Counterparty Verification in Commodity Trade: A 10-Minute Check
By the Vanguard Verify desk · Published 2026-10-24 · Updated 2026-10-24
Short answer: counterparty verification means confirming that the company you are about to trade with is a real, active legal entity, that the person you are dealing with can act for it, that it is not sanctioned, and that its documents agree with each other. Do it before the buyer sends proof of funds (POF) or the seller sends proof of product (POP), and before anyone signs a contract.
The 10-minute check
- Registry (3 min). Search the exact legal name and registration number in the official business register of the company's country. Your own country's register does not cover foreign companies. Note status (active), incorporation date, registered address and directors. A register entry proves the company exists, not that it is trustworthy.
- LEI (1 min). Search the GLEIF LEI database. Many banks and larger trading houses hold a Legal Entity Identifier; if one exists, its name and address should match the registry.
- Sanctions (2 min). Check the company and its directors against the EU Sanctions Map and, for dollar payments or trade outside the EU, the US OFAC SDN list.
- Signatory (2 min). The person signing the ICPO, FCO or SPA should appear as a director or show a written authority. The email domain should match the company's own website, not a free webmail address.
- Footprint (2 min). Look up the registered address on a map. A PO box, a mobile number only, or no registration number on the website are warning signs.
Then check the documents
Names, numbers, addresses and dates must match across the FCO, ICPO, inspection report, bill of lading and bank paper. See how to verify an FCO, how to verify an ICPO, how to verify an SGS report and how to verify a bill of lading.
Red flags
- Upfront fees before a signed contract ("registration", "legalisation", "bank charges").
- The buyer is asked for POF or a bank instrument before the seller shows any POP.
- Company incorporated a few weeks ago, dormant, or with a different name in the register.
- Refusal to let your bank or inspector contact the issuer of a document directly.
- References that cannot be reached, or that only confirm by WhatsApp.
At a glance
| Question | Where to check |
|---|---|
| Does the company exist? | Official register in its country |
| Same entity in the banking system? | GLEIF LEI search |
| Is it sanctioned? | EU Sanctions Map, OFAC SDN list |
| Can this person sign? | Register director list or written authority |
| Do the papers agree? | Cross-check FCO, inspection, B/L, bank paper |
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FAQ
Is a company registration enough to trust a counterparty?
No. A register entry shows the company legally exists; it does not prove it is trustworthy or controls any goods. Combine it with sanctions, signatory and document checks.
Which comes first, POF or POP?
Each side proves its own position: the buyer gives proof of funds, the seller gives proof of product. Be wary of any procedure that asks one side to commit money before the other shows anything verifiable.
Where do I check sanctions?
The EU Sanctions Map and the US OFAC Specially Designated Nationals (SDN) list are free to search.
Vanguard Verify is run by Vanguard Trade Capital Goods Wholesalers DWC-LLC, Dubai South, Licence 14282. This answer is general information, not legal or financial advice.