Step up vigilance, report illegal forex trading to ED: RBI to banks

PTI

Mumbai, April 24

The RBI on Wednesday asked banks to exercise greater vigilance to prevent unauthorised forex transactions through banking channels and immediately report such instances to the Enforcement Directorate (ED).

In a circular, the Reserve Bank said it has come across instances of unauthorised entities offering foreign exchange (forex) trading facilities to Indian residents with promises of disproportionate/exorbitant returns.

Entities promising exorbitant returns

• The RBI has alerted banks that unauthorised entities are offering forex trading facilities with promises of exorbitant returns
• “These entities have taken recourse to engaging local agents who open accounts at different bank branches for collecting money… these accounts are not found to be commensurate with the stated purpose in several cases,” the RBI said

“On investigation, it has been observed that to facilitate unauthorised forex trading, these entities have taken recourse to engaging local agents who open accounts at different bank branches for collecting money towards the margin, investment, charges, etc,” the RBI said.

The apex bank further said these accounts are opened in the name of individuals, proprietary concerns, trading firms and the transactions in such accounts are not found to be commensurate with the stated purpose for opening the account in several cases.

It is also observed that these entities are providing options to residents to remit/deposit funds in the rupees for undertaking unauthorised forex transactions using domestic payment systems like online transfers, and payment gateways, the central bank said.

There is a need for greater vigilance to prevent the misuse of banking channels in facilitating unauthorised forex trading, said the circular.

#Enforcement Directorate #Mumbai #Reserve Bank of India RBI