Payment agents who channel transfers between partners of international deals assume a growing role in foreign trade. Thanks to their services, business can bypass sanctions-related barriers and engage with counterparts in unfriendly jurisdictions. Moreover, Belarusian companies are often approached by their partners and affiliated persons fr om other jurisdictions to act as intermediaries in certain transactions. Before accepting to be an agent, a company must carefully weigh all the risks.
Belarusian law allows for a third-party role in a transaction, with its main parties’ consent, including in foreign exchange contracts. One should make a clear disctinction, however, between third-party execution (whereby the other two parties to the deal remain the same) and cases wh ere a third party fully replaces either of the two original ones: the debtor (through debt transfer) or the creditor (through claim assignment).
There are several ways to legalize such relations. The parties may enshrine the agent’s services directly in the contract, a special side agreement, or any of standard commission, mandate, agency agreements etc.
The party who imprudently agrees to the counterpart’s proposal to engage a payment agent may face grave legal consequences. Importantly, currency control authorities and other regulators first check the visible side of a transaction: the movement of funds through the parties’ accounts, the exchange agreement registration on the National Bank portal, etc. They may get suspicious of the payment scheme that seems perfectly clear and logical to yourself.
What are the main risks of bringing payment agents into a deal?
All risks fall into two broad groups that can be called documentary and payment risks.
Documentary risks include incorrect legalisation of contractual relations with the agent and the payments themselves.
Keep in mind that:
1. Third-party involvement must be sealed “ink on paper”. Using signed scans can be recommended only in exceptional cases, when you fully trust your partners. There were cases when courts challenged the authenticity of sender’s letters asking counterparts to accept third-party payments due under contracts.
2. One should always monitor payment orders issued by third parties, checking their purpose, making sure the amounts correspond to the terms of the contract, etc. Sometimes a third party sends false information of the legal grounds for its payments to currency control authorities, or deliberately indicates false payment purpose. This results in litigation and liability risks for the bona fide parties.
3. It is essential to ask the third party for written confirmation that the payments comply with the tax, currency, customs, and other laws of its residence country, and then write it into the contract. Such confirmation may take the form of a registration certificate, a certificate from the currency control or tax authority, etc.
4. Ownership structure of your counterpart group of companies must be carefuly examined. If the counterpart is part of a holding, make sure that all the details in the payment documents correspond to the contract signatory.
Discrepancies may provoke disputes or even contract invalidity.
The second major risk category has to do with national payment service norms. In 2022, Law No. 164-Z "On Payment Systems and Payment Services" in Belarus laid down the first comprehensive regulation of payment services, i.a. the activities of payment agents or “payment aggregators”.
To legally operate as a payment aggregator, a Belarusian resident must feature on the Register of Payment Service Providers of the National Bank. It must also comply with a number of specialized norms, meet certain financial standards and respect payment schedules. As a rule, the ones to commit themselves to these requirements are professional market players to whom payments to third parties is a core daily business.
On the other hand, for companies offering case-by-case payment services, the costs of becoming a registered aggregator may be incomparable to their gains from payment intermediation. To address this issue, some companies resort to the opt-out as per para 4-1 of the Instruction on the Payment Services Procedure in the Republic of Belarus, approved by Resolution No. 453 of the Board of the National Bank of the Republic of Belarus of December 5, 2022.
According to this norm, the activities of legal entities or individuals related to acceptance or transfer of funds (electronic money) by way of executing their obligations as commission agents under commission agreements, are not considered payment services. In other words, a commission agent making payments under a commission agreement doesn’t have to register as a payment aggregator.
One should note however, that according to Belarusian law, commission agents perform, on behalf of their principals, primarily legal actions. Notably, they enter one or more transactions in their own name but at the principals’ expense (Clause 1, Article 880 of the Civil Code of the Republic of Belarus). If a commission agent performs other activities within the scope of its commission, i.a. transfers payments to the principal or the principal’s counterpart in a transaction, such activities must be secondary and facilitative to the agent’s primary mission: to prepare deals and actively contribute to their implementation.
If regulators find a business entity to be a nominal commission agent, i.e. the one that participates in a transaction only to technically carry out payments, they may qualify it as irregular payment service. This can potentially result in a fine of up to 500 basic units, with or without confiscation of up to 100 percent of the income from such activity, as well as instruments and means of committing the administrative offense (Clause 3, Article 13.3 of the Code of Administrative Offence).
Before making a payment, commission agent should be well aware of its other possible functions under the commission agreement, such as finding potential counterparts for the principal, signing contracts, checking the quality of goods/services and participating in their transportation.
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