Full Fledged Money Changers (FFMCs)/Authorised Money Chnagers (AMCs)
Authorised Money Changers (AMCs) are entities, authorised by the Reserve Bank under Section 10 of the Foreign Exchange Management Act, 1999. An AMC is a Full Fledged Money Changer (FFMC). In addition to Authorised Dealer Category -I Banks (AD Category–I Banks) and Authorised Dealers Category – II (ADs Category–II), Full Fledged Money Changers (FFMCs) are authorised by the Reserve Bank to deal in foreign exchange for specified purposes, to widen the access of foreign exchange facilities to residents and tourists while ensuring efficient customer service through competition.
‘Full Fledged Money Changers’ (FFMCs)/Authorized Money Changers (AMCs)
The companies that after obtaining a licence from the Reserve Bank of India (RBI) intents to carry out functions of forex currency or money changer activity is termed as ‘Full Fledged Money Changers’ (FFMCs).
Every full fledged money changer is required to follow circular on Memorandum of Instruction on Money Changing Activities published by RBI and also provisions of Foreign Exchange Management Act, 1999 is to be followed by every FFMC licence holder.
Eligibility criteria by a company to be FFMCs:
1. The company should be registered under the Companies Act, 2013;
2. The Minimum Net Owned Funds ( NOF) are as follows:
- Single Branch FFMC- 25 lakhs
- Multiple Branch FFMC- 50 lakhs
Net Owned Funds need to be calculated as per the following
Owned Funds: (Paid-up Equity Capital + Free reserves + Credit balance in Profit & Loss A/c) minus (Accumulated balance of loss, Deferred revenue expenditure and Other intangible assets)
Net Owned Funds: Owned funds 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 funds.
DOCUMENTS REQUIRED FOR SEEKING FFMCs LICENSE
1. Copy each of the Certificate of Incorporation and Certificate of Commencement of Business of the company;
2. Memorandum and Articles of Association containing a provision for undertaking money changing business or an appropriate amendment to this effect filed with the ROC;
3. Copy of the latest audited accounts with a certificate from the Statutory Auditors 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, wherever applicable;
4. Confidential Report from the applicant’s banker in a sealed cover;
5. A declaration to the effect that no proceedings have been initiated by / are pending with the Directorate of Enforcement (DoE) / Directorate of Revenue Intelligence (DRI) or any other law enforcing authorities, against the applicant company or its directors and that no criminal cases are initiated / pending against the applicant company or its directors;
6. A declaration to the effect that proper policy framework on KYC / AML / CFT, in accordance with the guidelines issued vide A.P.(DIR Series) Circular No. 17[ A.P.(FL/RL Series) Circular No. 04] dated November 27, 2009, as amended from time to time, will be put in place on obtaining the approval of the Reserve Bank and before commencement of operations;
7. Details of sister / associated concerns operating in the financial sector, like NBFCs, etc.
8. A certified copy of the board resolution for undertaking money changing business.
Basis for Approval
Since several FFMCs are already functioning, fresh licences will be issued on a selective basis to those who comply with all the licencing requirements.
‘Fit and proper’ criteria for the applicant FFMCs #
If any case by DoE / DRI 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 licencing as FFMC.
Compliance’s after obtaining License
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.
FMC should commence its operations within a period of six months from the date of issuance of licence and inform the Regional Office concerned of the Reserve Bank.
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.
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 money changers in form FLM 4.
e. Register of sales of foreign currency notes / coins and foreign currency travellers’ cheques to the public in form FLM 5.
f. Register of sales of foreign currency notes / coins to authorized dealers / Full Fledged Money Changers / overseas banks in form FLM 6.
g. Register of travellers’ cheques surrendered to authorized dealers / authorized money changers / exported in form FLM 7.
ii. All registers and books should be kept up-to-date, cross-checked and balances verified daily.
iii. 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 business.
iv. 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 sales.
Submission of Statements to the Reserve Bank
i. AMCs should submit to the office of the Reserve Bank which has issued the license, a monthly consolidated statement for all its offices in respect of sale and purchase of foreign currency notes in form FLM 8 so as to reach not later than the 10th of the succeeding month.
ii. AMCs should submit to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank, a monthly statement indicating details of receipt / purchase of US $ 10,000 (or its equivalent) and above per transactions in the enclosed provided, within 10 days of the close of the month. FFMCs should include transactions of their franchisees in their statement.
iii. AMCs should submit a quarterly statement regarding Foreign Currency Account/s maintained in India in their names with AD Category-I Banks to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank as per the format provided.
iv. An Annual Statement should be submitted by all the AMCs to the respective Regional Offices of the Foreign Exchange Department, Reserve Bank which have issued the licenses within one month of the financial year-end, giving the details of the amount written off during the financial year, as per the format provided.
Submission of Balance Sheet and maintenance of NOF
All AMCs 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 Funds along-with a certificate from the statutory auditors regarding the NOF as on the date of the balance sheet. As AMCs are expected to maintain the minimum NOF on an ongoing basis, if there is any erosion in their NOF below the minimum level, 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 Funds to the minimum required level.
Author Bio
