(A) Guidelines for Licensing and other Approvals for Full Fledged Money Changers (FFMCs)
In addition to Authorized Dealers Category - I (AD Category I) and
Authorized Dealers Category - II (AD Category II), Full Fledged Money Changers (FFMCs)
are authorized by the Reserve Bank to deal in foreign exchange for specified purposes, to
improve access to foreign exchange facilities by residents and tourists while ensuring
efficient customer service through competition. FFMCs are authorized to purchase foreign
exchange from residents and non-residents visiting India and to sell foreign exchange for
certain approved purposes. AD Category I / AD Category II / FFMCs may appoint
franchisees to undertake purchase of foreign currency.
The Reserve Bank has since discontinued the scheme of Restricted Money Changers
(RMCs). However, validity of licences of certain RMCs, which are operating within 10 km of
border areas bordering Pakistan and Bangladesh, has been extended by the Reserve Bank
with a view to ensuring provision of adequate exchange facilities in these areas. These RMCs
and franchisees of AD Category I / AD Category II / FFMCs functioning within 10 km
from the borders of Pakistan and Bangladesh may also sell the currency of the bordering
country, with prior approval of the Reserve Bank. 2. Legal Requirement:-
Reserve Bank authorizes FFMCs to deal in foreign exchange in terms
of Section 10(1) of the Foreign Exchange Management Act, 1999 (the Act). No person shall
carry on or advertise that he carries on money changing business unless he is in possession of
a valid money changer's license. Any person found undertaking money changing business
without a valid license is liable to be penalized under the Act ibid.
The guidelines for issue of new FFMC license, renewal of license, branch licensing,
approval for appointment of agents / franchisees, AML Guidelines for Authorized Persons are
given below. These guidelines are indicative and the Reserve Bank may take into account
other relevant factors like increase in outreach, location, etc. while considering applications
for licenses. 3. Guidelines for issuance of FFMC License:-
(i). Entry Norms
(i) The applicant has to be a company registered under the Companies Act, 1956.
(ii) The minimum net owned funds required for eligibility for consideration as FFMC
are as follows: Category Minimum Net Owned Funds
Single branch FFMCs
Rs. 25 lakh.
Rs. 50 lakh.
FFMCs Note: -
The Net Owned Fund of applicants, other than banks, should be calculated
as per the following. (i) Owned Fund: -
(Paid-up equity capital + Free Reserves + Credit Balance in P &
L A/c) minus (Accumulated balance of loss, deferred revenue expenditure and other
(ii) Net Owned Fund: -
Owned Fund minus the amount of investments in shares of its
subsidiaries, companies in the same group, all (other) non-banking financial companies
as also the book value of debentures, bonds, outstanding loans and advances made to
and deposits with its subsidiaries and companies in the same group in excess of 10 per
cent of the Owned Fund.
Application in the form, as at Annex - II, should be submitted to
the respective Regional Office of the Foreign Exchange Department of the Reserve Bank
under whose jurisdiction the registered office of the applicant falls, along with the following
(a) Copy each of the Certificate of Incorporation and Certificate of Commencement of
Business of the company.
(b) Memorandum and Articles of Association containing a provision for undertaking
money changing business or an appropriate amendment to this effect filed with the
Company Law Board.
(c) copy of the latest audited accounts with a certificate from the Chartered Accountant
certifying the net owned funds as on the date of application. Copies of the audited
Balance Sheet and Profit & Loss Account of the company for the last three years,
(d) Confidential Report from the applicant's banker in a sealed cover.
(e) A declaration to the effect that no proceedings have been initiated by / pending
with the Directorate of Enforcement (DoE) / Directorate of Revenue Intelligence
(DRI) or any other law enforcing authorities against the applicant company and its
directors and that no criminal cases are initiated / pending against the applicant
company and its directors.
(f) A declaration to the effect that proper policy framework on "Know Your Customer"
and Anti Money Laundering measures, in accordance with the guidelines issued vide
A. P.(DIR Series) Circular No. 18 / A.P.(FL Series) Circular No. 1 dated December 2,
2005, A.P. (DIR Series) Circular No.39 / A.P. (FL Series) Circular No. 2 dated June
26, 2006 and A.P. (DIR Series) Circular No. 14 / A.P.(FL Series) Circular No. 1 dated
October 17, 2007 as amended from time to time, will be put in place on obtaining
the approval of the Reserve Bank and before commencing operations.
(g) Details of sister / associated concerns operating in the financial sector, like
(h) A certified copy of the board resolution for undertaking money changing business. (iii). Basis for Approval:-
(i) Since several FFMCs are already functioning, fresh licenses
will be issued on a selective basis to those who comply with all the licensing requirements,
facilitate an increase in outreach, have locational advantage, like being located in border
areas, tourist centers, etc.
(ii) 'Fit and proper' criteria for the applicant FFMCs #
If any DoE / DRI case or any other case by any other law enforcing authorities, is initiated /
pending against any company / its directors, the company will not be considered as 'fit and
proper' and its application will not be considered for licensing as FFMC. (# Also applicable to
non-bank AD Category II)
(iii) `Fit and proper' criteria for directors of FFMCs * Please see Annex - III for the
details in this regard. (* Also applicable to non-bank AD Category - II)
(iv) Clearance by the Empowered Committee
The request for issuance of FFMC license would be considered by the Regional Office
concerned of the Reserve Bank on the basis of the clearance by the Empowered Committee
set up for the specific purpose.
(v) Reserve Bank's decision in the matter of granting approval will be final and
(vi) On obtaining approval from the Reserve Bank, a copy of the registration under
Shops & Establishment Act or any other documentary evidence such as rent receipt, copy of
lease agreement, etc. should be submitted to the Regional Office concerned of the Reserve
Bank before commencement of the business.
(vii) The FFMC should commence its operations within a period of six months from
the date of issuance of license and inform the Regional Office concerned of the Reserve
(viii) New FFMCs should carry out their activities as per the instructions specified in
paragraphs (E) and (F) below and other instructions issued from time to time.
No fresh authorization will be issued to Urban Cooperative Banks (UCBs) to function
(B) Guidelines for Grant of License for Additional Branches :-
1. No FFMC shall carry
on money changing business at any additional place of business other than its
permanent place of business except with the prior approval of the Reserve Bank. An FFMC
which intends to commence money changing business at any additional place of business
shall apply in writing to the respective Regional Office of the Foreign Exchange Department
under whose jurisdiction the registered office of the applicant falls and the Reserve Bank
may approve the additional place of business subject to such conditions as it may think fit.
