{"id":27868,"date":"2020-01-13T21:00:55","date_gmt":"2020-01-13T15:30:55","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=27868"},"modified":"2021-01-19T12:09:28","modified_gmt":"2021-01-19T06:39:28","slug":"rbi-compliances-for-full-fledged-money-or-persons-dealing-in-forex-transaction","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/rbi-compliances-for-full-fledged-money-or-persons-dealing-in-forex-transaction\/","title":{"rendered":"What are RBI Compliances for FFMC (Full Fledged Money Changers) or Persons Dealing in Forex Transaction?"},"content":{"rendered":"<p class=\"has-drop-cap\">Under Section 10 of the <strong>Foreign Exchange Management Act, 1999<sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Foreign_Exchange_Management_Act\">[1]<\/a><\/sup><\/strong>, the Reserve Bank of India authorizes entities to deal in foreign exchange for specific purposes. These entities are known as Authorized Money Changers (AMCs).<\/p>\n\n\n\n<p><strong><em>AMC can be classified into three categories: <\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"294\" height=\"253\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/AMC-classifieds.png\" alt=\"AMC classified\" class=\"wp-image-27882\"\/><\/figure><\/div>\n\n\n\n<p>Such varied entities enable easy access and competitive rates for persons seeking to exchange currency.<\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background has-vivid-cyan-blue-background-color\" href=\"https:\/\/enterslice.com\/full-fledged-money-changers\">Get Start Forex Business Today &ndash; Apply Now<\/a><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Who are Full Fledged Money Changers (FFMC)?<\/h2>\n\n\n\n<p>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. &nbsp;<\/p>\n\n\n\n<p><strong><em>FFMCs are actively involved in the following activities:<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"376\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMCs-actively-1024x376.png\" alt=\"FFMCs Activities\" class=\"wp-image-27878\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMCs-actively-1024x376.png 1024w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMCs-actively-300x110.png 300w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMCs-actively-768x282.png 768w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMCs-actively.png 1129w\" sizes=\"(max-width: 1024px) 100vw, 1024px\"\/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Eligibility for obtaining FFMC Registration<\/strong>\/License<\/h2>\n\n\n\n<p><strong><em>As per RBI guidelines, an applicant of Full Fledged Money Changer (FFMC) License must meet the following requirements:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Registered as a company under the Companies Act, 2013<\/li><li>The Memorandum must have a mention in its Object Clause that the company will pursue money changing activity.<\/li><li>Has a minimum Net Owned Fund (NOF) of\n<ul>\n<li>25 Lacks &ndash; in case of FFMCs with single branch.<\/li>\n<li>50 Lacks &ndash; in case of FFMCs with Multiple Branch.<\/li>\n<\/ul>\n<\/li><li>The Company should be &lsquo;<em>Fit and Proper&rsquo;<\/em>, i.e. there shouldn&rsquo;t be any criminal or civil cases pending against the company or its Director with the Directorate of Revenue Intelligence (DRI) and Directorate of Enforcement (ED).<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What Documents are required for obtaining an FFMC License in India?<\/h2>\n\n\n\n<p><strong><em>The following documents are required to be filed along with the application for registration as Full Fledged Money Changer before RBI:<\/em><\/strong><\/p>\n\n\n\n<ul><li>A copy of Certificate of Commencement of Business &amp; Certificate of Incorporation of the Company.<\/li><li>The MoA (Memorandum of Association) and AoA (Articles of Association) of the company containing the provisions for carrying out money changing activities or a proper <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Amendment&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;An &amp;quot;amendment&amp;quot; refers to the formal change or correction of a legal document, often involving additions, variations, or deletions to address irregularities or clarify points in an agreement.(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/amendment\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>amendment<\/a> with the same effect.<\/li><li>A sealed confidential report from the banker of the applicant<\/li><li>Copies of the audited Balance Sheet and Profit &amp; Loss Account of the company for the last three years before application, wherever applicable.<\/li><li>A Board Resolution certified copy undertaking money changing business.