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In a letter of credit transaction, participants have distinct undertakings and face various risks. The applicant commits to pay the issuing bank upon submission of compliant documents; however, there's a risk that documents may not be genuine, and even valid documents may not confirm the beneficiary's fulfillment of obligations. The issuing bank must pay the nominated bank for a compliant presentation, but risks incorrect document examination. Additionally, the applicant might be unable or unwilling to reimburse the issuing bank. The advising bank, which may differ from the confirming and nominated banks, is responsible for verifying the authenticity of the credit or its amendments and must forward them accordingly.