2. Applications for additional locations (places of business) should be accompanied
by the following:-
(a) Copy of the latest audited accounts with a certificate from the Chartered
Accountant regarding the position of net owned funds as on the date of application.
(b) Confidential Report from the applicant's banker in a sealed cover.
(c) A declaration to the effect that no proceedings have been initiated / pending by
the Directorate of Enforcement (DoE) / Directorate of Revenue Intelligence (DRI) or
any other law enforcing authorities against the applicant and its directors and that no
criminal cases are initiated / pending against the applicant and its directors. No new
branch license will be issued to any FFMC, against whom any major DoE / DRI case
is pending. In minor DoE / DRI pending cases, a decision will be taken by the
Reserve Bank on a case by case basis. The categorization of pending DoE / DRI
cases as major / minor will be at the discretion of the Reserve Bank and the decision of
the Reserve Bank will be final and binding. Where any DoE / DRI case is adjudicated and
penalty is imposed, a view will be taken, on the basis of the nature of the offence,
provided no fresh DoE / DRI case is instituted.
(d) A copy of the KYC / AML policy framework existing in the company.
(e) Brief write-up on the internal control systems, including internal and external
3. With a view to having proper distribution of branches of FFMCs in metros and non-
metros, the applications for additional offices in metropolitan cities will be considered if the
total offices (including proposed offices) of the applicant are in the ratio 1:1 (i.e. the
applicant has one non-metropolitan office for every office in a metro). For this purpose, in
addition to Mumbai, New Delhi, Chennai and Kolkata, three more cities viz., Bangalore,
Hyderabad and Ahmedabad will be considered as metropolitan centers. Preference will be
given to applications for branches in remote areas of tourist attraction.
4. A copy of the registration under Shops & Establishment Act or any other documentary
evidence such as rent receipt, copy of lease agreement, etc. should be submitted to the
Regional Office concerned of the Reserve Bank before commencement of business at an
5. The FFMC should commence operations of its additional branch within a period of
six months from the date of issuance of license and inform the Regional Office concerned of
the Reserve Bank. (C) Guidelines for appointment of Agents / Franchisees by Authorized Dealers
Category - I, Authorized Dealers Category - II and FFMCs: -
Under the Scheme, the
Reserve Bank permits AD Category - I, AD Category - II and FFMCs to enter into
agency / franchisee agreements at their option for the purpose of carrying on Restricted
business i.e. conversion of foreign currency notes, coins or travelers' cheques into rupees. 2. Franchisee:
A franchisee can be any entity which has a place of business and a
minimum net owned funds of Rs.10 lakh. Franchisees can undertake only restricted money
changing business. 3. Agency / Franchise Agreement:
Franchisers are free to decide on the tenor of
the arrangement as also the commission or fee through mutual agreement with the
The Agency / Franchise agreement to be entered into by an AD Category - I/ AD Category
II / FFMC should, however, include the following salient features:
(a) The display of exchange rates by the franchisee. Exchange Rate for conversion of
foreign currency into rupees should be the same or close to the daily exchange rate
charged by the AD Category I / AD Category - II / FFMC at its branches.
(b) The surrender of foreign currency purchased by the franchisee to the franchiser
or any other authorized persons, as may be agreed upon, within 7 working days.
(c) The maintenance of proper record of transactions by the franchisee.
(d) The on-site inspection of premises and records of the franchisee by the franchiser
at least once a year. 4. Procedure for application:
An AD Category - I/ AD Category - II/ FFMC should apply
to the respective Regional Office of Reserve Bank, in Form RMC-F (Annex-IV) for appointment of
agents / franchisees under this Scheme. The application should be accompanied by a declaration
that while selecting the franchisees adequate due diligence has been carried out and that such
entities have undertaken to comply with all the provisions of the franchising agreement and
prevailing Reserve Bank regulations regarding money changing. Approval would be granted
by the Reserve Bank for the first franchisee arrangement. Thereafter, as and when new
agency / franchisee agreements are entered into, these would have to be reported to the
Reserve Bank on a post-facto basis along with similar declaration as indicated above. 5. Due Diligence of Agents / Franchisees:
The AD Category I / AD Category
II / FFMCs should undertake the following minimum checks while conducting the due
diligence of the agents / franchisees
existing business activities of the agent / franchisee / its position in the area.
minimum net owned fund of the agent / franchisee.
Shop & Establishment / other applicable municipal certification in favour of the
verification of physical existence of location of the agent / franchisee, where
restricted money changing activities will be conducted.
whether the agent / franchisee is solvent.
conduct certificate of the agent / franchisee from the local police authorities.
declaration regarding past criminal case, if any, cases initiated / pending against
the agent / franchisee or its directors / partners by any law enforcing agency, if any.
PAN Card of the agent / franchisee and its directors / partners.
photographs of the directors / partners and the key persons of agent / franchisee.
The above checks should be done on a regular basis, at least once in a year. The AD
Category I / AD Category II / FFMCs should obtain from the agents / franchisees proper
documentary evidence confirming the location of the agents / franchisees in addition to
personal visits to the site. The AD Category I / AD Category II / FFMCs should also
obtain a Chartered Accountant's certificate confirming the maintenance of the net owned
funds of the agent / franchisee, i.e., Rs. 10 lakh on an ongoing basis. Note:-
The AD Category I / AD Category II / FFMCs are advised to discontinue
agreements with agents/ franchisees who do not meet the revised criteria within three
months from the date of issue of this circular. 7. Selection of Centers:
Franchisers are free to select centers for operationalising
Franchisers are expected to impart training to the agents / franchisees
as regards operations and maintenance of records. 9. Reporting, Audit and Inspection:
The franchisers i.e. the AD Category I / AD
Category II / FFMCs are expected to put in place adequate arrangements for reporting of
transactions by the franchisees to the franchisers on a regular basis (at least monthly).
