PRACTICE THREE
Counterparty Intelligence
Two questions decide a cross-border transaction before price does: who the counterparty is on the record, and whether the arrangement does what its papers say.
Both are answered from sources, or not answered.
Identity, authority and arithmetic are facts, and facts have sources.
THE REGISTER
Where a counterparty actually fails.
None of these findings names anyone. A pattern is universal: a reader recognizes his own position in one, and nobody else has been disclosed.
The yield that no trade has ever paid.
Twelve percent a month is promised on custodied goods, which compounds to roughly 290 percent a year against documented margins in single digits. Capital that enters can only be paid with capital that follows, and documented recovery in these cases runs below ten percent.
THE SIGNAL
Ask where the margin comes from, instrument by instrument. On a guaranteed monthly return, the explanation stops at the word trading.
Custody by the seller, who may use the goods.
The goods bought stay in the seller's custody, and the contract lets the custodian trade or utilize them against a promise of replacement. The buyer is not an owner with stored property, but an unsecured creditor of the custodian.
THE SIGNAL
Custody sits with the counterparty itself, the goods are not segregated and serial numbered to the buyer, and no independent custodian exists.
A retail license behind an investment product.
The entity holds a license to buy and sell goods, while the product offered requires authorizations from financial regulators it has never applied for. There is no regulatory cover and no compensation scheme behind anything that then goes wrong.
THE SIGNAL
Read the license entry itself. The activities it enumerates describe a different business from the one being offered.
The signer who left the company before signing.
The contract is signed by a person presented as chief executive, whom the registry shows as ceased weeks earlier through a filing with retroactive effect. Every warranty in the document attaches to someone with no registered authority to give it.
THE SIGNAL
Pull the officer list and the control record in the week of signature, not in the month of introduction.
The company that changed name, sector and story.
One registration number carries a sequence of unrelated businesses, a name changed shortly before entry into the current trade, and activity codes that still describe the previous one. The longevity that justified skipping verification was borrowed.
THE SIGNAL
Compare the registered activity codes against the deal on the table, and the date of the renaming against the counterparty's entry into this market.
No premises, no staff, no bank.
The registered office resolves to a provider hosting thousands of companies at one street number, and banking runs entirely through e-money accounts. The counterparty cannot issue the instruments the transaction size requires, and holds no assets.
THE SIGNAL
Ask for the transaction to be routed through a documentary credit at the counterparty's own bank. A structure with no real banking cannot comply.
A discount below a benchmark that does not exist.
The offer prices the goods below a named index that does not exist for this commodity, in a market where they trade at a premium to spot. The transaction was never going to close: its function is to extract advances along a procedure that keeps resetting.
THE SIGNAL
Search the benchmark on the administrator's own site, then search the text of the offer. The same percentages circulate in public scam repositories.
The contract was written for a different cargo.
High value goods that travel by secured air freight are sold under a maritime delivery term, citing arbitration rules the named institution never issued. The dispute clause names a body that does not exist on the day it is needed.
THE SIGNAL
One hour of reading: the delivery term against the transport mode, each cited rulebook against the issuer's own catalogue, the internal dates against the parties' incorporation dates.
Two dates of birth, one name, no answer.
The same name appears in two registries with different dates of birth, or matches a documented case that open sources can neither confirm nor exclude. Proceeding inside that ambiguity adopts the worst reading as an acceptable one.
THE SIGNAL
Ask for documentary disambiguation. Unresolved homonymy plus a deflected request is itself a finding, and it is recorded.
The deal that changes shape after the refusal.
A proposal declined on documented grounds returns weeks later as a different structure, a new vehicle or a new jurisdiction, with the economics intact. The refusal reasoned correctly the first time is re-argued against fatigue and relationship pressure.
THE SIGNAL
Same parties, new paperwork, unchanged arithmetic. The channel runs through the community, not through documents.
THE SEQUENCE
How a counterparty is verified.
The standard below is the one applied to every counterparty file, whatever the size of the transaction behind it. It is published here because a standard that is not published cannot be held against us.
Five independent sources.
Every material question is researched through five independent streams, and the file counts how many of them confirmed each finding. A single source result is marked as an input to verification, never carried forward as a fact.
Primary registers, directly.
