{"id":14187,"date":"2020-08-01T13:27:38","date_gmt":"2020-08-01T07:57:38","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=14187"},"modified":"2020-08-01T15:20:44","modified_gmt":"2020-08-01T09:50:44","slug":"revocation-of-ffmc-license-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/revocation-of-ffmc-license-in-india\/","title":{"rendered":"An Outlook on Revocation of FFMC License"},"content":{"rendered":"\n<p class=\"has-drop-cap\">FFMCs are the RBI-approved entities that conduct money changing activities in India. Their job is to purchase foreign exchange from the individuals visiting the country and sell it for specific purposes, such as converting foreign currency into Indian rupees and vice versa. No person shall conduct forex trading activities without a valid <a href=\"https:\/\/corpbiz.io\/ffmc-license\"><strong>FFMC license<\/strong><\/a> issued by Reserve Bank of India. Any individual who intentionally undertakes such business in the absence of a valid license is liable to confront certain penalties under the Act. In this article, you will come across conditions that trigger the Revocation of the FFMC License. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/revocation-of-ffmc-license-in-india\/#Revocation_of_FFMC_License\" >Revocation of FFMC License<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/revocation-of-ffmc-license-in-india\/#Prominent_reasons_for_revocation_of_FFMC_license\" >Prominent reasons for revocation of FFMC license<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/revocation-of-ffmc-license-in-india\/#Best_Practices_to_Avoid_Revocation_of_FFMC\" >Best Practices to Avoid Revocation of FFMC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/revocation-of-ffmc-license-in-india\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revocation_of_FFMC_License\"><\/span>Revocation of FFMC License<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any license awarded under <strong><em>Section 10(1) of FEMA 1999<\/em><\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/Scripts\/BS_FemaNotifications.aspx?Id=1222\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> may be canceled by RBI if:<\/p>\n\n\n\n<ul><li>It is in favor of\npublic interest or<\/li><\/ul>\n\n\n\n<ul><li>If the licensee\nbreaches the conditions that support the license&#8217;s integrity or has failed to\nmeet the standards for which the authorization was granted. <\/li><\/ul>\n\n\n\n<p>Reserve Bank has the authority to cancel the license of any of the registered entities for the contravention of regulatory or statutory provisions. Additionally, RBI also holds the right to amend or cancel the existing conditions of the license. <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"650\" height=\"450\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image.png\" alt=\"Revocation of FFMC License\" class=\"wp-image-14188\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image.png 650w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-300x208.png 300w\" sizes=\"(max-width: 650px) 100vw, 650px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prominent_reasons_for_revocation_of_FFMC_license\"><\/span>Prominent reasons for revocation of FFMC license <span class=\"ez-toc-section-end\"><\/span><\/h2><br>\n\n\n\n<h3 class=\"wp-block-heading\">Improper Book-keeping<\/h3>\n\n\n\n<p>Bookkeeping is a core aspect of the FFMC working protocol. The licensee needs to maintain all the transactions in an immaculate manner in an account book. Such a book is exposed to periodic auditing that ensures transparency. Henceforth, any shortcoming in this aspect could trigger the chances of the cancellation. And the matter of the fact that RBI can scrutinize AMCs anytime; it\u2019s a duty of the license holders to maintain the integrity of transactions throughout the years.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Mismatching in Conversion Rates<\/h3>\n\n\n\n<p>FFMC in India is liable to provide foreign exchange facilities to Indian nationals, overseas individuals visiting India and NRIs through a valid exchange rate applicable at the time of business. If the registered entity undertakes some unorthodox methods to alter the conversion rates for the sake of profit, it would be deemed a felony in the eye of law. The moment RBI picks this shortcoming; they might wound up the entity&#8217;s activities by canceling its license. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Violation of Provisions <\/strong><\/h3>\n\n\n\n<p>FFMC working protocol is driven by specific provisions of\nlaw that cannot be overlooked in any conditions whatsoever. AMCs working with\nFFMC license are under the obligation to follow all the norms while conducting\nthe business activities or in-house amendments. Any actions against these norms\nwould be treated as an offense resulting in hefty fines and even revocation of\nlicense. Apart from these prominent shortcomings, there are few more factors as\nwell that could trigger the cancellation of the FFMC license.