Regular spot audits of all locations of franchisees, at least once in six months, should be
conducted by AD Category I / AD Category II / FFMCs. Such audits should involve a
dedicated team and 'mystery customer' concept should be used to test the compliance level
of the franchisees. A system of annual inspection of the books of the franchisees should be
put in place. The purpose of such inspection is to ensure that the money changing business
is being carried out by the franchisees in conformity with the terms of the agreement and
prevailing RBI guidelines and that necessary records are being maintained by the
franchisees. 10. Anti Money Laundering / Know Your Customer Guidelines:
required to strictly adhere to the AML / KYC guidelines, as applicable to AD Category I /
AD Category II / FFMCs. Note:-
No license for appointment of agents / franchisees will be issued to any FFMC /
nonblank AD Category - II, against whom any major DoE / DRI / CBI / Police case is pending. In
case where any FFMC / non-bank AD Category - II has got one-time approval for appointing
agents / franchisees and subsequent to the date of approval, any DoE / DRI / CBI / Police case is
filed, the FFMC / non-bank AD Category - II should not appoint any further agents / franchisees
and bring the matter to the notice of the Reserve Bank immediately. A decision will be taken by
the Reserve Bank regarding allowing the FFMC / non-bank AD Category - II to appoint agents /
franchisees. (D) Guidelines for Renewal of licenses of existing FFMCs:
1. The applicant should be a
company registered under the Companies Act, 1956 having registered / head office within
the area of jurisdiction of the office.
2. The net owned funds required are as follows: Category Minimum Net Owned Funds
Single branch FFMCs Rs. 25 lakh.
Rs. 50 lakh.
3. Applications for renewal should be submitted along with the documents,
(a) Copy of the latest audited accounts with a certificate from the Chartered Accountant
regarding the position of net owned funds as on date.
(b) Confidential Report from the applicant's banker in a sealed cover.
(c) A declaration to the effect that no proceedings have been initiated by/ pending
with the Directorate of Enforcement / Directorate of Revenue Intelligence or any
other law enforcing authorities against the applicant company and its directors and
that no criminal cases are initiated/ pending against the applicant company and its
(d) A copy of the KYC / AML policy framework existing in the company.
An application for the renewal of a money-changer's license shall be made not later
than one month, or such other period as the Reserve Bank may prescribe, before the expiry
of the money changer's license. Where a person submits an application for the renewal of
his money changer's license, the license shall continue in force until the date on which the
license is renewed or the application for its renewal is rejected, as the case may be. No
application for renewal of a moneychanger's license shall be made after the expiry of the
license. (E) Operational Instructions:- 1. Bringing in and taking out of Foreign Exchange:-
(i) Foreign exchange in any form can be brought into India freely without limit
provided it is declared on the Currency Declaration Form (CDF) on arrival to the
Custom Authorities. When foreign exchange brought in the form of currency notes or
travellers' cheques does not exceed US$ 10,000/- or its equivalent and / or the value
of foreign currency notes does not exceed US$ 5000/- or its equivalent, declaration
thereof on CDF is not insisted upon.
(ii) Taking out foreign exchange in any form, other than foreign exchange obtained
from an authorized dealer or a money changer is prohibited unless it is covered by a
general or special permission of Reserve Bank. Non-residents, however, have general
permission to take out an amount not exceeding the amount originally brought in by
them subject to compliance with the provisions of sub-para (i) above. 2. Purchases of Foreign Currency from Public:-
(i) Authorized Money Changers (AMCs) / franchisees may freely purchase
foreign currency notes, coins and travellers cheques from residents as well as non-
residents. Where the foreign currency was brought in by declaring on form CDF, the
tenderer should be asked to produce the same. The AMC should invariably insist
on production of declaration in CDF.
(ii) AMCs may sell Indian rupees to foreign tourists / visitors against
International Credit Cards and take prompt steps to obtain reimbursement through
normal banking channels. 3. Encashment Certificate:-
(a) AMCs may issue certificate of encashment when asked for in cases of
purchases from the public. These certificates bearing authorized signatures should be
issued on the letter head of the money changer and proper record maintained.
(b) In cases where encashment certificate is not issued, attention of the
customers should be drawn to the fact that unspent local currency held by non-
residents will be allowed to be converted into foreign currency only against production
of a valid encashment certificate. 4. Purchases from other FFMCs and Authorized Dealers:-
AMCs may purchase
from other FFMCs, RMCs and ADs any foreign currency notes, coins and encash travellers
cheques tendered in the normal course of business. Rupee equivalent of the amount of
exchange purchases should be paid only by way of crossed account payee cheque/Demand
Draft. 5. Sale of foreign exchange:- (I) Private Visits:-
AMCs may sell exchange up to
the prescribed ceiling in the form of foreign currency notes / coins and travellers' cheques to
eligible resident Indian citizens for undertaking one or more private visits to any country
abroad (except Nepal and Bhutan). Exchange for such visits may be released on the basis of
declaration given by the traveller regarding the amount of foreign exchange availed of
during a calendar year. Foreign nationals permanently resident in India are also eligible to
avail of this quota for private visits provided the applicant is not availing of facilities for
remittance of his salary, savings, etc. abroad in terms of the existing Foreign Exchange
regulations. (II) Business visits:-
AMCs may sell foreign exchange in the form of foreign
currency notes/coins and travellers' cheques to eligible travellers for undertaking business
travel or attending a conference or specialized training or for maintenance expenses of a
patient going abroad for medical treatment or check up abroad or for accompanying as
attendant to a patient going abroad for medical treatment / check up. Quantum of Exchange
Amount prescribed by Reserve Bank from time to time.
The sale of foreign exchange should be made only on personal application and
identification. In case of issue of travellers' cheques, the traveller should sign the
cheques in the presence of an authorized official and the purchaser's acknowledgement
for receipt of the travellers' cheques should be held on record. ii.
Payment in excess of Rs.50,000/- towards sale of foreign exchange should be
received only by the applicant's crossed cheque / crossed cheque drawn on the bank
account of the firm / company sponsoring the visit of the applicant / Banker's cheque /
Pay Order / Demand Draft. For this purpose, sales in instalments, should be reckoned as
a single drawal for the journey. iii.
The sale of foreign currency / notes and coins within the overall entitlement of
foreign exchange, should be restricted to the limits prescribed by Reserve Bank from
time to time. 6. Sales against Reconversion of Indian Currency: -
AMCs may convert into
foreign currency, unspent Indian currency held by non-residents at the time of their
departure from India, provided a valid Encashment Certificate is produced. . Note (1):
AMCs may convert at their discretion, unspent Indian currency up to
Rs.10,000 in the possession of non-residents if, for bonafide reasons, the person is unable
to produce an Encashment Certificate after ensuring that the departure is scheduled to take
place within the following seven days.
