The Intermediary Reality: Beyond 'That's Just How It Works Here'

A promising Gulf client mentions, almost casually: "We work with a consultant who helps facilitate these relationships."

Some international advisors hear alarm bells. Others hear "that's just how it works here" and switch off their compliance instincts entirely.

Both reactions miss the reality.

Intermediaries are real in the GCC. Some provide genuine value. Others create structures that don't withstand regulatory scrutiny or generate compliance problems that surface years later. Your job is to know the difference before your firm's name appears anywhere near a problematic arrangement.

When intermediaries are legitimate (and what real value looks like)

The GCC is relationship-intensive. Access to decision-makers, influence pathways, and commercial networks often requires someone who already sits inside those circles. That's economic reality, not impropriety.

Legitimate intermediaries provide market intelligence you couldn't acquire alone, introductions to principals who don't take cold approaches, navigation through undocumented access processes, and reputation endorsement that opens doors. When someone has spent twenty years building trust with a sovereign fund or family office, that trust has commercial value. Compensating them isn't inherently problematic.

The test isn't whether an intermediary exists. It's whether they provide real value for the fees paid, whether the arrangement withstands regulatory scrutiny, and whether you can document their role without discomfort.

The red flags that demand deeper scrutiny

Watch for these patterns:

• No visible business or track record but claims of being essential. 

• Role described only in abstractions like "relationship management" or "smooth facilitation" with nothing concrete you can document.

• Fees wildly disproportionate to identifiable work.

• Instructions to avoid putting things in writing. 

• Defensive or vague responses to basic due diligence questions. 

Any single flag should trigger questions. Multiple flags together mean you're looking at a structure designed to obscure arrangements that can't survive regulatory review.

I've watched firms tell themselves "everyone does it" or "we're not responsible for how the client structures things." If your firm's name is on the engagement and the intermediary arrangement later attracts attention, your compliance processes and judgment will be questioned. 

Others taking the same risk doesn't protect you.

The due diligence that actually matters

Most firms have intermediary policies. The problem is treating them like formalities rather than serious gatekeeping.

Real due diligence means: Can they articulate their value in a way you could defend to a regulator? What's their reputation among people who would actually know? Are they politically exposed, and if so, is that transparent? Who else do they work for, and can you verify references? Would you be comfortable explaining this arrangement to your firm's GC, to a prosecutor reviewing files five years from now?

Beyond databases and sanctions checks, talk to people. Local counsel who've practiced here for years often know which intermediaries are respected and which are problematic. Your other GCC clients may have views. Bank compliance teams have seen these structures repeatedly.

Don't outsource judgment to client assurances. They may genuinely believe the arrangement is fine, or they may be discretely awaiting your professional reassurance. 

What good documentation looks like

If the role is legitimate, document it clearly: written agreement specifying services, deliverables, fees, and payment basis. Invoices tied to identifiable work. Disclosure where required. Clear anti-bribery representations.

What creates exposure: vague service descriptions, payment structures designed to avoid scrutiny, critical details left to unwritten "understandings." That's not cultural adaptation. That's creating records that raise questions under review.

Apply this test to any document: "If disclosed in regulatory review, would this show clear commercial rationale and proper oversight, or raise questions about what we were obscuring?"

When to decline (without burning bridges)

Sometimes the answer is no. Frame it as a compliance requirement, not a judgment: "Our firm's global policies require certain due diligence standards on intermediaries. We're not comfortable with the current structure, but we'd be happy to engage if it can be restructured to meet those standards."

This preserves the relationship if the client will adjust, gives you a clear exit if they won't. Most sophisticated clients respect maintained standards, even if disappointed.

If they insist "this is the only way" or suggest you're culturally insensitive, you have your answer. Cultural intelligence means understanding how relationships work in the Gulf. It doesn't mean accepting structures that create unmanageable risk.

Your immediate action checklist

Before engaging any GCC intermediary:

Verification: Confirm visible business, track record, references. Check sanctions/PEP databases. Consult local counsel and other clients familiar with the market.

Value test: Can they articulate specific, documentable services? Are fees relative to identifiable work? Is compensation structure reasonable?

Documentation standard: Would this arrangement be defensible to your GC or a regulator? Can you document role, services, and fees clearly in writing?

Red flag count: How many warning signs are present? One flag = deeper questions. Multiple flags = serious exposure risk.

The walk-away threshold: If you can't satisfy due diligence, if documentation can't be made clear, or if the client pressures you to bypass compliance steps, decline the engagement professionally.

The best Gulf clients want advisors who understand intermediaries without being naive about risks, who ask necessary questions respectfully, and who protect them from future exposure. That's the reputation worth building: sophisticated about how the market works, uncompromising on professional standards.

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Till next week,