<\/li><li>Two Declarations <ul><li>Firstly, specifying that no proceedings pending or initiated against the applicant company or its directors before the Directorate of Revenue Intelligence (DRI) \/ Directorate of Enforcement (ED) or any other law enforcing authorities,<\/li><li>Second, that a policy framework on <\/li><\/ul><\/li><\/ul>\n\n\n\n<p><\/p><p>&ndash; KYC (Know Your Customer),<\/p>\n<p>&ndash; AML (<a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Anti-Money Laundering&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In an increasingly complex global financial landscape, combating financial crimes like money laundering has become paramount. Anti-Money Laundering (AML) is a comprehensive framework of(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/anti-money-laundering\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Anti-Money Laundering<\/a>) &amp;<\/p>\n<p>&ndash; CFT (Combating the Financing of Terrorism)<\/p>\n\n\n\n<p>has been put in place after obtaining approval of the Reserve Bank and before the operations commenced.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What steps are involved in acquiring FFMC Registration from RBI?<\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" loading=\"lazy\" width=\"921\" height=\"541\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMC-Registration-from-RBI.png\" alt=\"Steps of FFMC Registration\" class=\"wp-image-27879\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMC-Registration-from-RBI.png 921w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMC-Registration-from-RBI-300x176.png 300w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/FFMC-Registration-from-RBI-768x451.png 768w\" sizes=\"(max-width: 921px) 100vw, 921px\"\/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">What are the <strong>compliances after obtaining a License<\/strong>?<\/h2>\n\n\n\n<ul><li>On obtaining approval from the RBI, either of the following documents is to be sent as evidence at the RBI&rsquo;s Regional Office before the commencement of business <\/li><\/ul>\n\n\n\n<p><\/p><p>&ndash; Copy of the registration under Shops &amp; Establishment Act or<\/p>\n<p>&ndash; Copy of lease agreement or<\/p>\n<p>&ndash; Rent receipt etc.<\/p>\n\n\n\n<ul><li>From the date of issuance of License, within six months FMC should commence its operations and inform the Reserve Bank at the regional office.<\/li><li>Every FFMC must display a copy of the money changing license or <a href=\"https:\/\/enterslice.com\/full-fledged-money-changers\"><strong>FFMC license<\/strong><\/a> granted by the RBI at each of its business places.<\/li><li>FFMCs must have a system of Concurrent Audit of all the transactions undertaken by them.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Statutory Compliances and Day-to-Day Business for FFMCs<\/h2>\n\n\n\n<p><strong><em>Every FFMC entity is required to follow <\/em><\/strong><\/p>\n\n\n\n<ol><li>Provisions\nof Foreign Exchange Management Act, 1999 and <\/li><li>RBI\npublished Master Circular on Memorandum\nof Instructions &ndash; governing Money Changing Activities &amp;<\/li><\/ol>\n\n\n\n<p>RBI Master Direction consists of various compliances amongst which the most notable ones are<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Registers and Books of Accounts<\/h3>\n\n\n\n<ul><li>There\nare certain <em>registers<\/em> which are to be\nmaintained by the AMC related to all its transactions:<strong><\/strong><ul><li>Balance\nBook and Daily Summary (related to Foreign currency notes\/coins) in the form named\nFLM 1<\/li><\/ul><ul><li>Balance\nBook and Daily Summary (Travelers&rsquo; cheques) in the form FLM 2<\/li><\/ul><ul><li>Register\nof purchases of foreign currencies from the public in form FLM 3<\/li><\/ul><ul><li>Register\nof purchases of foreign currency notes\/coins from authorized dealers and\nauthorized money changers in form FLM 4<\/li><\/ul><ul><li>Register\nof sales of foreign currency notes\/coins and foreign currency travellers&rsquo;\ncheques to the public in form FLM 5<\/li><\/ul><ul><li>Register\nof sales of foreign currency notes\/coins to authorized dealers \/ Full Fledged\nMoney Changers \/ overseas banks in form FLM 6.<\/li><\/ul><ul><li>travellers&rsquo;\ncheques register surrendered to authorized dealers \/ authorized money changers\n\/ exported in form FLM 7<\/li><\/ul><\/li><\/ul>\n\n\n\n<ul><li>All the account books and registers\nnamely called <strong>FLM 1 to FLM 7<\/strong> should be kept up-to-date and cross-checked\nfrom time to time.<\/li><li>Transactions related to money\nchanging business should not be mixed with money changing transactions.<\/li><li>If the FFMC has more than one\nplace of business, separate registers should be maintained for each\nestablishment.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Submission of Statements to the Reserve Bank<\/h3>\n\n\n\n<ul><li><strong><em>Foreign\nCurrency Notes <\/em><\/strong><em>&ndash; <\/em>Submit <strong>monthly consolidated statements<\/strong>\nto RBI regarding the purchase or sale of foreign currency notes by the 10th of\nthe next month.<\/li><li><strong><em>Receipt \/ Purchase Of USD 10,000 (or more)&nbsp;<\/em><\/strong><em>&ndash; <\/em>a <strong>monthly\nstatement<\/strong> indicating details of receipt\/purchase of USD 10,000 (or its\nequivalent) and above per transaction shall be submitted to the regional office\nof RBI within 10<sup>th<\/sup> of next month.