AD Category - I and AD Category - II may provide facility for reconversion
of Indian Rupees to the extent of Rs. 50,000/- to foreign tourists (not NRIs) against ATM
Receipts based on the following documents.
Valid Passport and VISA
Ticket confirmed for departure within 7 working days.
Original ATM slip (to be verified with the original debit/ credit card). 7. Cash Memo: -
AMCs may issue a cash memo, if asked for, on official letterhead
to travellers to whom foreign currency is sold by them. The cash memo may be required for
production to emigration authorities while leaving the country. 8. Rates of Exchange: -
AMCs may put through transactions relating to foreign
currency notes and travellers' cheques at rates of exchange determined by market
conditions. 9. Display of Exchange Rate Chart: -
AMCs should display at a prominent place in
or near the public counter, a chart indicating the rates for purchase/sale of foreign currency
notes and travellers' cheques. 10. Foreign Currency Balances: -
i. AMCs should keep balances in foreign
currencies at reasonable level and avoid build up of idle balances with a view to speculating
on currency movements.
ii. RMCs / franchisees should surrender foreign currency notes, coins and
travellers' cheques purchased to an authorized dealer or to an FFMC within seven
iii. The transactions between authorized dealers, FFMCs and RMCs should,
however, be settled by way of account payee crossed cheques / demand drafts.
Under no circumstances should settlement be made in cash.
11. Replenishment of Foreign currency Balances:-
(i) AMCs may obtain their
normal business requirements of foreign currency notes from other AMCs (including RMCs) /
authorized dealers in foreign exchange in India, against payment in rupees made by way
of account payee crossed cheque / Demand Draft.
(ii) Where AMCs are unable to replenish their stock in this manner, they may
make an application to the Forex Markets Division, Foreign Exchange Department,
Central Office, Reserve Bank of India, Mumbai through an AD Cat-I for permission to
import foreign currency into India. The import should take place through the
designated AD Cat-I through whom the application is made. 12. Export / Disposal of surplus Foreign Currency Notes / Travellers' Cheques:-
AMCs may export surplus foreign currency notes / encashed travellers' cheques to
an overseas bank through the medium of designated Authorized Dealer Category - I in foreign
exchange for realization of their value through the latter. FFMCs may also export surplus
foreign currency to private money changers abroad subject to the condition that either the
realizable value is credited in advance to the AD Category - I Nostro account or a bank
guarantee is issued by an international bank of repute covering the full amount of the foreign
currency notes / coins to be exported. 13. Write-off of fake foreign currency notes:-
In the event of foreign currency
notes purchased being found fake/forged subsequently, AMCs may write- off up to USD
2000 per financial year after approval of their Top Management after exhausting all
available options for recovery of the amount. Any write-off in excess of the above amount,
would require the approval of the Regional Office concerned of the Foreign Exchange
Department of the Reserve Bank. 14. Registers and Books of Accounts of Money-changing Business:- i.
AMCs shall maintain the following Registers in respect of their money-changing transactions
(a) Daily Summary and Balance Book (Foreign currency notes / coins) in form
FLM 1 (Annex-V).
(b) Daily Summary and Balance Book (Travellers' cheques ) in form FLM 2
(c) Register of purchases of foreign currencies from the public in form FLM 3
(d) Register of purchases of foreign currency notes / coins from authorized
dealers and authorized moneychangers in form FLM 4 (Annex-VIII).
(e) Register of sales of foreign currency notes / coins and foreign currency
travellers' cheques to the public in form FLM 5 (Annex-IX).
(f) Register of sales of foreign currency notes / coins to authorized dealers /
Full Fledged Money Changers / overseas banks in form FLM 6 (Annex-X).
(g) Register of travellers' cheques surrendered to authorized dealers /
authorized money changers / exported in form FLM 7 (Annex-XI).
(h) In addition, money-changers should maintain such books of account like
cash book in rupee currency, etc. commonly maintained in business firms. ii.
Besides the above, AMCs shall maintain such registers and books of account as
prescribed by the Reserve Bank from time to time. iii.
All registers and books should be kept up-to-date, cross-checked and balances
verified daily. iv.
Transactions not pertaining to money changing business of the AMC should not be
mixed up with money-changing transactions. In other words, the registers and books
of account should show clearly the trail of transactions pertaining to money-changing
Separate registers should be maintained for each establishment, 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 sale. 15. Submission of Statement to Reserve Bank:
- i. FFMCs / AD Category - II
should submit to the office of Reserve Bank which has issued the license/unified license, a
monthly consolidated statement for all its offices in respect of sale and purchase of foreign
currency notes in form FLM 8 (Annex-XII) so as to reach Reserve Bank not later than the
of the succeeding month.
ii. Similarly RMCs should submit to the office of Reserve Bank under whose
jurisdiction they are functioning, a quarterly statement in form RLM 3 (Annex-XIII). The
statement duly certified by the AD Category I / AD Category - II/ FFMC should reach the
Reserve Bank not later than the 10th day of the month following the quarter. In case the
collections of foreign currencies are surrendered to different authorized dealers / FFMCs,
separate quarterly statements should be prepared to facilitate independent certification by
each such authorized dealer / FFMC.
iii. FFMCs / AD Category - II should submit to the Regional Office concerned of the
Foreign Exchange Department, Reserve Bank of India, a monthly statement indicating
details of receipt / purchase of US $ 10,000 / its equivalent and above per transactions in
the enclosed format as at Annex-XIV, within 10 days of the close of the month. FFMCs / AD
Category - II should include transactions of their franchisees in their statement.
iv. FFMCs / AD Category - II should submit a quarterly statement regarding Foreign
Currency Account/s maintained in India in their names with AD Category - I to the Regional
Office concerned of the Foreign Exchange Department, Reserve Bank of India as per the
format in Annex-XV.
v. An Annual Statement should be submitted by all the FFMCs / ADs Category - II to
the respective Regional Offices of the Foreign Exchange Department, Reserve Bank of India
which have issued the licenses within one month of the financial year-end, giving the total
amount written off during the financial year details there of as per the format as at Annex-
XVI. 16. Inspection of Transactions of AMCs:-
Section 12(1) of Foreign Exchange
Management Act 1999, empowers any officer of Reserve Bank specially authorized in this
behalf to inspect the books and accounts and other documents of AMCs. AMCs should
provide all assistance and co-operation to Inspecting Officers in carrying out their inspection.
