Foreign exchange is a very important department in any country. This deals with foreign exchange of currency and such other activities. There are many businesses and other transactions carried out internationally and also for foreign tourism and tourists this kind of companies are mandatory to make the foreign exchange easy for people. But to carry out such activity it is important to have a license for such activity. This license is called FFMC- full- fledged money charger license in India. It is mandatory to obtain a Full fledge money changer license in India by the RBI for companies who do business in forex- foreign currency exchange activity. Full fledge money changer activity are governed and these entities are authorized by RBI to do currency exchange in India. This is according to section 10 of foreign exchange management act 1990.
Every year RBI issues guidelines on forex and FFMC by publishing master circular on a memorandum of instruction on money changing activities. Every companies to obtain FFMC license, has to abide by this circular and foreign exchange management act, 1990 provisions and RBI guidelines. Even the entities other than banks can deal with exchange of currency. These entities fall under authorized dealer category II and banks are authorized dealer category II.
All the companies registered under Companies Act 2013, can apply for this full fledge money changer license in India.
Required conditions to apply for FFMC license
- To apply for Full- fledged money charger license license in India, the company should be registered with registrar of companies under companies’ act 2013.
- To apply for single branch license a company should have net owned fund of Rs. 25 lakhs and for a company with multiple branches applies for license should have net owned worth of Rs. 50 lakhs.
- The main activity of the company should be money exchanging activity, which has to be mentioned in the object clause of memorandum of association.
- The FFMC license in India, to be applied by the authorized dealer should conduct regular audits, and assure that there no pending cases on the company with department of enforcement or department of revenue intelligence.
Franchise (company) license from existing FFMC
The franchise of the company, the company should be registered under companies’ act 2013, and should be having a minimum net worth of Rs. 10 lakhs. Its main object should be of money exchanging activity which shall be mentioned in the object clause of its memorandum of association. Thereafter such franchise can obtain a franchise license from FFMC. The franchise is only allowed to do restricted business of money exchange activity according to the master circular of RBI. Franchisers are expected to give training to franchisees in order to maintenance of records and operations.
Reporting
Franchises like, authorized dealer I/ authorized dealer category II / FFMC’s are expected to arrangements for reporting of all the transactions by franchisees to the franchisors. Spot audits should be regularly conducted by the authorized dealer I/ authorized dealer II/ FFMC’s on a regular basis. And for testing the compliance of the franchise, the mystery concept and a dedicated team should be there.
An annual inspection should be conducted of the books of franchise; it is important as to keep a check on the franchise that the money exchange activity is conducted and managed properly and as per the guidelines of RBI.
Compliance with anti- money laundering act.
It is necessary to check the records of all the transactions are done in compliance with anti- money laundering guidelines by the concurrent auditor. In case of compliance is on lapse, it should be put up on board by concurrent auditor. A certificate is to be obtained at the time of preparation of annual report of compliance by the statutory auditor on compliance with anti-money laundering act.
Penalty provisions.
FFMC’s are authorized by the Reserve bank of India to deal with foreign exchange activity as per section 10(1) of foreign exchange management act, 1999. No person or company is allowed to carry out business relating to money exchange activity unless they possess the license otherwise they will be penalized under this act.
Process to apply for Full- fledged money charger license.
When you need to apply for the FFMC license, you have to go to the foreign exchange department of regional office of RBI where the company is situated taking along with all the documents that are necessary to be submitted along with the application.
Documents required for applying for FFMC License.
- To apply for getting a FFMC license, you have to submit an application form of annexure II prescribed by the RBI on master circular on memorandum of instruction on money changing activities.
- Copy of incorporation certificate
- The copy of the document when the business was commenced.
- Copies of last 3 years balance sheet of audited balance sheet and profit and loss account.
- You also need to submit the statutory auditor certificate of net owned fund of the date of application.
- The copy of memorandum of association with object clause stating that the primary activity of the company is to carry out business relating to money exchange activity.
- Customer information report from the bank which is a confidential report and should be submitted to the RBI in a sealed cover.
- Certificate of copy of board of resolution stating to apply for FFMC license with RBI to undertake the money exchange activity.
- According to the guidelines issued by the RBI, a declaration to be made and signed that a proper policy framework will be placed for Anti money laundering act, KYC- know your customer, and combating the financing terrorism before commencement of operation and after obtaining of FFMC license from the RBI.
- Full-fledged money charger license has to be renewed every year by providing appropriate documents to Reserve bank of India.
Summary:
Full- fledged money charger license is a license obtained by those who carry out business of money exchange activity. It is governed by foreign exchange act and RBI. License needs to renew every year and you can apply for this license by application and submitting relevant documents to the RBI as per their guidelines. You can visit Company Vakil for more information.
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