Company registries in each relevant jurisdiction, regulator and authorization lists, industry accreditation, sanctions lists and international notice systems, domain records, and the counterparty's own public footprint against its own claims.
The arithmetic is checked.
Promised returns are compounded and compared against documented margins in the same trade. Prices are compared against the real benchmark on the administrator's own publications, and cited rulebooks against the issuing institution's catalogue.
Conflicts are recorded, not settled.
When sources disagree on a director, a date or a figure, the file records both sides with their primary sources. It then records the probable reason for the divergence and the document that would resolve it.
Homonymy is never resolved by guessing.
A name matching a documented adverse case is a priority verification item, not an identification. Until documentary disambiguation arrives, the relationship does not advance, and the reason is written down.
Absence of footprint is a finding.
For certain roles, nothing adverse found is not an answer. A person or an entity that should leave a verifiable public trace and leaves none is an anomaly, and the burden of documentation moves across.
Red flags are classified.
Findings are graded by severity and by whether they are resolvable: a named document inside a deadline, or structural. Severity attaches to the pattern and never to the person, and the language stays coherence, not accusation.
Three verdicts.
Proceed. Defer, against a named list of documents and a deadline, with the relationship suspended in the interim. Do not proceed, with the grounds documented and the file archived. There is no fourth outcome, and no draft.
A refused counterparty that returns with the same parties inside a new structure is treated under the original verdict. The shape changed. The file did not, and neither did we.
PERIMETER
Where the work sits.
Verification happens where the record physically sits, which is rarely where the counterparty presents itself. Each jurisdiction below enters a file in a stated capacity.
Screening against public summaries is never presented as formal tier one screening, and every file states which of the two was performed. Where coverage falls short of five streams, the file says so and adjusts.
United Arab Emirates. Home jurisdiction: licensing, banking, contract execution, dispute fora, and verification on the local registers.
United Kingdom. Registry verification: company filings, officer and persons with significant control records, charges, and accounts.
Cyprus. Counterparty domicile: registry extracts, corporate service provider patterns, beneficial ownership.
Lithuania. Banking verification: e-money institution accounts encountered inside counterparty structures.
Poland. Counterparty verification: national court register checks, operating presence analysis.
Italy. Contracting jurisdiction: professional register verification, and identity checks on counterparties of Italian files.
Bahamas. Payer jurisdiction: offshore centre risk profile inside payment flows and banking review.
India. Counterparty and supplier market: identity verification of signatories, and trade footprint.
MANDATE SILHOUETTE
The shape of a mandate.
Generalized to the type, never to the case. No party, sector or country appears in it, which is the condition on which it can be written at all.
The situation.
A private principal is introduced, outside any professional channel, to a goods transaction priced below any legitimate benchmark. The counterparty network spans several jurisdictions, and one entity signs.
The intervention.
Verification to the five source standard, registers fetched directly in each jurisdiction of the network, arithmetic of the offer reconstructed, contract anomalies read clause by clause.
The outcome.
A counterparty dossier, a classified red flag schedule, and a do not proceed verdict with its grounds documented. The channel is closed in a form that can be shown to whoever opened it.
DELIVERABLES
What is actually handed over.
- Counterparty Dossier
- Identity, ownership and control, license perimeter, banking and premises, filing history, litigation and sanctions position, and the counterparty's public account of itself set against the record.
- Red Flag Schedule
- Every finding, graded by severity and by resolvability, with the primary source next to it. It is the working document, built to be decided on rather than filed.
- The Verdict
- One of the three, with its grounds. Written to be read by the counterparty, because in a deferred verdict it usually is, and it has to survive that.
- The Document List
- Where the verdict is defer, the exact instruments the counterparty must produce, to whom, and by when. It is the only path from a deferred file to an open one.
On every engagement
- Progress Report
- Periodic. The state of the engagements, the counterparties contacted in the period, the documents produced. It is what makes a year of work visible.
- Engagement Closure Record
- Issued at the end of each engagement, with the outcomes as they were measured rather than as they were promised.
- Correspondence Archive
- The file itself, kept by us and available to the client on request. It is not delivered. It exists.
The first conversation.
What public sources can establish, what they cannot reach, and what closing that gap would take. That is the whole of it.
Every file carries a page of what could not be verified. It is written before the conclusions rather than after them, and it is short.
If the answer is do not proceed, you receive it in writing, with the grounds attached.