FFMC License in India

Criteria for Full-Fledged Money Changer License

Explore the basic requirements and criteria for a full-fledged money changer license as described below:

• The applicant company must be a registered company under the Companies Act of 1956/2013.
• You must have at least INR 25 lakhs net owned fund (NOF) if applying for a single-branch license and INR 50 lakhs NOF if applying for a multiple-branch license.
• The Memorandum of Association (MOA) must clearly reflect the activity of “money changing” to be carried out by the entity.
• The company must furnish an affidavit demonstrating no criminal or civil cases against its directors or promoters by the Department of Revenue Intelligence (Fit & Proper Criteria).
• You must start business operations within 6 months of receiving the certificate of the FOREX license after informing the RBI.
• Submission of a Power of Attorney (POA) is required if filing is done through a legal representative.

Who Can Obtain an FFMC License Online?

• Only incorporated companies, including private and public limited companies, are eligible to obtain an FFMC license online.
• Individuals, LLPs, and partnerships cannot register an FFMC entity.

Types of Money Changer Licenses Entities

In accordance with Section 10 (1) of the Foreign Exchange Management Act of 1999, there are three main types of money changer license entities in India, as explained below:

• Authorized Dealer Category- I: Selected banks can carry out current and capital account transactions in accordance with RBI directions.
• Authorized Dealers Category- II: This category includes rural and urban co-operative banks that can operate certain trade-related current account transactions, as permitted by the RBI.
• Authorized Dealers Category- III: Certain financial organizations are permitted by the RBI to carry out foreign exchange transactions.
• Full-Fledged Money Changers (FFMCs): Entities with this permit are authorized to purchase and sell foreign exchange currencies and travellers’ cheques for business and travel purposes. It is further categorized into Authorized Money Changers (AMCs) and Restricted Money Changers (RMCs).

Appointment of Agents/Franchisees After FFMC License Online

An entity with an FFMC license online can appoint agents/franchisees if they want to conduct restricted money changing activities through others in accordance with RBI master directions.

• The FFMC must obtain prior authorization from the RBI via Form RMC-F (Annexure III).
• The full-fledged money changer entity must enter into a franchise agreement with the respective entity that they want to partner with. There’s no separate license granted by the RBI for the same.
• The respective FFMC must submit the franchisee’s required documents, including shop & establishment license, MCA company registration certificate, MOA & AOA, fit & proper declarations, and PAN of all members & entities.
• The FFMC entity is fully responsible for the KYC-AML compliance of its franchise/agent entity.
• The franchise entity is only permitted to carry out activities like the issuance of travellers’ cheques and certificates of encashment of foreign notes.
• The franchisee must have a net owned fund of INR 10 lakhs to enter into an agreement with the FFMC.
• All purchased foreign currency must be transferred to the FFMC within seven business days.
• The franchiser must conduct an inspection of its franchisee at least once a year.

Compliance After Money Changer License with Corpbiz

Take Corpbiz’s help in fulfilling the compliance requirements after obtaining the money changer license in India, as explained below:

• Submission of Lease Agreement: Once registered with the RBI for the FFMC license, our lawyers will draft and submit a lease agreement for your registered business address to the RBI.
• Providing Shop & Establishment License Proof: Our compliance team will assist you in obtaining and furnishing a shop & establishment permit to the RBI, including renewals.
• Commencement of Business Operation: After receiving the FFMC license certificate online, you’re required to start your business operations within 6 months from enrolment with the RBI.
• Adherence to the RBI: Legal experts will track RBI mandates to ensure you remain fully compliant with regulations.
• Display of License at Each Establishment: All branches of the registered FFMC entity must display a copy of their registration license at the verified business address.
• Implementation of KYC-AML-CFT Audit System: FFMCs must conduct timely audits of all franchise locations, with assistance in finding professionals experienced in AML-KYC compliance.
• Annual Financial Report Filing – Audited: We’ll help submit annual financial returns to the regional RBI office after auditing balance sheets, profit & loss statements, and expense reports for the last three years.
• Maintenance of NOF: Post FFMC registration, you must maintain the prescribed net owned funds (INR 25 lakhs for single, INR 50 lakhs for multiple branches).
• Records of Registers: All FFMCs must maintain records in accordance with Form FLM 1-7 for sale and purchase of travellers’ cheques.
• Cash Transaction Reporting (CTR): Cash transactions exceeding INR 10 lakhs must be reported to the Financial Intelligence Unit of India by the 15th of the succeeding month.
• Suspicious Transaction Report (STR): Any suspicious transactions must be reported to the appointed principal officer, who then submits the report to FIU via the goAML portal within seven days.
• Monthly Reporting: All sales and purchases of foreign currency notes must be reported through Form FLM-8 to the RBI by the 10th of each month.

Renewal of the FFMC License Online

An FFMC/non-bank AD Category II must submit its renewal application before the expiry of its existing license, specifically, at least two months prior to expiry.

• If the renewal is filed within time, the existing license continues in force until the date on which the renewed license is granted or the application is rejected.
• The RBI has the power to revoke or cancel an FFMC registration/license on grounds such as non-compliance, public interest, or violation of conditions.