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Under Section 10 of the Foreign Exchange Management Act, 1999[1], the Reserve Bank of India authorizes entities to deal in foreign exchange for specific purposes. These entities are known as Authorized Money Changers (AMCs).
AMC can be classified into three categories:
Such varied entities enable easy access and competitive rates for persons seeking to exchange currency.
Full Fledged Money Changers, also known as FFMCs (a type of AMC) are the entities/persons who are involved solely in the exchange of foreign currency or foreign security.
FFMCs are actively involved in the following activities:
As per RBI guidelines, an applicant of Full Fledged Money Changer (FFMC) License must meet the following requirements:
The following documents are required to be filed along with the application for registration as Full Fledged Money Changer before RBI:
– KYC (Know Your Customer),
– AML (Anti-Money Laundering) &
– CFT (Combating the Financing of Terrorism)
has been put in place after obtaining approval of the Reserve Bank and before the operations commenced.
– Copy of the registration under Shops & Establishment Act or
– Copy of lease agreement or
– Rent receipt etc.
Every FFMC entity is required to follow
RBI Master Direction consists of various compliances amongst which the most notable ones are
The FFMC License gets renewed on an annual basis. The renewal application shall be filed at least one month before the expiry of the License. If the License expires, no renewal application is allowed.
The stringent compliance requirement by the AMCs or the FFMCs is because they deal directly with the public and constitute an essential area of countries finance. According to the RBI guidelines, no entity can carry on the business of money changing activity or advertise it unless they possess a valid FFMC license. Any entity found in breach of this would be subject to penalties under the Foreign Exchange Management Act, 1999.
Please get in touch with our service team to avail advisory service regarding application of FFMC license or alternatively for our CFO Services which will help with complex web of compliances and updates by allowing you to outsource all prerequisite actions to Enterslice.
Read our article: All you need to know about Money Changing Activities
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