<\/p>\n\n\n\n<ul><li>System of Concurrent Audit is not implemented within the system. <\/li><li>Foreign exchange rate chart not updated regularly. <\/li><li>Entities fail to incorporate the list of core members on record. <\/li><li>AMCs fail to comply with the payment provisions mentioned under the law. <\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/benefits-types-and-procedure-of-ffmc-license-india\/\">An Outlook on Benefits, Types and Procedure of FFMC License<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Best_Practices_to_Avoid_Revocation_of_FFMC\"><\/span>Best Practices to Avoid Revocation of FFMC<span class=\"ez-toc-section-end\"><\/span><\/h2><br>\n\n\n\n<h3 class=\"wp-block-heading\">Display Chart regarding Exchange Rate<\/h3>\n\n\n\n<p>All the FFMCs must display an exchange rate chart in the vicinity accessible to the general public. The chart must exhibit the exchange rate of foreign currency notes and travelers&#8217; cheques for all prominent currencies. As the currency rates fluctuate frequently, the chart should be updated accordingly, latest by 10:30 a.m. Indian time. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Avoid Accumulation of Fake Currency Notes<\/h3>\n\n\n\n<p>If the AMCs mistakenly obtained fake foreign currency\nnotes from the customers, it might write off the same after the top\nmanagement&#8217;s approval. According to the Act, the limit of disposing of such\ncurrency is limited to the US $ 2000 per financial year. The moment AMCs\ncrosses this threshold limit; they would require an RBI authorization to\nproceed further. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Implement Training Protocols for Employee<\/h3>\n\n\n\n<p>AMCs should implement an employee training program for\nthe member working within the organization. The training modules should\nencompass policies and procedures pertaining to money changing activities to\nensure transparency and integrity within the system. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Avoid Build-up Foreign Currency <\/h3>\n\n\n\n<p>As per law, AMCs are liable to maintain an optimum level of foreign currencies. Any build-up in this regard would hinder the company&#8217;s performance in the longer run. The majority of the transaction between AMCs and authorized dealers should discourage any payment in cash. The transaction related to foreign currency notes is confined to the limit mentioned in the provisions of RBI. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conduct an Audit of Financial Affairs to Ensure Transparency <\/h3>\n\n\n\n<p>Any AMCs earning more than the threshold limit should\nconduct a comprehensive financial audit to ensure transparency. The entity must\nmaintain the record of the same for cross-referencing with authority in case of\nscrutiny. It&#8217;s worth noting that section 12(1) of FEMA 1999, empowers RBI&#8217;s\nofficers to audit the financial affairs of AMCs anytime. The officers have the\nauthority to investigate the books and accounts of AMCs. The core members of\nthe AMC should cooperate with the investigation officers in carrying out their\nactivities. If AMCs member fails to comply with such conditions, then it would\nbe deemed as a violation of the Act <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There is no denying that FFMCs are a vital part of the Indian economy. They are accountable for handing forex trading activities within the framework of RBI&#8217;s norm. Anybody who aim to initiates such business needs to follow all the guideline of law without exception. Entities who try to bypass these provisions for the sake of profit would be liable to pay a hefty license. In some cases, the authority might opt for the revocation of the FFMC license. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/compliances-for-a-full-fledged-money-changer-in-india\/\">Guide: Compliances for a Full Fledged Money Changer in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>FFMCs are the RBI-approved entities that conduct money changing activities in India. Their job is to purchase foreign exchange from the individuals visiting the country and sell it for specific purposes, such as converting foreign currency into Indian rupees and vice versa. No person shall conduct forex trading activities without a valid FFMC license issued [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":14219,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[217],"tags":[831],"acf":{"service_id":"55"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5377,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14187"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=14187"}],"version-history":[{"count":10,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14187\/revisions"}],"predecessor-version":[{"id":14241,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14187\/revisions\/14241"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/14219"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=14187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=14187"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=14187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}