{"id":1352,"date":"2021-01-16T09:37:59","date_gmt":"2021-01-16T09:37:59","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=1352"},"modified":"2021-01-16T09:38:01","modified_gmt":"2021-01-16T09:38:01","slug":"reasons-for-cancellation-of-ffmc-license","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/","title":{"rendered":"Cancellation of FFMC License: Reasons for Cancellation of License"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A Full-Fledged Money\nChanger is an entity that is approved by the Apex Bank, i.e., RBI, to conduct\nMoney Changing Activities in India. They mainly purchase foreign exchange from\nthe tourists visiting India and sell the same to the people who are visiting\nforeign countries. That means they deal in the activities concerning Foreign\nExchange. However, it shall be considerate to mention that any person who is\ncarrying out any forex activity which is restricted by RBI, the same will\nresult in the Cancellation of FFMC License.<\/p>\n\n\n\n<p>In this blog, we will\ndiscuss the concept and reasons for the cancellation of FFMC License, together\nwith the ways to avoid the same.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3abb34c4ed3\" class=\"ez-toc-cssicon-toggle-label\"><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><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3abb34c4ed3\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Concept_of_Cancellation_of_FFMC_License\" title=\"Concept of\nCancellation of FFMC License\">Concept of\nCancellation 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:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Reasons_for_Cancellation_of_FFMC_License\" title=\"Reasons for Cancellation of FFMC\nLicense\">Reasons for Cancellation of FFMC\nLicense<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Improper_Bookkeeping\" title=\"Improper Bookkeeping\">Improper Bookkeeping<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Disparity_in_Conversion_Rates\" title=\"Disparity in Conversion Rates\">Disparity in Conversion Rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Violation_of_Guidelines_and_Provisions\" title=\"Violation of Guidelines and\nProvisions \">Violation of Guidelines and\nProvisions <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Practices_to_Avoid_Cancellation_of_FFMC_License\" title=\"Practices to Avoid\nCancellation of FFMC License\">Practices to Avoid\nCancellation of FFMC License<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Display_Chart_Concerning_Foreign_Exchange_Rate\" title=\"Display Chart Concerning Foreign\nExchange Rate\">Display Chart Concerning Foreign\nExchange Rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Never_Accumulate_Fake_Currency_Notes\" title=\"Never Accumulate Fake\nCurrency Notes\">Never Accumulate Fake\nCurrency Notes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Implement_Training_Practices_for_Employees\" title=\"Implement Training Practices for\nEmployees \">Implement Training Practices for\nEmployees <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Avoid_Build-up_Foreign_Currency\" title=\"Avoid Build-up Foreign\nCurrency\">Avoid Build-up Foreign\nCurrency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Conduct_Regular_Audit_of_Financial_Affairs_to_Confirm_Transparency\" title=\"Conduct Regular Audit\nof Financial Affairs to Confirm Transparency\">Conduct Regular Audit\nof Financial Affairs to Confirm Transparency<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/blog\/reasons-for-cancellation-of-ffmc-license\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Cancellation_of_FFMC_License\"><\/span>Concept of\nCancellation of FFMC License<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The concept of Revocation or Cancellation of FFMC License or <strong><a href=\"https:\/\/swaritadvisors.com\/ffmc-license\" class=\"text-primary\">Full Fledged Money Changer License<\/a><\/strong> is governed by section 10(1) of FEMA 1999. Further, RBI declares cancellation of FFMC License in the two situations as follows:<\/p>\n\n\n\n<ol><li>In\nthe Public Interest;<\/li><li>If\nin case, the licensee breaches any of the conditions or stipulations mentioned\nin the FEMA 1999 or any direction or guideline issued by RBI;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_for_Cancellation_of_FFMC_License\"><\/span>Reasons for Cancellation of FFMC\nLicense<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The prominent reasons behind the cancellation of FFMC License are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Improper-Bookkeeping-1024x269.png\" alt=\"Reasons for Cancellation of FFMC License\" class=\"wp-image-1354\" width=\"766\" height=\"201\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Improper-Bookkeeping-1024x269.png 1024w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Improper-Bookkeeping-300x79.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Improper-Bookkeeping-768x202.png 768w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Improper-Bookkeeping.png 1200w\" sizes=\"(max-width: 766px) 100vw, 766px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Improper_Bookkeeping\"><\/span>Improper Bookkeeping<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the operations of\nFFMC license holder, the process of Bookkeeping plays a significant role. Therefore,\nit is mandatory for every FFMC licensee to maintain all the transactions and\ndealings happened in a prescribed manner in an account book. <\/p>\n\n\n\n<p>Further, it shall be\nsignificant to note that in order to maintain transparency and clarity, it is\nmandatory for the license holder to get his\/ her accounts audited.<\/p>\n\n\n\n<p>Henceforth, any\nshortcoming or default in this aspect might increase the chances of the\ncancellation of FFMC License. Also, it shall be considerate to record that RBI\nhas the power to scrutinize operations of AMC, so again it is the duty of the\nlicense holders to maintain the integrity and honesty of the transactions\nthroughout the year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disparity_in_Conversion_Rates\"><\/span>Disparity in Conversion Rates<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In India, FFMC License\nHolder is responsible for providing forex facilities to both Overseas Citizens\nand Indian Nationals at an exchange rate decided by the RBI. <\/p>\n\n\n\n<p>However, if in case,\nthe registered entity carries out some unconventional or eccentric modes to\nalter the existing conversion rate for the sake of earning more profit, then,\nin that case, RBI will revoke or cancel the FFMC license of such holder.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Violation_of_Guidelines_and_Provisions\"><\/span>Violation of Guidelines and\nProvisions <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As we know, the working\nof an FFMC is driven by specific provisions of FEMA law and the guidelines and\ndirections issued by RBI. That means the same cannot be overlooked by the\nlicensee in any manner.<\/p>\n\n\n\n<p>Also, it shall be\nsignificant to state that in order to make any in-house amendments or to carry\nout business activities, the licensee needs to comply with all the requirements\nand norms on a mandatory basis, else the same leads to the imposition of hefty penalties\nby RBI, even the cancellation of FFMC License.