Startups Stack Exchange Archive

International Funds Transfer Restrictions (Legal & Geopolitical)

My company has been negotiating with a representative (Jr. Board member), of a Middle Eastern (SA), chemical company to license our IP and build an algae production facility for biochemicals. He has asked a favor. He has asked us to mirror a SWIFTS transfer to another country and offered a 1% gratuity. As we are a startup going after our first sizeable deal, they have probably figured out that we’re on a shoestring. . We won’t do anything illegal or unethical. However our Attorney is beyond his depth. That our first facility won’t be at home we see as luck of the draw. . We’ve done a thousand internet searches but have questions that we don’t know how to categorize.

What we need to know is….

  1. Is this a negotiations tactic? If so,please elaborate.
  2. Is what they’re asking legal?
  3. Are there restrictions on which countries we can transfer to from the US? If so, what are they in a nutshell?
  4. Is this a common request/occurrence?
  5. Is this a scam? Maybe a “long-con”? What’s the dynamic in play?
  6. If we decline, we are worried doing so would kill the negotiations. Are we being taken advantage of? How?
  7. Assuming that what they ask is legal?
  8. Is this some kind of “business savviness test”?
  9. Are they trying to help us, or hurt us? Why?
  10. Timing won’t allow us time to engage an appropriate Attorney. Who in the government does one contact to help us figure this all out?
  11. What are the potential pitfalls/risks of doing this favor?

All responses are humbly appreciated.

Answer 12034

He has asked us to mirror a SWIFTS transfer to another country and offered a 1% gratuity.

You need to explain this in more detail, but it certainly smells really bad. What is the other country, who is receiving the money, why does he want your involvement, and why is he calling the payment a “gratuity”?

I can’t imagine any legal reason why he would need your help with this, and why he would choose a small startup to help him.

Unless he can provide reasonable answers to the questions above, don’t touch this one. Put the burden on him to explain why this is legal and reasonable (and of course vet everything he says).

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