Authorised Money Changers/ AMCs are entities who are authorised by the Reserve Bank of India as per Section 10 of the Foreign Exchange Management Act of 1999. Accordingly, an AMC may either be a Restricted Money Changer (RMC) or a Full Fledged Money Changer (FFMC). As defined by the Act, an Authorised Person essentially means an authorised dealer, money changer, off-shore banking unit or any other individual for the time being authorised under sub-section (1) of Section 10 to involve in foreign securities or foreign exchange. A license is required by FFMCs to purchase foreign exchange from residents and non-residents visiting India and to sell foreign exchange for specifically approved purposes.
These companies are sanctioned under the Foreign Exchange Act of 1999. The RBI permits business entities to handle foreign exchange for specific purposes. These business entities are referred to as Authorized Exchanges or AMCs.
Full Fledged Money Changer (FFMC)
A Full Fledged Money Changer (FFMC) is an authorized entity who may purchase foreign exchange from non-residents and residents of India and sell the same for private and business travel purposes only to the people visiting abroad. As Section 10 of the Foreign Exchange Management Act, 1999 prescribes, authorized money changers are the only entities in the country that can deal in money changing activities and offer necessary foreign exchange services. For the purpose of removing the obstacles faced by foreign visitors and tourists, particular firms and hotels have also been offered the registration to deal in foreign currency notes, coins and traveller’s cheques under the directions issued by the RBI frequently.
No individual is permitted to carry on or advertise that they carry on money changing business unless they own a valid money changer’s license issued by the RBI. Any individual found undertaking any sort of money changing business without a valid license is liable to be penalised under the Act.
Benefits of FFMC
- An AMC licensee can provide sales facilities and services for foreign exchange;
- An FFMC licensee may offer collection certificates in the case of traveler’s cheques, foreign currency notes from non-residents and residents;
- An FFMC licensee can carry out foreign exchange activities for foreign tourists visiting India;
- An AMC licensee can settle trades in coins, traveler’s cheques, and foreign currency, at the prevailing exchange rate.
Activities of FFMCs
- An FFMC may enter into a franchise agreement at their convenience for the purpose of carrying on the Restricted Money Changing business which basically involves the conversion of foreign currency notes, coins or travellers’ cheques into Indian Rupees (INR).
- An FFMC or its franchisees may freely purchase any foreign currency notes, coins or traveller’s cheques from the residents as well as the non-residents of India.
- An FFMC may sell Indian Rupees (INR) to foreign tourists or visitors against International Debit Cards/ International Credit Cards and take prompt actions in order to obtain reimbursements through normal banking channels.
- FFMCs may choose to sell foreign exchange for the following purposes.
- Business Visits
- Private Visits
- Forex Pre-Paid Cards
Eligibility criteria for obtaining FFMC registration
As per the RBI guidelines, an applicant who wants to obtain an FFMC license must fulfill the following requirements:
- The applicant should obtain company registration under the Companies Act, 2013.
- Further, a minimum NOF (Net-owned Fund) of Rs. 25 lakhs is necessary for one FFMC branch, while Rs. 50 lakhs for multi-branch FFMCs is mandatory.
- There should be no criminal or civil cases pending against a company or individual with the Directorate of Tax Intelligence and the Directorate of Enforcement.
- The subject matter clause of the memorandum must demonstrate the business of money exchange to be carried out by the company.
Types of FFMC License
The following are the types of license that are required by an entity to operate as a Full Fledged Money Changer (FFMC).
- Authorised Dealer Category-I Banks (AD Category–I Banks)
- Authorised Dealers Category-II (ADs Category–II)
- Full Fledged Money Changers (FFMCs)
Documents Required for FFMC License
- A copy of the Certificate of Incorporation of the Entity.
- The Memorandum and Articles of Association comprising of a provision for undertaking money changing businesses or an appropriate amendment with the same effect.
- A copy of the latest audited accounts of the Entity with a certificate from Statutory Auditors certifying the Net-Owned Funds as on the Date of Application for the License.
- Several copies of the audited Balance Sheet and, Profit and Loss Account of the Entity for the immediate three years prior to the Date of Application for the License, wherever applicable.
- A Confidential Report from the banker of the Applicant in a sealed manner.
- Information concerning the sister or associated concerns operating in the financial sector such as NBFCs.
- A certified copy of Board Resolution to undertake money changing business.
Procedure for obtaining FFMC License from RBI
- Application submission to the Reserve Bank of India: In the first step of the procedure, the applicant company has to apply along with the required documents at the regional branch of Apex Bank in the prescribed format. Annexure II deals with the format prescribed by RBI.
- Meet the appropriate and correct criteria: To obtain an Authorized Money Changer License from the Reserve Bank of India, a company must meet the Fit and Proper criteria. Consequently, the Board must go through a Due Diligence process to confirm that the prescribed Fit and Proper criteria are properly met.
Further, one of the main functions of the eligibility and propriety criteria is to assist in determining the expertise, integrity, qualifications, and previous record of a person proposed for appointment as a director.
Post Approval Requirements by FFMCs
- A copy of the registration under the Shops and Establishment Act or any other documentary evidence such as a rent receipt or a copy of the lease agreement must be submitted to the Regional Office directed by the Reserve Bank before the commencement of any business activity.
- New Full Fledged Money Changers (FFMC) must carry out their activities according to the instructions specified by the Reserve Bank often.
- FFMCs must, at each of its business places, display a copy of the money changing license issued by the RBI.
- FFMCs must have a system of Concurrent Audit of all the transactions undertaken by them.
- It is essential that all FFMCs submit their annual audited balance sheets to the respective Regional Office of the RBI.
Records and Registers by FFMC
- Daily Summary and Balance book of the Foreign currency notes/ coins in form FLM-1.
- Daily Summary and Balance book of Travelers’ cheques in form FLM-2.
- Register of purchases of the foreign currencies from the public in Form FLM-3.
- Register of purchases of the foreign currency notes/ coins from authorized dealers and authorized money changers in the Form FLM-4.
- Register of sales of foreign currency notes/ coins and foreign currency travellers’ cheques to the public in the Form FLM-5.
- Register of sales of the foreign currency notes/ coins to authorized dealers/ Full Fledged Money Changers/ overseas banks in the Form FLM-6.
- Register of travellers’ cheques surrendered to the authorized dealers/ authorized money changers/ exported in the Form FLM-7.
FFMC License Revocation
- Revoking FFMC’s license is in the public interest;
- The FFMC licensee has failed to comply with the rules, regulations, notices, and instructions or violated any of the provisions of the Act.
- The RBI may revoke the authorization of any of the FFMC offices based on violation of any statutory or regulatory provision. The Reserve Bank may also revoke any existing license conditions of FFMC or impose new conditions.
Renewal of FFMC License
An application for the renewal of a Full Fledged Money Changer (FFMC) License must be made before 1 month from the expiry date of the license. No request for the restoration of a money changer’s license shall be accepted after the expiry of the FFMC license.
FAQs
Q: What happens if there is a violation of the FFMC regulations?
Non-compliance with the regulations may result in penalties, suspension, or revocation of the FFMC license. It is essential for entities holding such licenses to adhere to the regulatory requirements to avoid legal consequences.
Q: What is an FFMC license?
An FFMC (Full Fledged Money Changer) license is a license issued by the Reserve Bank of India (RBI) to entities that wish to engage in the business of buying and selling foreign exchange, as well as providing other financial services related to currency exchange.
Q: Who can apply for an FFMC license?
A: Entities such as banks, financial institutions, travel agencies, and other entities meeting the eligibility criteria set by the RBI can apply for an FFMC license.
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