Failure to produce any books of account or other document or to furnish any statement or
information or to answer any question relating to the money-changing transactions to the
Inspecting Officers, shall be deemed to be a contravention of the provisions of the Act ibid. 17. Concurrent Audit:-
(i) FFMCs / AD Category - II should put in place a system
of Concurrent Audit of the transactions undertaken by them.
(ii) All single branch FFMCs / AD Category - II having a turnover of more than
USD 100,000 or equivalent per month and all multiple branch FFMCs / AD Category -
II should institute a system of monthly audit. Single branch FFMCs / AD Category - II
having turnover of less than USD 100,000 or its equivalent may institute a system of
(iii) Appointment / selection of auditors is left to the discretion of the FFMCs/
AD Category - II. The auditors should check all the transactions of the FFMCs / AD
Category - II. The Statutory Auditors would be required to certify that the Concurrent
Audit and the internal control systems are working satisfactorily.
(iv) The auditors should check all the transactions of the FFMC / AD Category -
II and ensure that all the instructions issued by the Reserve Bank from time to time
have been complied with.
18. Renewal of License:-
AMCs should apply for renewal of license at least 1
month in advance of the expiry of the current license to the Regional Office of Reserve Bank
in whose jurisdiction their Head Office is situated. 19. Temporary Money changing Facilities:-
AMCs are authorized to transact money
changing business only at the location or locations specifically indicated in the license. If it is
intended to provide money changing facilities on a temporary basis on certain special occasions,
a separate application should be made for the purpose to the Regional Office concerned of the
Foreign Exchange Department of the Reserve Bank. Full details such as period for which the
exchange counter will be operated, volume of business expected, manner of accounting of the
transactions, letter from organizers making available venue for the money changing facilities,
etc should be submitted. 20. Opening of Foreign Currency Accounts by FFMCs / AD Category II: -
FFMCs / AD Category - II may be allowed to open Foreign Currency Accounts in India by the
respective Regional Offices of the Foreign Exchange Department subject to the following
(i) Only one account may be permitted at a particular centre.
(ii) Only the value of foreign currency notes/ encashed TCs exported through the
specific bank and realized
can be credited to the account.
(iii) Balances in the accounts shall be utilized only for settlement of liabilities on
(a) TCs sold by the FFMCs / AD Category - II and
(b) Foreign currency notes acquired by the FFMCs / AD Category - II from AD
Category - I banks.
(iv) No idle balance shall be maintained in the said account.
21. Submission of Balance Sheet and maintenance of NOF:-
All FFMCs / AD
Category - II 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 fund
along-with a certificate from the statutory auditors regarding the NOF as on the date of the
balance sheet. As FFMCs / AD Category - II are expected to maintain the minimum NOF on
an ongoing basis, 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 fund to the
minimum required level, if there is any erosion in their NOF below the minimum level. (F) AML Guidelines:-
1. Money Laundering The offence of Money Laundering has been
defined in Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) as "whosoever
directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is
actually involved in any process or activity connected with the proceeds of crime and
projecting it as untainted property shall be guilty of offence of money laundering". Money
Laundering can be called a process by which money or other assets obtained as proceeds of
crime are exchanged for "clean money" or other assets with no obvious link to their criminal
origins. 2. Anti-Money Laundering Guidelines:-
The purpose of prescribing Anti-Money
Laundering Guidelines is to prevent the system of Authorized Money Changers (AMCs)
engaged in the purchase and / or sale of foreign currency notes / Travellers' cheques from
being used for money laundering. Therefore, Anti-Money Laundering (AML) measures should
a. Identification of Customer according to "Know Your Customer" (KYC) norms,
b. Recognition, handling and disclosure of suspicious transactions,
c. Appointment of Money Laundering Reporting Officer (MLRO),
d. Staff Training,
e. Maintenance of records,
f. Audit of transactions.
The following paragraphs contain broad guidelines to enable AMCs to formulate and
put in place a proper policy framework for AML measures. 3. Know Your Customer (KYC) Identification of Customers:-
For purchase of
foreign exchange less than US $ 200 or its equivalent, photocopies of the identification
document need not be kept on record. However, full details of the identification document
For encashment of foreign exchange between US $ 200 and US $ 2000 or its
equivalent, the photocopies of the identification document should be maintained for one
year and completion of statutory audit.
For encashment in excess of US $ 2000 or its equivalent, the photocopies of the
identification document should be maintained for a minimum period of five years. 4. Purchase of Foreign Exchange:-
a) For encashment of foreign currency notes
and / or Travellers' Cheques up to USD 500 or its equivalent, production of passport need
not be insisted upon and any other suitable document of identification like ration card,
driving license, etc. can also be accepted.
b) For verification of the identity of customer for encashment in excess of USD 500
or its equivalent, a photo identity document such as passport, driving license, PAN Card,
voter identity card issued by the Election Commission, etc. should be obtained
c) Requests for payment of sale proceeds in cash may be acceded to the extent of
USD 1000 or its equivalent per transaction. All encashment within one month may be
treated as single transaction for the purpose. Requests for payment in cash by foreign
visitors / Non-Resident Indians may be acceded to the extent of USD 3000 or its equivalent.
In all other cases AMCs should make payment by way of 'Account Payee' cheque / demand
d) Where the amount of forex tendered for encashment by a non-resident or a
person returning from abroad exceeds the limits prescribed for Currency Declaration Form
(CDF), the AMC should invariably insist for production of declaration in CDF. 5. In all cases of sale of foreign exchange, irrespective of the amount involved:-
identification purpose the passport of the customer should be insisted upon. The sale of forex
should be made only on personal application and identification. Payment in excess of
Rs.50,000/- towards sale of foreign exchange should be received only by the applicant's
crossed cheque / crossed cheque drawn on the bank account of the firm/company sponsoring
the visit of the applicant / Banker's cheque / Pay Order / Demand Draft. All purchases by a
person within one month may be treated as single transaction for the purpose. Encashment
Certificate, wherever required, should also be insisted upon. 6. Establishment of business relationship:-
Relationship with a business entity like a
company / firm should be established only after obtaining and verifying suitable documents in
support of name, address and business activity such as certificate of incorporation under the
Companies Act, 1956, Memorandum of Association and Articles of Association, registration
certificate of a firm (if registered), partnership deed, PAN Card, etc. A list of employees who
would be authorized to transact on behalf of the company / firm and documents of their
identification together with their signatures, should also be called for.
