Authorized Money changer compliance
BOOK A FREE CONSULTATION
Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it's absolutely FREE.
The companies that after obtaining a license from the Reserve Bank of India ( RBI) intents to carry out functions of forex currency or money changer activity is termed as ‘Full Fledged Money Changer. These companies are required to maintain their compliance to run a business properly.
Register and book of account of money-changing business:
AMCs shall maintain the following Registers in respect of their money-changing transactions.
Per day Balance Book and Summary (Foreign currency notes/coins) in form FLM 1.
Per day Balance Book and Summary (Travellers' cheques) in form FLM 2.
Purchasing of foreign currencies from the public in form FLM 3.
Purchasing of foreign currency notes/coins from authorized dealers and authorized money changers in form FLM 4.
Sales of foreign currency notes/coins and foreign currency travelers' cheques to the public in form FLM 5.
Sales of foreign currency notes/coins to authorized dealers / Full Fledged Money Changers / overseas banks in form FLM 6.
Register of travelers' cheques surrendered to authorized dealers / authorized money changers / exported in form FLM 7.
(i) Books & registers should be kept updated, cross-checked and balances verified daily.
(ii) The registers and books of account should show clearly the trail of transactions pertaining to money changing business. In other words Transactions not pertaining to money changing the business of the AMC should not be mixed up with money changing transactions.
(iii) For each establishment, Separate registers should be maintained, if the AMC maintains more than one place of business.
Note:- Inter-branch transfer of foreign currencies should be accounted as stock transfer and not as sales.
Submission of Statements to the Reserve Bank
Authorized money changer (AMCs) should submit to the office of the Reserve Bank which has issued the license, a monthly consolidated statement for all its offices in respect of sale and purchase of foreign currency notes in form FLM 8 so as to reach not later than the 10th of the succeeding month.
AMCs should submit to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank, a monthly statement indicating details of receipt/purchase of US $ 10,000 (or its equivalent) and above per transactions in the prescribed format, within 10 days of the close of the month. FFMCs should include transactions of their franchisees in their statement.
AMCs should submit a quarterly statement regarding Foreign Currency Account/s maintained in India in their names with Banks to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank as per the prescribed format.
Annual Statement should be submitted by all the AMCs to the respective Regional Offices of the Foreign Exchange Department, Reserve Bank which have issued the licenses within one month of the financial year-end, giving the details of the amount written off during the financial year, as per the prescribed format.
AMCs should report to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant falls, regarding any action initiated by Directorate of Enforcement (DoE) / Directorate of Revenue Intelligence (DRI) or any other law enforcing authorities against the AMCs or its directors within one month of such action.
(i) AMCs should do Concurrent Audit for the transactions undertaken by them.
(ii) All single branch AMCs having a turnover of more than US $ 100,000 or equivalent per month. Single branch AMCs having a turnover of less than US $ 100,000 or its equivalent may institute a system of quarterly audit.
AMCs having multiple branches, may put in place a system of Concurrent Audit which will cover 80 percent of the transactions value-wise under a system of monthly audit and rest 20 percent of the transactions value-wise under quarterly audit.
(iii) Selection/Appointment of concurrent auditors is left to the discretion of the AMCs. The Statutory Auditors are required to certify that the Concurrent Audit and the internal control systems are working satisfactorily.
-All AMCs are required to submit their annual audited balance sheet to the respective Regional Office of the Reserve Bank for the purpose of verification of their Net Owned Funds along with a certificate from the statutory auditors regarding the NOF as on the date of the balance sheet. As AMCs are expected to maintain the minimum NOF on an ongoing basis, if there is any erosion in their NOF below the minimum level, they are required to bring it to the notice of the Reserve Bank immediately along with a detailed time-bound plan for restoring the Net Owned Funds to the minimum required level.
Revocation of Licence
The Reserve Bank reserves the right to revoke the license granted to an AMC at any time if the Reserve Bank is satisfied that:
(a) It is in public interest to do so or
(b) The AMC has failed to comply with any condition subject to which the authorization is granted or has contravened any of the provisions of the Foreign Exchange Management Act, 1999 or any rule, regulation, notification, direction or order made thereunder.