Money Changer Compliance

What do you mean by Money Changer?

The money changer is a facility that predates modern banking in India. It is licenced by the Reserve Bank of India (“RBI”) and governed by Section 10 of the Foreign Exchange Management Act, 1999. Through effective customer services, it increases residents’ and visitors’ access to foreign exchange facilities.

Records and Registers Required for Dealer Money Changer Compliance

  • Maintain daily summary and balance book (foreign currency notes/ coins transacted) in form FLM 1
  • Maintain transaction done through travellers cheques (daily summery/ balance book) in form FLM 2
  • Maintain register of foreign currencies from public inform FLM 3
  • Maintain register of purchase of foreign currency notes/ coins form authorized money changers in form FLM 4
  • Maintain register of sale of foreign currency (coins and notes and travellers cheque) to public in form FLM 5
  • Maintain sale of foreign currency (notes / coins)to authorized dealer/ full fledge money changers in form FLM 6
  • Maintain register of surrendered traveller’s cheque to authorized dealers/ authorized money changers in form FLM 7
  • By 15th of every month submit cash transaction report to financial intelligence unit of India. However individual transaction below INR 50000 need not to be submitted in the report
  • Within 7 days of happening of suspicious transaction, report shall be prepared and submitted about those suspicious transaction
  • Authorized Money Changers should send a monthly consolidated statement to the office of the Reserve Bank which issued the license for all its offices regarding the selling and purchase of foreign currency notes in the form FLM 8 (Annex-XI) in order to arrive not later than the 10th of the following month.
  • An Annual Report should be submitted by all Authorized Money Changerss to the respective Foreign Exchange Department Regional Offices, Reserve Bank which granted the licenses within one month of the end of the financial year, providing details of the amount written off during the financial year, in the format set out in Annex XIV.

Activities of Full Fledge Money Changer

The activities are as follows:

  • To operate the Restricted Money Changing business, which entails converting foreign currency notes, coins, or travellers’ checks into Indian Rupees, an FFMC may enter into a franchise agreement at their discretion (INR).
  • Any resident of India or a non-resident of India may freely sell their foreign currency notes, coins, or traveler’s checks to an FFMC or its franchisees.
  • An FFMC may exchange Indian Rupees (INR) into foreign currency using international credit or debit cards, and it may act quickly to obtain reimbursements through traditional banking channels.
  • For the following uses,
  1. FFMCs may sell foreign currency:
  2. Visits for Business Private Visits
  3. Pre-Paid Cards for Forex.

What is the eligibility to obtain FFMC License?

  • To operate as a Full Fledged Money Changer (FFMC), the following requirements must be met:
  • According to the Companies Act of 2013, the entity wishing to apply for a Full Fledged Money Changer License must be registered.
  • To apply for a single-branch licence, the firm must have a minimum net-owned fund of 25 lakh rupees, and for a multiple-branch licence, a minimum net-owned fund of 50 lakh rupees.
  • The entity’s proposed money-changing activities should be reflected in the object clause of the Memorandum.
  • With the Department of Revenue Intelligence’s enforcement, there shouldn’t be any active civil or criminal charges involving the company.
  • The Entity must conduct the business activity within six months of the date of obtaining the licence and should without fail intimate the RBI

Post Approval Requirements by FFMCs

The following conditions should be fulfilled by the Full Fledged Money Changer after obtaining the license:

  • Before beginning any business activity, the copy of the registration under the Shops & Establishments Act or any other documented evidence, such as the rent receipt or a copy of the lease agreement, shall be given to the Regional Office instructed by the Reserve Bank of India.
  • New Full-Fledged Money Changers should conduct their business in accordance with the Reserve Bank’s guidelines.
  • Each location where FFMCs conducts business must have a copy of the money-changing licence that was issued by the Reserve Bank of India on display.
  • FFMCs ought to have a concurrent auditing system in place for all of their business dealings.
  • All FFMCs must deliver their annually audited balance sheets to the relevant RBI Regional Office.

Annual Money Changer Compliances in India

The following mandatory money changer compliances should be taken into account once a person has obtained the FFMC licence and started operating the business. Below is a discussion of a few of them:

  • The individual is needed to keep track of their purchases of foreign currency, balances of their foreign currency coins, daily summaries, traveler’s checks, etc.
  • Additionally, the Reserve Bank of India must receive monthly consolidated statements detailing the purchase or sale of foreign currency notes by the 10th of the following month.
  • By the 10th of the following month, the monthly statement of receipts and any transactions involving purchases of 10,000 US Dollars or more must be submitted to the relevant regional office of the Foreign Exchange Department, RBI.
  • submission of the quarterly account statement for any foreign currency accounts kept in India.
  • Additionally, the annual audited balance sheet must be submitted, together with a certificate from the statutory auditors connected to the NOFs (Net-Owned Funds). Additionally, the report should be filed to the relevant Regional Office of the Reserve Bank of India as of the balance sheet date.
  • The FFMC should implement a suitable mechanism for the concurrent audit of transactions.
  • Additionally, the yearly statement needs to be delivered to the relevant Regional Office of the RBI’s Foreign Exchange Department.

License for FFMC renewal

A Full Fledged Money Changer License renewal application must be submitted no later than one month after the licence expiration date. Once the FFMC licence has expired, no request for the restoration of the money changer licence will be entertained.

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