Copies of all documents called for verification should be kept on record. 7. Suspicious Transactions: -
The AMC must ensure that its staff is vigilant against
money laundering transactions at all times. An important part of the AML measures is
determining whether a transaction is suspicious or not. A transaction may be of suspicious
nature irrespective of the amount involved.
Some possible suspicious activity indicators are given below:
Customer is reluctant to provide details / documents on frivolous grounds.
The transaction is undertaken by one or more intermediaries to protect the
identity of the beneficiary or hide their involvement.
Large cash transactions.
Size and frequency of transactions is high considering the normal business of
Change in the pattern of business transacted.
The above list is only indicative and not exhaustive. 8. Appointment of Money Laundering Reporting Officer (MLRO):-
a. An MLRO may be
appointed by every AMC for monitoring transactions and ensuring compliance with the AML
Guidelines issued by the Reserve Bank from time to time. Any transaction, that appears
suspicious, may be put through after obtaining MLRO's consent. The MLRO will also be
responsible for reporting of suspicious transaction/s to the Financial Intelligence Unit (FIU). b.
The MLRO shall have reasonable access to all the necessary information/ documents,
which would help him in effective discharge of his responsibilities.
The responsibility of the MLRO may include:
Putting in place necessary controls for detection of suspicious transactions.
Receiving disclosures related to suspicious transactions from the staff or
Deciding whether a transaction should be reported to the appropriate
Training of staff and preparing detailed guidelines / handbook for detection of
Preparing annual reports on the adequacy or otherwise of systems and
procedures in place to prevent money laundering and submit it to the Top
Management within 3 months of the end of the financial year. 9. Reporting of Suspicious Activity:-
To the extent possible, all suspicious transactions should be reported to the
MLRO before they are undertaken.
Full details of all suspicious transactions, whether put through or not, should be
reported, in writing, to the MLRO.
Any transaction which seems suspicious may be undertaken only with prior
approval of MLRO.
If the MLRO is reasonably satisfied that the suspicious transaction has / may
have resulted in money laundering, he should make a report to the appropriate
authority viz. the FIU.
10. Staff Training:-
All the managers and staff of the AMC must be trained to be aware of
the policies and procedures relating to prevention of money laundering, provisions of the
PMLA and the need to monitor all transactions to ensure that no suspicious activity is being
undertaken under the guise of money changing. The steps to be taken when the staff come
across any suspicious transactions (such as asking questions about the source of funds,
checking the identification documents carefully, reporting immediately to the MLRO, etc.)
should be carefully formulated by the AMC and suitable procedure laid down. The AMCs
should have an ongoing training programme for consistent implementation of the AML
measures 11. Audit / Compliance:-
The concurrent auditor should check all transactions to verify
that they have been done in compliance with the anti-money laundering guidelines and
have been reported as required. Compliance on the lapses, if any, recorded by the
concurrent auditor should be put up to the Board. A certificate from the Statutory Auditor on
the compliance with AML guidelines should be obtained at the time of preparation of the
Annual Report and kept on record. 12. Maintenance of records:-
The following documents should be preserved for a
minimum period of five years.
Records including identification obtained in respect of all transactions.
Statements / Registers prescribed by the Reserve Bank from time to time.
All Inspection / Audit / Concurrent Audit Reports.
Annual reports of the MLRO submitted to the Top Management in terms of
paragraph 8 above.
Details of all suspicious transactions reported in writing or otherwise to the
Details of all transactions involving purchase of foreign exchange against
payment in cash exceeding Indian Rupees 1,000,000 from inter-related persons
during one month.
All correspondence / reports with the appropriate authority in connection with
References from Law Enforcement Authorities, including FIU, should be
preserved until the cases are adjudicated and closed.
(G) Revocation of License: -
Reserve Bank reserves the right to revoke the license granted
to an FFMC at any time if the Reserve Bank is satisfied that (a) it is in public interest to do so
or (b) the Full Fledged Money Changer 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
there-under. Reserve Bank also reserves the right to revoke the authorization of any of the
offices for infringement of any statutory or regulatory provision. Reserve Bank may at any
time vary or revoke any of the existing conditions of a money changer's license or impose
new conditions. (Paragraph (A) (3) above) Application Form for FFMC Licence Under Section 10(1) of FEMA, 1999
Full name of the applicant
Address in full
Name of location/s to where the applicant
proposes to conduct Money Changing
Business (Please enclose copies of the
Licences under Shops and Establishment
(a) Date of establishment of the company
(b) Name/s and address/es of the Directors
of the company
Copy of the certificate of Registration
(Certificate of Incorporation & Certificate of
Commencement of Business) of the
Copy of Memorandum of Association
together with a letter indicating the clause
which provides for taking up money
Confidential report from the applicant's
in CIR format.
Net Owned Funds A copy of the latest
Audited Balance Sheet of the applicant
company together with a certificate from
their Chartered Accountant certifying their
net owned funds as on the date of
application and calculation thereof is to be
Declaration to the effect that the company
and any of its directors are not under
investigation/adjudication of any law
enforcing agencies, such as DoE/DRI & also
that no criminal proceedings filed by Crime
Investigation Agencies are pending against
the company or any of its directors.
Undertaking to post competent staff to
10 handle the money changer's business.
Name, designation & signature of persons
11 authorised to deal in foreign exchange.
A brief write up of the activities of the
12 applicant/nature of business.
Whether the applicant had applied earlier
for FFMC / RMC licence. If so, the particulars
Any other particulars / special reasons the
applicant may wish to state in support of the
We undertake that in the conduct of money changing business, we shall at all time
abide by the rules/regulations/orders/directions/notifications which Reserve Bank of India
may from time to time issue in this behalf.
