Illegal forex trading: RBI cautions banks, customers
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According to the RBI, these entities are providing options to residents to remit/deposit funds in Rupees for undertaking unauthorised forex transactions using domestic payment systems like online transfers and payment gateways.
The Reserve Bank of India (RBI) has cautioned banks and customers again about unauthorised entities offering foreign exchange trading using the banking channels.
In a circular issued on Wednesday, the RBI said it has come across instances of unauthorised entities offering foreign exchange (forex) trading facilities to Indian residents with promises of disproportionate and exorbitant returns.
“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 margin, investment, charges, etc,” it said, asking banks to report such illegal trading activities to the Enforcement Directorate (ED).
“These accounts are opened in the name of individuals, proprietary concerns, trading firms etc. and the transactions in such accounts are not found to be commensurate with the stated purpose for opening the account in several cases,” the circular said. The RBI had issued warning against illegal forex trading several times in the past.
According to the RBI, these entities are providing options to residents to remit/deposit funds in Rupees for undertaking unauthorised forex transactions using domestic payment systems like online transfers and payment gateways.
“There is a need for greater vigilance to prevent the misuse of banking channels in facilitating unauthorised forex trading. AD Cat-I banks are, therefore, advised to be more vigilant and exercise greater caution in this regard,” the RBI said. As and when AD Category-I banks come across an account being used to facilitate unauthorised forex trading, they should report the same to the Directorate of Enforcement, Government of India, for further action, as deemed fit, the central bank said,
The central bank said banks should advise their customers to deal in forex only with ‘Authorised Persons’ and on ‘authorised ETPs’ and give wide publicity to the list of ‘Authorised Persons’ and the list of ‘authorised ETPs’ available on the RBI website. It also asked category-1 banks to give publicity to the ‘Alert List’ and Press Releases issued by the RBI in this regard.
The RBI’s Alert List also contains names of 75 entities, platforms and websites which appear to be promoting unauthorised entities and ETPs, including through advertisements of such unauthorised entities or claiming to be providing training and advisory services.
“This list is not exhaustive. An entity not appearing in the list should not be assumed to be authorised by the RBI. The authorisation status of any person or ETP can be ascertained from the list of authorised persons and authorised ETPs,” it said.