<\/p>\n\n\n\n<p>Besides, the reasons\nmentioned above, there are some additional factors as well that leads to\ncancellation of FFMC License, which are as follows:<\/p>\n\n\n\n<ol><li>In case the company does not implement the mechanism of\nConcurrent Audit;<\/li><li>If in case the Chart displaying the Foreign Exchange Rates is\nnot properly updated;<\/li><li>In case the license holders fail to include the list of core\nmembers on record;<\/li><li>If in case an AMC fails to abide by the provisions concerning\npayment as specified under the law;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Practices_to_Avoid_Cancellation_of_FFMC_License\"><\/span>Practices to Avoid\nCancellation of FFMC License<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The practices that a license holder must incorporate to avoid the event of cancellation of FMC License by RBI:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/infographic-1.png\" alt=\"Avoid Cancellation of FFMC License Practices\" class=\"wp-image-1355\" width=\"793\" height=\"320\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/infographic-1.png 985w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/infographic-1-300x121.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/infographic-1-768x310.png 768w\" sizes=\"(max-width: 793px) 100vw, 793px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Display_Chart_Concerning_Foreign_Exchange_Rate\"><\/span>Display Chart Concerning Foreign\nExchange Rate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is both necessary and compulsory for all the FFMCs to display the prevailing foreign exchange rate chart in the place accessible to the general public. Further, the chart must showcase the exchange rate for both travellers\u2019 cheques and foreign currency notes for all the prominent foreign currencies. <\/p>\n\n\n\n<p>Also, as we know, that\nthe currency exchange rates fluctuate on a frequent basis, therefore, it\nnecessary to update the chart accordingly, and latest by 10:30 a.m. as per\nIndian Time.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Never_Accumulate_Fake_Currency_Notes\"><\/span>Never Accumulate Fake\nCurrency Notes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If in case an AMC mistakenly obtains\nfake foreign currency from any customer, then, in that case, it needs to write\noff the same after taking approval from the Top Level Management. <\/p>\n\n\n\n<p>Further, as per the provisions of the <strong>FEMA 1999<sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/acts\/foreign-exchange-management-act.aspx\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong>, the upper limit for disposing off such currencies is restricted to the US $2000 every financial year. Also, the moment AMC surpasses this limit, it will need RBI authorisation to proceed further. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Implement_Training_Practices_for_Employees\"><\/span>Implement Training Practices for\nEmployees <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Every AMC must\nimplement Training Practice or Employee Training Programmes for all the members\nworking within the said organisation. Further, to ensure integrity and\ntransparency within these training modules must include procedures and policies\nrelating to money changing activities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Avoid_Build-up_Foreign_Currency\"><\/span>Avoid Build-up Foreign\nCurrency<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Based on the provisions\nof the FEMA 1999, it is necessary for every AMC to maintain an optimum level of\nforeign exchange. That means any build-up in the respect will ultimately hinder\nthe performance of the company in the longer run.<\/p>\n\n\n\n<p>Also, it shall be\nsignificant to state that the majority of transactions happening between\nAuthorised Dealers and AMCs must discourage payment of cash.<\/p>\n\n\n\n<p>Moreover, all the\ntransactions concerning foreign currency notes is limited to the provisions and\nguidelines issued by RBI.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conduct_Regular_Audit_of_Financial_Affairs_to_Confirm_Transparency\"><\/span>Conduct Regular Audit\nof Financial Affairs to Confirm Transparency<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If in case an AMC or Authorised Money\nChanger is earning any income which is more than the set threshold limit, then,\nin that case, it must conduct a financial audit to ensure integrity and\ntransparency. <\/p>\n\n\n\n<p>Also, it is mandatory for a money\nchanger to maintain its record properly, so that the same can be used as a reference\nin the case of scrutiny. Moreover, as per section 12 (1) of FEMA 1999 (Foreign\nExchange Management Act), the officers designated by RBI has the authority to\naudit the financial affairs and investigate the books of accounts of AMC\nanytime. <\/p>\n\n\n\n<p>Further, it is mandatory for all the\ncore members of an AMC to cooperate and assist the investigation officers\nduring the process of audit, else the same would be considered as a violation\nof the provisions of FEMA and may lead to cancellation of FFMC License as well.<\/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>In a nutshell, it will\nbe right to state that FFMCs play a crucial part in the growth of Indian Economy.\nThey are accountable and responsible to handle all the activities concerning\nforex trading and currency exchange based on the norms decided by the RBI.<\/p>\n\n\n\n<p>That means any person or an entity who wish to start money changer license business must abide by all the guidelines and directions issued by RBI, else the same will result in the cancellation of FFMC License by RBI, together with the levy of hefty penalties.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/renewal-of-full-fledged-money-changer-license\">A Complete Guide: Renewal of Full Fledged Money Changer License<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Full-Fledged Money Changer is an entity that is approved by the Apex Bank, i.e., RBI, to conduct Money Changing Activities in India. They mainly purchase foreign exchange from the tourists visiting India and sell the same to the people who are visiting foreign countries. That means they deal in the activities concerning Foreign Exchange. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1353,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[57],"tags":[180],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/1352"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=1352"}],"version-history":[{"count":4,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/1352\/revisions"}],"predecessor-version":[{"id":1359,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/1352\/revisions\/1359"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/1353"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=1352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=1352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=1352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}