bank asks for invoices and underlying agreements for transactions

horseface said:

Does anyone have any experience with these kind of bank requests?

Plenty of times. It's common practice nowadays, so make sure you have agreements in the future. This will happen again.

horseface said:

What will they accept as an "underlying agreement" apart from an actual agreement signed by my company and the recipient company?

It depends on the risk profile of the transaction. If it's a very low-risk transaction (low/medium amount, to/from low-risk territories, sensible nature of business and purpose of payment), it might be enough to say it's a verbal agreement or show some emails/text messages where the deal is discussed. It doesn't look professional but there are situations where banks let things like that slide with a slap on the wrist and instructions to do better in the future.

However, as is more likely the case, this is not a low-risk transaction. The bank has picked up on something unsavory in the transaction and decided to make sure there is nothing sketchy going on. If that's the case, they will want to see the agreement. And if they really don't trust you, they might ask to see proof of delivery of goods/services.

horseface said:

Has anyone tried to create any such underlying agreement by themselves and got away with it?

You might want to pay a lawyer to draft an agreement for you, to make sure it doesn't look entirely too amateurish.

horseface said:

Is there a way for me to pass this bank request for underlying documents without showing any legal document? I'm afraid that the bank will terminate the account, maybe freeze the bank assets and then also start a money laundering investigation with EU authorities.

What you have described unfortunately sounds a lot like money laundering ”” or at least sufficiently close to money laundering that banks want nothing to do with it. It sounds like you're just moving money around for the same company, which has all sorts of implications.

horseface said:

Is there a way to escape this at all?

No, your transaction and account are now flagged for review. Be prepared for the future. Handle this situation well and learn from it.

I wonder if a Non-Disclosure Agreement (NDA) might be useful in this situation or similar situations.

In my experience working on software development, there are plenty of startups in "stealth mode" that make third parties sign an NDA so you can't reveal any details about the relationship between the startup and the third party.

Working as a nearshore employee, with such NDAs I couldn't reveal who I was working with and what I was working on.

Last edited: Jul 5, 2021

Tr0nad0r said:

I wonder if a Non-Disclosure Agreement (NDA) might be useful in this situation or similar situations.

In my experience working on software development, there are plenty of startups in "stealth mode" that make third parties sign an NDA so you can't reveal any details about the relationship between the startup and the third party.

Working as a nearshore employee, with such NDAs I couldn't reveal who I was working with and what I was working on.

Banks don't care about NDAs. You can't NDA your way out of a KYC situation.

put it as an Terms of Service to your website - from my point of view - many deals are done online and signature is digital or is accepted with buying on a online site. e.g. fb ads - do they collect written contracts or do they close the deal with you through clicking "accept" somewhere - you go to a shop and buy things in real life, same there - the invoice itselfs should be defined what is done and you should be clear about it what you sell - if you buy a cup of tea somewhere it should be at least something to drink on the bill, right ?

horseface said:

The transaction in question is a valid transaction (not about moving money for the same company nor person even though the bank may suspect that).

I'm not saying that the transaction is money laundering, just that from the description, I can see why a bank might suspect there's something afoul and treat it as a high-risk transaction, i.e. you don't have the benefit of the doubt and will need to prepare for forensic KYC.

horseface said:

Drafting a legal agreement is not a problem, I will gladly pay a lawyer (or any other knowledgeable person) to do it.

But I cannot involve the company who delivered the services in this so whatever agreement is drafted it will be without any signatures from them. That worries me because the signatures will be only from my company's side, not from the other company who received the money in the transaction. Clearly the bank would react to this?

Signature might not be necessary. It's hard to say because we don't know the full details here and what the bank's view is. An unsigned copy of an agreement can be enough sometimes, for example if they are generic Terms and Conditions and you can show that the transaction is related to an order placed online.

horseface said:

Or could I have a legal agreement without any signatures whatsoever?, only some sort of "common understanding to receive X services"?

Yes, just think of all the T&Cs you agree to online by ticking a checkbox. They are just as legally binding as signed agreements.

horseface said:

Would a bank ever contact the company receiving the funds to check on the validity of the transaction? Even though the company is in another country?

No, it's up to you to satisfy your bank. If they don't trust the other company, they consider that your problem and refuse the transaction.

They might ask that you obtain confirmation from the other company, but that's rare.

horseface said:

This transaction was made last year. If they "refuse" the transaction, what exactly would that mean as the money has been sent already and can't just "take back the money"?

If it's a transaction that took place last year and are only now asking questions, they have definitely identified something suspicious related to one of the involved parties.

They have identified something suspicious about you or something suspicious about someone involved in the relevant transactions, or both. If you're lucky, they're just casting a very wide net and you're just getting caught even if you have no sketchy connections. Otherwise, prepare to have compliance officer with the bank breathing down your neck for a while.

Have you considered just being honest with the bank and explain your situation? You didn't have agreements and realize in retrospect that what was on the invoices was perhaps slightly inaccurate. This depends on how badly you've deceived the bank previously.

horseface said:

I'm trying to calculate the risks in what exactly might occur if the bank does not accept whatever documents and explanations I give them for one or two transactions (executed many months ago already).
Could they freeze my assets?

Yes, they can freeze the assets pending an internal decision or court order compelling them to release.

horseface said:

Or just tell me that they will terminate my account and that I will have to bank elsewhere?

They can do that as well.

horseface said:

Or worse, file a case with the authorities for money laundering?

Also possible.

That might have been how you got entangled in this. If you're doing business with dodgy people and need to hide the true origin and purpose of the transactions ("recipient in question is not in the field of IT"), you might be under investigation as a part of a broader investigation into actual money launderers.

Be mindful that if you do present a false agreement to hide the true origin or purpose of the transactions, you are breaking the law and you would in fact at that point be committing money laundering.