Signature of the applicant with seal
1. Bankers' confidential Report
2. Attested copies of audited accounts for the past 3 years.
Note: Single branch FFMCs shall have net owned funds not less than Rs.25 lakhs while
FFMCs intending to operate through more than one branch will have to maintain net owned
funds not less than Rs.50 lakhs. `Fit and proper' criteria for directors of FFMCs / non-bank AD Category II
(a) The Boards of FFMCs / non-bank AD Category - II should undertake a process of
due diligence to determine the suitability of the person for appointment / continuing to hold
appointment as a director on the Board, based upon qualification, expertise, track record,
integrity and other `fit and proper' criteria. For assessing integrity and suitability, factors like
criminal record, financial position, civil action initiated to pursue personal debts, refusal of
admission to or expulsion from professional bodies, sanctions imposed by regulators or
similar bodies, previous questionable business practices, etc. should be considered. The
Board of Directors should assess `fit and proper' status by calling for information by way of
self-declaration, verification reports from market, etc. FFMCs / non-bank AD Category - II
should obtain necessary information and declaration from the proposed / existing directors
for the purpose in Proforma given at the end.
(b) The process of due diligence should be undertaken by the FFMCs / non-bank AD
Category - II at the time of appointment / renewal of appointment.
(c) The Boards of the FFMCs / non-bank AD Category - II should constitute Nomination
Committees to scrutinize the declarations.
(d) Based on the information provided in the signed declaration, Nomination Committees
should decide on the acceptance or otherwise and may make references, where considered
necessary to the appropriate authority / persons, to ensure their compliance with the
(e) FFMCs / non-bank AD Category - II should obtain annually as on 31st March a simple
declaration that the information already provided has not undergone change and where there is
any change, requisite details are furnished by the directors forthwith.
(f) Further, the candidate should normally not exceed 70 years of age, should not be
a Member of Parliament / Member of Legislative Assembly / Member of Legislative Council.
(g) Any change in directors during the year should be reported to the Regional Office
concerned of the Foreign Exchange Department, Reserve Bank of India in the Proforma
(h) Comments of respective Departments of the Reserve Bank will be obtained on
the operations of an applicant who / whose parent organisation is already licensed /
authorised by the Reserve Bank. Information about New Directors / Change of Directors of the FFMC / non-bank AD Category - II
Business Address :
Residential Address :
Educational / professional qualifications :
Line of business or vocation :
Name/s of other companies in which the person has held the post of Chairman /
Managing Director / Director / Chief Executive Officer :
10 (i) Whether associated as promoter, Managing Director, Chairman or Director with
any other FFMC / AD Category - II? :
(ii) If yes, the name/s of the company/ies :
(i) Whether prosecuted/convicted for any economic offence either in the individual
11 capacity or as a partner / director of any firm / company :
(ii) If yes, particulars thereof :
12 Experience in money changing business (number of years) :
13 Equity shareholding in the company
No. of shares
Percentage to total equity share capital of the company:
Company Form RMC-F (Paragraph (C) (4) above) 1.
Name of the AD/ FFMC
Name and address of the franchisees
Details of locations
Arrangements in place to surrender the foreign
AML, Reporting and Inspection arrangements
We declare that while selecting the franchisees adequate due diligence has been carried out
and that such entities have undertaken to comply with all the provisions of the franchising
agreement/prevailing RBI regulations regarding money changing.
Authorized Signatory FLM 1 [Paragraph (E) (14) (i) above] Daily Summary and Balance Book (Foreign Currency notes/coins)
Pound U.S. Euro Yen Other Sterling dollar Pl. specify) I. Opening Balance
II. Add: Purchases
(i) Purchases from the public
(i) Purchases from authorized dealers, money-
changers and franchisees
(iii) Import from abroad for replenishment of
stock Total purchases
Total (I + II)
III. Less Sales:
(i) Sales to public
(ii) Sales to authorized dealers/ full-fledged
(iii) Despatch abroad for realization
IV. Closing Balance (I + II - III)
In cases where forged notes etc. are detected, the closing balance may be adjusted with
remarks indicating the amount and the reasons for writing off.
FLM 2 [Paragraph (E)(14)(i) above] Daily Summary and Balance Book (Travellers cheques)
Date:_______________ Pound U.S. Euro Yen Other Sterling dollar Pl. specify) I. Opening Balance
1) Purchase from the public
2) Purchases from others (including fresh stock
Total (I + II) III. Less :
1) Sales to public
2)Surrender to ADs/FFMCs
IV. Closing Balance (I + II - III)
Pre-paid cards sold
Designation:______________________ Note: -
Stock register of blank travellers cheques/ smart cards in various
denominations obtained from authorized dealers/ TC issuers/ other agencies for sale to
travellers under Basic Travel Quota or for business visit should be maintained and balanced
on daily basis. FLM 3 [Paragraph (E) (14) (i) above]
Register of purchases of foreign currencies from the public
Date No. Name of Nationality Details of Pound U.S. Euro Sr. the & Full Identification Sterling dollar tenderer Address documents
1. 2. 3. 4.
6. 7. 8. Japanese Others (Pl. Rate Rupee Encashment Remarks Yen specify) Equivalent certificate
No. and date
9. 10. 11. 12. 13. 14.
(1) If the money-changer is dealing in a large number of currencies, two or more
registers currency- wise or otherwise may be maintained, as convenient.
(2) If travellers cheques are purchased, the prefix, "TC" may be indicated in the amount
(3) If more than one currency is purchased from the same tenderer, separate entries may
FLM 4 [Paragraph (E) (14) (i) above]
Register of purchases of foreign currency notes/coins from
Authorised dealers and authorised money-changers Date Sr. No. Name and address Currency Amount Rate Rupee Remarks of the authorised equivalent dealer/authorised money-changers
1. 2. 3.
4. 5. 6.
Designation:__________________________ FLM 5 [Paragraph (E) (14) (i) above] Register of sales of foreign currencies to the public Date Sr. Name Nationality Details of Name of the Country/ies Purpose of Duration No. of the & Full Identification sponsoring of visit visit of stay tenderer Address Document Organisation abroad
(No. of days)
1. 2. 3.
9. Particulars of foreign Rate Rupee Commission Total amount Cash Remark currency notes/coins/ equivalent charged, if received Memo s TCs/pre-paid cards any No. & Date Name of Amount Amount By Cash By currency In Notes/ in TCs/ Cheque coins cards
10. 11. 12. 13.
