Background: A few months ago I met a fellow who I’ve been working with - he was starting an online book selling business, and hired me to help manage the business (only employee).
He is from India and not a citizen (but he has a legal permit to live, study, and work here AFAIK). But because of this fact apparently he could not open a business bank account on his own. So I opened one jointly with him as an authorized signatory on the account - I was a little wary of doing this of course so I had him sign a letter stating that I wouldn’t be held personally responsible for any fees/balance etc. on the account should it ever become overdrawn.
I worked for him a few hours a week for several months on the business, but I am now focusing on my other job and no longer working for him. The account is still open (I plan to close it but he needs to change the direct deposit information from the other businesses that have been paying the company first). And here’s the issue - he recently asked me to authorize a wire transfer from the account to the book supplier in India to pay for the books.
The transfer will be not-insignificant (several thousand $). I felt rather nervous when I got an e-mail asking me to do this - I replied that I would prefer it if he moved the funds into a personal account of his (remember, since I am authorized signatory on the business account I would have to authorize a transfer from that account) and paid them from there, because I don’t want to be on the hook for the amount owed to the supplier if for some reason the wire transfer doesn’t go through properly. (I have not found him to be untrustworthy, but I don’t trust him 100%. Not that I trust anyone 100%) The money is all his, as I was paid on an hourly basis and have already been paid for my work with him. He replied:
It seems to me like they (the supplier) wouldn’t care what account they get paid from as long as they get paid. Is that second statement BS? What would happen if, theoretically, I authorized this transfer and then he pulled all the funds from the account? Should I just refuse to do this and let him find another way to pay them?
I think if you showed this to a bank officer, they’d probably just laugh. Your associate can’t absolve you from your responsibilities relating to the account. The letter protects you from him – he says he won’t hold you responsible, but he’s not the bank. I don’t think that letter overrides your obligations as a joint account holder.
You’re right to be wary. Like you said, the supplier shouldn’t care what account their money comes from, as long as they get it.
Well, right, but if for some reason if I had to make a legal claim against him it seems like it would be helpful to have that.
In any case, like I said he has been trustworthy until now, and there is plenty of (his) money in the account. But I don’t owe him anything further and I’m afraid of potential consequences for doing this, so I appreciate any and all informed opinions.
Wire transfers are incredibly common in international transactions, and though they take a worrying couple day or so to come through, they’re commonplace: millions and millions of wire transactions a day go through without a hitch. I think you’re right to be a little wary, but I doubt from what you say that there’s malice in his intention (though the letter probably wouldn’t be worth anything if you got trouble), nor any real reason to be scared of the transfer clearing.
If you have a funny feeling, don’t authorize it- hell, why can’t he just take the money out in cash and send it via western union? Or have the bank draw a check and send it? I don’t see why he insists that it must be a wire transfer, and if it does have to be one, why it has to be from that particular account.
It could just be an accounting/tax issue. I know with my personal and business accounts I always keep them separate and would never transfer funds from the business to my personal account to pay a business cost.
Wires get sent all the time and are no a problem at all.
The supplier won’t care, but the account holder might. In my jurisdiction, transferring money from a business to a personal account would be considered “paying” myself, making the payment subject to personal taxes - it would cause a lot of additional accounting work to get around this.
Also, I don’t understand how the OP could be held liable for a wire transfer OUT of his account…
Finally - is there any reason to think that instead of a book supplier the money may be going to some front for terrorism? This would actually be my biggest worry more than anything else if I wasn’t involved in the original transactions or the day to day running.
I’d refuse to authorize it in order to light a fire under his butt to get his own account without you on it. Assuming, of course, that’s what you want him to do.
Aren’t the funds automatically deducted once the wire order is made? I don’t think if you authorize a transfer and the money is there that within the space of minutes he could withdraw the funds. If the money is there, it goes. If the money is not there, it doesn’t go. I think you may be confusing the liability of the wire with the liability of the invoice. Are you liable for the invoice if the wire doesn’t go?