Full Fledged Money Changer | FFMC License | FFMC Registration
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Full Fledged Money Changer (FFMC) registration is a kind of permit that allows the company willing to undertake the business of the money changing activity or Forex Currency Exchange. Under Section 10 (1) of the Foreign Exchange Management Act (FEMA), 1999, Authorized Money Changers (AMC) are the entities or individuals authorized by the Reserve Bank of India (RBI). These AMCs are known as Full Fledged Money Changers. According to the respective guidelines, no entity can keep the business of money changing activity or advertise it unless they have a legitimate FFMC license granted by the RBI.
Hence, any entity found carrying on any such money changing the business without obtaining the approval from the RBI will be subject to penalties under the prescribed Act.
Classification of FFMC License:
For an entity to operate as a Full Fledged Money Changer (FFMC), needs to acquire the following types of license:
- AD Category- I Banks (Authorised Dealer Category – I Banks)
- AD Category- II (Authorised Dealer Category – II)
- Full Fledged Money Changers (FFMCs)
Activities of FFMCs:
The Full Fledged Money Changers are able to carry on the following activities:
- FFMCs can go into franchise agreement at their convenience for undertaking the Restricted Money Changing business which comprises the conversion of coins or traveler's cheques, foreign currency notes into (INR) Indian Rupees.
- An FFMC is allowed to sell INR (Indian Rupees) to foreign visitors or tourists against International Credit Cards/International Debit Cards and take quick action to receive the reimbursement through normal banking channels.
- FFMCs or their franchises could unhesitatingly buy any coins or traveler's cheques and foreign currency notes from both NRIs as well as residents of India.
An FFMC is allowed to choose selling foreign exchange for the purposes as follows:
- Private Visits
- Business Visits
- Forex Pre-Paid Cards
Eligibility criteria for obtaining FFMC Registration:
According to the RBI guidelines, the applicant willing to obtain an FFMC License must meet the requirements as follows:
- The applicant should have obtained a company registration under the Companies Act, 2013.
- Furthermore, the minimum NOF (Net-owned Fund) of ? 25 lakhs is necessary for single branch FFMC while ? 50 lakhs for FFMC with multiple branches is mandatory.
- There shouldn’t be any of the criminal or civil cases pending against the company or individual with the Directorate of Revenue Intelligence and Directorate of Enforcement.
- The object clause of Memorandum must demonstrate the money changing activity to be pursued by the company.
Documents required for registration of FFMC License in India:
For obtaining an FFMC registration in India, applicant must first prepare and submit the following documents to the RBI:
- A copy of Certificate of Commencement of Business and Certificate of Incorporation of the Company.
- The Memorandum of Association (MOA) and Articles of Association (AOA) of the company containing the provisions for carrying out money changing activities or a proper amendment with the same effect.
- Various copies of the Audited Balance Sheet along with the Profit & Loss Account of the entity or individual for the consecutive three years before the date of application for the license, as applicable.
- A declaration to the effect that there aren’t any proceedings pending with or has been initiated by the Directorate of Revenue Intelligence (DRI) or Directorate of Enforcement (DoE) or any other law administering authorities.
- A sealed confidential report from the banker of the applicant.
- A declaration to the effect that proper policy framework on Know Your Customer (KYC)/ Anti-Money Laundering (AML) / Combating the Financing of Terrorism (CFT) will be kept in place on procuring the authorization from the Reserve Bank of India and before commencing the business operations.
- A certified copy of the Board Resolution for carrying out the business of money changing.
Step by Step procedure for acquiring FFMC Registration from RBI:
Reserve Bank of India (RBI) regulates the operation of Full-Fledged Money Changer, therefore, any entity willing to start an FFMC needs to obtain approval from the RBI.
Step by step procedure for FFMC Registration in India -
Step 1: Submit the application to RBI
Firstly, applicant needs to submit a detailed application for the FFMC registration to the concerned regional office of the RBI.
Step 2: The applicant should fulfil the fit and proper criteria
The person applying for an FFMC license must satisfy the fit and proper criteria. It means there shouldn’t be any proceedings pending with the DRI or DoE. If there’s any proceeding pending, the applicant company won’t be considered for the grant of FFMC license.
Step 3: Review of Director’s fit and proper criteria by RBI
Next, the RBI will review for fit and proper criteria of the applicant company’s director. If everything is correct and the RBI is satisfied, it will consider the application.
Step 4: Issuance of the Certificate of Registration
If the RBI is satisfied with the application and if everything is in line, the RBI will issue the license within the time frame of two to three months.
Step 5: Clearance by the Empowered Committee
Lastly, the applicant requires clearance from the Empowered Committee.
The Post-Approval Requirements of FFMCs
- The applicant is required to submit a copy of registration obtained under Shops & Establishment Act or any other proof in documents to the RBI’s regional office. These may include a copy or rent or lease agreement, rent receipt, etc. Furthermore, the submission must be made prior to the commencement of the business.
- The newly incorporated FFMCs have to undertake their business activities according to the instructions prescribed by the RBI on a timely basis.
- It's mandatory for every FFMC to display a copy of the money changing license or FFMC license granted by the RBI at each of its business places.
- FFMCs have to keep the system of Concurrent Audit of the transactions they undertake in the correct place.
- Every FFMC needs to submit its Annual Audited Balance Sheet to the concerned RBI's regional office.