(1) If the money-changer is dealing in a large number of currencies, two or more
registers currency-wise or otherwise may be maintained, as convenient.
(2) If more than one currency is sold, separate entries may be made
(3) The columns 6 and 9 to be filled in case of release of exchange for business purpose.
Designation:__________________ FLM 6 [Paragraph (E) (14) (i) above] Register of sales of foreign currency notes/coins to authorised dealers / full fledged money changers/overseas banks
Date Sr. Name and Currency Amount Rate Rupee Remarks No. address of the Equivalent authorised received dealer/full fledged Money
changer/overseas bank to whom
sold 1. 2. 3. 4 5. 6. 7. 8.
Necessary entries in the register should be made before the funds are taken out of
the premises, not after delivery of funds.
Designation:______________________ FLM 7 [Paragraph (E) (14) (i) above] Register of travellers cheques surrendered to authorised dealers/authorised money changers/exported
Date Sr. Name and Travellers Amount Rate Rupee Remarks No. address of the cheque Equivalent Authorised No.(s) received dealer/authorised money
agent to whom sold
Designation:______________________ FLM 8 (For FFMCs) (Paragraph (E) (15) (i) above) Summary statement of purchases and sale of foreign currency notes during the month of__________200
Name and address RBI Licence No.________ of money changer
USD GBP EURO JPY Others (Specify) A. Opening balance
Purchase of foreign currency notes from
(b) RMCs/FFMCs/ADs including imports.
B. Total Purchases (a) + (b) + (c)
Sales of foreign currency notes under
(b) Business Visits
(c) Sales to other FFMCs/ADs including
C. Total Sales [ (a) + (b) + (c) ]
Closing balance (A+B - C)
We hereby certify that the statement is a true and correct account of all transactions
undertaken during the
month in accordance with the Exchange Control Regulations.
(Signature of Authorized Official)
FLM 8 (For ADs Cat-II) (Paragraph (E)(15)(i) above) Summary statement of purchases and sale of foreign currency notes during the month of __________200
Name and address RBI Licence No.________ of the Authorised Dealer Category-II____________________ USD GBP EURO JPY Others (Specify) A. Opening balance
Purchase of foreign currency notes from
(b) RMCs/FFMCs/ADs including imports.
B. Total Purchases (a) + (b) + (c)
Sales of foreign currency notes under( with
(a) (i) BTQ /(ii) Private Visits (S0302)
(b) (i) Business Visits/(ii) Business Travel
(c) Remittance by tour operators / travel agents
to overseas agents / principals / hotels( S0306)
(d) Film shooting(S1101)
(e) Medical Treatment abroad(S0304)
(f) Disbursement of crew wages(S1401)
(g) Overseas Education(S0305)
(h) (i) Fee for participation in global conferences
and specialized training / (ii) Remittance for
participation in international events /
competitions (towards training, sponsorship
and prize money)/ (iii) Remittance under
educational tie up arrangements with
universities abroad/(iv) Remittance towards
fees for examinations held in India and
abroad and additional score sheets for GRE,
TOEFL etc./ (v) Employment and processing,
assessment fees for overseas job
applications/(vi) Skills / credential
assessment fees for intending migrants/(vii)
Visa fees /(viii) Processing fees for
registration of documents as required by the
Portuguese / other Governments/ (ix)
Registration / Subscription / Membership
fees to International Organizations (S1102)
(i) Emigration Fees (S1202)
(j) Emigration Consultancy Fees (S1006)
(k) Sales to other FFMCs/ADs including exports
C. Total Sales [ (a) + (b) + (c) + (d) + (e) + (f) + (g) + (h )+ (i) + (j)+(k) ]
Closing balance (A+B - C)
We hereby certify that the statement is a true and correct account of all transactions
undertaken during the month in accordance with the Exchange Control Regulations.
(Signature of Authorised Official) Stamp
Designation Date:____________________ RLM 3 (Paragraph (E) (15)(ii) above ) Statement of foreign currency surrendered to authorized dealers/ full-fledged moneychangers during the quarter ended -------------
Name and address of
Restricted Money Changer ______________
RBI License No. _______________________ Name of Opening Foreign Rupee Amount Closing foreign balance at currency equivalent surrendered balance at currency the purchased to authorized the end of beginning dealers/ full quarter in of the fledged foreign quarter money currency changers in
foreign currency (1) (2) (3) (4) (5) (6)
Japanese Yen C/N
I/We certify that: (a) the statement accounts for all the purchase transactions
undertaken with the customers and surrendered to the authorized dealers/ full-fledged
money-changers during the quarter.
(b) All the above transactions have been effected in accordance with the current Exchange
Control regulations; and
(c) Encashment certificates have been issued in respect of all purchases from the public
(Signature of Authorized Official)
Counter Signature of the AD/ FFMC
Note: - Fully utilized CDF received from tenderers should be enclosed with the statement (Paragraph (E) (15) (iii) above) Statement of Purchase transactions of USD 10,000 and above for the month of _______
Date of transaction Name and address of the Amount person surrendering the
Signature of Authorized Official
(Paragraph (E) (15) (iv) above) Statement showing summation of Foreign Currency Account opened in India out of export proceeds of Foreign Currency Notes/ encashed Travellers' Cheques for the quarter ended ___________
(Value in USD) Opening Value of Amount Of Column Amount Maximum Closing Remarks Balance foreign realized 3 amount remitted to balance balance in the currency in credited to TC issuing maintained in the Account notes/ foreign Foreign organization on any day Foreign encashed currency Currency from TCs in the Currency TCs Account sold/ foreign Account exported Debited for currency purchase of account foreign during the currency quarter notes from
1. 2. 3 4.
Certified that the above particulars are correct as per our records.
Name and address of the AD Category - I
Signature of Authorized Official of
the AD Category - I with Seal (Paragraph (E) (15) (v) above)
Name of the FFMC/ AD Cat-II:
Statement of the amount of foreign currency written off during the financial year
A. Total amount written-off (in equivalent USD):-
B. Details of the amount written-off:- Sr. No. Date of write-off Amount of On account of * Approved by foreign FFMC/AD Cat- currency (with II/ Reserve
currency wise Bank break-up) 1. 2. 3. 4. 5. Total :
* Please indicate whether on account of being found to be fake or forged/ theft/ lost in
Signature of Authorized Official