor.
- Use a reputable lawyer’s IOLTA (trust/escrow) account and attestation letter stating capacity.
One of the four methods — with an ATV letter by far most common — is required to launch our formal due diligence, so that if all goes well, we will make a binding offer to fund.
Why this Verification Step is necessary
We ask for an ATV letter from the party that holds the bank account used for delivering the project’s security to avoid wasting time — yours or ours. The actual enabling Security gets delivered later on, as the last step before closing, so for now, since we don’t charge for Due Diligence, we ask that clients seeking funding share some form of non-binding evidence that they are able to reliably deliver once under contract.
This removes barriers to building a new relationship between funder the client, and is part of mutual KYC (know your customer, known your investor), and the first safety checkpoint, described here.
We ask to verify this capacity now (ahead of binding contractual arrangements for CAP funding) because
a) There are a lot of bankers who have had their identity stolen, so we need to know that we’re talking to a real banker, not some criminal trying to defraud our clients, and
b) Because we do not charge any fees for vetting or due diligence, and will even pay for our own site visit, etc., so if all goes well, both parties bear their own expenses to get under binding terms and contractual obligations to deliver your project’s funding.
But as the funder, we will end up making a significant investment in up-front and legal work, so if we did this several times a week, week after week, we would be inviting the fake bankers to the table alongside the real ones. We would spin our wheels and muddy the process, slowing down even the ones that have real bankers involved as we wasted countless hours hoping that the fake bankers could deliver, when in reality all they are trying to do is charge clients a fee to deliver nothing of value.
Thus, we must verify that clients will work with legitimate bankers (not those who stole a legitimate banker’s credentials) doing their part to actually deliver the Security when the time comes — once the project’s funding is under contract.
Make sense? Next steps:
- Obtain the respective template(s) by type of proposed Security
- Discover more at What is an ATV letter?
- Contact In3 or your registered Affiliate with any questions.
- Register and send In3 or your Affiliate the proposed, filled in Security documents.