International business

What are international financial flows?

International financial flows are all movements of capital between countries. They may involve payments linked to the import and export of goods and services, transfers between companies of the same group, foreign direct investment or cross-border financing transactions.

These flows have a direct impact on the company's cash position, profitability and overall strategy. Poor management can delay the financing of operations, generate unexpected costs or jeopardise commercial opportunities.

The obligations

Exchange controls and local compliance

In many jurisdictions, any transfer of capital must be declared to or authorised by the local authorities. Failure to comply can result in significant financial and administrative penalties. Anticipating these formalities is essential to keep operations running smoothly.

Not all jurisdictions offer the same ease of transfer. Some impose prior approvals, ceilings, repatriation obligations or dual exchange rate regimes. MOSAIK works at the front line of the most restrictive regimes for its clients: SAFE and the PBoC in mainland China (with direct coordination from Hong Kong), Banxico and the CNBV in Mexico (from our Mexico City office), and the Argentine, Venezuelan and Nigerian regulations through our network of correspondents. This direct presence in high-friction regions significantly reduces transfer times and costs for our clients, and allows us to anticipate blockages rather than merely record them.

Anti-money laundering and counter-terrorist financing

International financial flows are closely monitored under AML/CFT frameworks (anti-money laundering and counter-terrorist financing). Companies must implement rigorous internal procedures to vet their partners, ensure the traceability of transactions and report any suspicious operation to the competent authorities. The AML/CFT framework was substantially strengthened by the AML package adopted in 2024 (the 6th Directive AMLD6, the AML/CFT Regulation and the creation of AMLA, the European Anti-Money Laundering Authority, headquartered in Frankfurt). This framework harmonises due diligence thresholds, generalises the beneficial ownership register and toughens the penalties applicable to obliged entities. Cross-border transactions sit at the heart of the framework: they are the focus of second-line controls and of reports to TRACFIN, the French financial intelligence unit.

International sanctions and extraterritorial compliance

The sanctions adopted since 2022 by the European Union, the United States (OFAC), the United Kingdom (OFSI / HMT), Switzerland (SECO) and the United Nations have profoundly reshaped the practice of international financial flows. Any transaction involving Russia, Belarus, Iran, North Korea or Syria, or counterparties subject to sectoral restrictive measures, now requires rigorous prior screening and impeccable documentation. The extraterritorial reach of US law also exposes European operators to secondary sanctions where transactions are denominated in dollars or involve US-origin components, regardless of compliance with EU law. MOSAIK conducts prior analyses for its clients, handles licence applications (French Treasury DGT, OFSI, OFAC), performs value chain reviews and, where necessary, conducts defence proceedings in the event of designation.

Taxation and reporting obligations

International capital movements can trigger tax obligations in several countries. It is essential to take account of the local legislation of each State concerned and to check for bilateral tax treaties to avoid double taxation. Appropriate tax planning, carried out with the support of a specialised attorney, optimises costs and secures the transactions.

Intra-group flows (dividends, interest, royalties, service fees) are systematically subject to withholding taxes at rates that vary with the applicable bilateral treaty. The most recent European case law calls for heightened vigilance on beneficial ownership and on the economic substance of interposed structures.

The risks of inadequate management

Poor management of international financial flows can have consequences on three levels:

• Legal: transfers that do not comply with local regulations may be blocked, challenged or give rise to administrative or criminal penalties;
• Financial: currency fluctuations and payment delays can affect the cash position and profitability of operations;
• Reputational: opaque or insufficiently documented flows can undermine the confidence of business partners and investors.

How can you secure your international financial flows?

Securing international financial flows rests on six pillars, which MOSAIK deploys according to each client's situation:

1. Map the flows (intra-group, commercial, financial, royalties) and identify the points of regulatory friction.

2. Document the economic substance of interposed structures, a strict precondition for the application of tax treaties and EU directives.

3. Implement KYC / KYB procedures and sanctions screening across all counterparties and beneficial owners, with periodic updates.

4. Audit contracts for payment clauses, termination for regulatory cause, jurisdiction and governing law.

5. Anticipate withholding taxes and build the documentation supporting treaty rates (forms 5000/5001, tax residence certificates, transfer pricing documentation).

6. Maintain a complete audit trail (flows, invoices, approvals, bank records, correspondence) available immediately in the event of an audit.

Frequently asked questions

What are the main risks associated with these flows?

The risks are legal (non-compliant transfers may be blocked or penalised), financial (currency fluctuations, payment delays) and reputational (insufficiently documented flows can worry partners and investors).

How can I quickly audit my company's exposure to Russia / Iran / Belarus sanctions?

MOSAIK conducts sanctions exposure reviews along three lines: direct counterparties (customers, suppliers), ultimate beneficial owners across ownership chains, and the components of products or services (the OFAC 25 percent rule, US *de minimis* thresholds, dual-use goods). The standard deliverable is a risk map with prioritised remediation recommendations, delivered within 5 to 15 days depending on the complexity of the group.

My group has just crossed the Pillar Two threshold: where do we start?

The GloBE rule (a 15 percent global minimum, transposed in France by the Finance Act for 2024) requires groups with consolidated revenue above 750 million euros to analyse their effective tax rate (ETR) country by country. Three priority steps: (i) identify jurisdictions with an ETR below the threshold, (ii) compute the top-up tax (QDMTT, IIR, UTPR), (iii) determine the jurisdiction of payment and prepare the GIR filing. MOSAIK supports these analyses through an integrated international tax and flows team.

A European bank has blocked one of my payments to Mexico: what should I do?

Bank blockages linked to exchange control regimes or compliance checks must be handled quickly and methodically: reconstructing the economic background, assembling supporting documentation, engaging formally with the correspondent bank and, where necessary, referring the matter to the competent regulator. Our Mexico City office allows us to act in France and in Mexico in parallel to unblock the situation as quickly as possible.

How does MOSAIK assist clients on these issues?

Our international financial flows practice is led by a team with direct operational experience: Izzat-Begum RAJAN spent nearly 25 years in senior tax and finance roles within international groups (Maersk, EY Equity Partner) across four continents (Europe, the Middle East, Africa and India). This corporate experience, combined with our Paris, Mexico City and Hong Kong triangle, allows us to treat a flow not as an isolated legal act but as a link in a value chain that must be secured end to end: from bank initiation to tax documentation, through local regulatory approvals and AML/CFT obligations.