UCP standard by 1938. Article 5 of the Uniform Commercial Code, drafted in 1952, provided a basis for codifying many UCP principles into state law and created one of the only extensive specific legal regulations of letters of credit worldwide, although the UCC rules do not cover all aspects of letters of credit. New York effectively subjugated the UCC rules to the existing UCP rules, and as a result the UCP rules continued to govern letters of credit under New York law. Article 5 was revised in 1995 to reflect the latest international practices as codified in the UCP. Use in fraud Letters of credit are sometimes used to defraud banks through presentment of false documentation indicating that goods were shipped when they actually were not. Letters of credit are also sometimes used as part of fraudulent investment schemes. In the international banking system, a Letter of Undertaking (LOU) is a provisional bank guarantee, under which a bank allows its customer to raise money from another bank's foreign branch in the form of a short term credit. The LOU serves the purpose of a bank guarantee. However, to be able to raise the LOU, the customer is supposed to pay margin money to the bank issuing the LOU and accordingly, he is granted a credit limit. In 2018, PNB suffered from such a breach of documentation protocols. See also Bank payment obligation Buyer's credit Circular letter of credit Documentary collection Uniform Customs and Practice for Documentary Credits Financial law References External links Text of UCP 600, document hosted at Faculty of Law, Universidade Nova de Lisboa, Portugal. Letter of Credit in China from ExamineChina. What is LC? Menendez, Andres, Letter of Credit, a Masked Contract (July 30, 2010). Financial law Contract law Credit credit, Letter of International trade documents International finance Payment systems