Sub-agent

Sub-agent: a person to whom the agent passes the execution of a payment order, or part of it, under a sub-agency agreement. This option is provided for by Article 1009 of the Russian Civil Code. As a general rule, the agent may engage a sub-agent unless the agreement with the principal prohibits it, and remains liable to the principal for the sub-agent’s actions.

Why an agent needs a sub-agent

In an international payment, there is usually one reason: the beneficiary’s bank does not accept money from just any payer. For example, the supplier’s bank works only with senders it has a settlement history with, or the supplier has agreed a list of payers with its bank in advance. Then the payment technically goes out from a sub-agent that is able to make it.

Where the risk is

For the client, a sub-agent is one more company in the chain through which its money passes. If the agent engages a sub-agent at its own discretion, the client may not know who actually paid the supplier and where the money was in transit. Currency control has questions too: the payer in the payment confirmation does not match the agent named in the agreement.

What to watch for

• Check in the agency agreement whether the agent can engage a sub-agent without your consent.
• If a sub-agent is needed, the agent agrees it with you in advance.
• The chain must be visible in the closing documents: from the agent to the sub-agent and on to the supplier.

When VEDmost arranges the payment, the agent brings in a sub-agent in one case only: the beneficiary’s bank accepts the payment only from a specific payer. This is done only with your consent. More on the Payment protection page.