<em><\/em><\/li><li><strong><em>Foreign Currency Account\/s Maintained<\/em><\/strong><em> &ndash;<\/em> FFMCs should submit a <strong>quarterly\nstatement <\/strong>regarding Foreign Currency Account\/s maintained in India in\ntheir names.<em><\/em><\/li><li><strong><em>Written off\nAmount<\/em><\/strong>\n&ndash; An <strong>annual Statement<\/strong> should\nbe submitted to Reserve Bank giving details of the amount written off during\nthe financial year within one month after the fiscal year ends.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Submission of Balance Sheet and maintenance of Net Owned Funds (NOF)<\/h3>\n\n\n\n<ul><li><strong>Annual\nAudited Balance Sheet<\/strong>\nare required to be submitted to the respective Regional office of RBI for\nverification of their Net Owned Funds [NOF] of the AMC. Apart from this a\ncertificate from an auditor (statutory) regarding the NOF as on the date of the\nbalance sheet should also be submitted. <\/li><li>AMCs\nare to continuously maintain the minimum NOF. If ever the value falls below the\nrequisite minimum value it is to be brought to the notice of the Reserve Bank\nimmediately along with a specific time-bound plan for restoring the Net Owned\nFunds to the minimum required level.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>The\nFFMC License gets renewed on an annual <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a>. The renewal application shall be\nfiled at least one month before the expiry of the License. If the License\nexpires, no renewal application is allowed.<\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<p>Please get in touch with our service team to avail advisory service regarding application of FFMC license or alternatively for our <a href=\"https:\/\/enterslice.com\/virtual-cfo\"><strong>CFO Services<\/strong><\/a> which will help with complex web of compliances and updates by allowing you to outsource all prerequisite actions to <a href=\"https:\/\/enterslice.com\/\"><strong>Enterslice<\/strong><\/a>. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/enterslice.com\/learning\/money-changing-activities\/\"> All you need to know about Money Changing Activities<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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 [&hellip;]<\/p>\n","protected":false},"author":29,"featured_media":27870,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1447],"tags":[3296],"acf":{"service_id":"55"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>RBI Compliances for Full Fledged Money or Persons Dealing in Forex Tran<\/title>\n<meta name=\"description\" content=\"Full Fledged Money, also known as FFMCs (a type of AMC) are the entities\/persons who are involved solely in the exchange of foreign currency.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/rbi-compliances-for-full-fledged-money-or-persons-dealing-in-forex-transaction\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"RBI Compliances for Full Fledged Money or Persons Dealing in Forex Tran\" \/>\n<meta property=\"og:description\" content=\"Full Fledged Money, also known as FFMCs (a type of AMC) are the entities\/persons who are involved solely in the exchange of foreign currency.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/rbi-compliances-for-full-fledged-money-or-persons-dealing-in-forex-transaction\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2020-01-13T15:30:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-01-19T06:39:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/RBI-Compliances-For-FFMC-Full-Fledged-Money-Changers.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Vikalp Mishra","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/Vikalp-Mishra.jpg","authorDescription":"Vikalp is NLU graduate from Patiala (Punjab) and has a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata. He specializes in Corporate Law, IPR and has fair share of litigation practice under his belt. Other facets of him are voracious reader, health freak and avid traveler. To him content writing comes naturally in effort to simplify the law for general public\/reader.","postViews":574,"readingTime":4,"nextPost":{"id":27896,"slug":"understand-fraud-risk-assessment"},"prevPost":{"id":27855,"slug":"overview-of-gst-on-advertisement-services-and-its-taxability"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/01\/RBI-Compliances-For-FFMC-Full-Fledged-Money-Changers.jpg","postTerms":"Full Fledge Money Changers","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/27868"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/29"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=27868"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/27868\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/27870"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=27868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=27868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=27868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}