Full Fledge Money Changer (FFMC) License 

Full Fledged Money Changer (FFMC) is a company that carries out trading activities like forex currency after prior approval from the Reserve Bank of India. These companies are sanctioned under the Foreign Money Exchange Act of 1999. The RBI authorizes business entities to deal with foreign exchange for specific purposes. These business entities are referred to as Authorized Money Changers or AMCs.

From Foreign-Exchange or Forex trading to money exchanging, from dollars to rupees to any other currencies, becoming an Authorized Money Changer can assist you a lot.

Types of Authorized Money Changers (AMCs)s

There are three types of AMCs:

• Authorized Dealer Category: I (AD Category-I) Banks
• Authorized Dealer Category: II (AD Category –II) Banks
• Full-Fledged Money Changer (FFMC)

The reasons for the three types of AMCs to exist are the following:

• Foreign tourists have wider access to foreign exchange facilities.
• To enable residents to have wider access to foreign exchange facilities.
• Making sure that the customers get the most efficient services.
• To cater to the increasing competition in the market.

To work as an FFMC in India, the aspirant must get an FFMC License that the Reserve Bank of India issues. If any company dares to engage in Forex trading without the appropriate license, it will get penalized.

FFMC License Requirements

Before filing for the registration of a Full-Fledged Money Changer license at the RBI, the applicant must fulfil the following pre-conditions:

• The Full Fledged Money Change applicant should be an incorporated company under the Companies Act of 2013.
• The minimum Net Owned Fund should be
  • INR 25 lakhs in case of a single branch, and
  • INR 50 Lakh in multiple branches.
• The money-changing activity should be specified in the Memorandum of Association of the company.
• The company should be clean, i.e. there should be no current legal cases lodged against the company at the Department of Enforcement or the Department of Revenue Intelligence.

Documents Required for FFMC License

The following documents must be submitted with the RBI FFMC application for the smooth registration process:

• Certificate of Incorporation of the applicant company.
• Copy of Memorandum of Association of the applicant company.
• Copy of Articles of Association of the applicant company.
• A confidential report from the Bank.
• The latest copy of the latest audited license sheet and the statutory auditors' certificate.
• Details of the nature of the business.
• If the applicant files another FFMC application, those are required as well.

How to Get FFMC License in India

To get a ffmc license in India, it is essential to follow the given steps to complete application smoothly.

Step 1: Collect Necessary Documents

You must gather all the necessary documents for the FFMC license. This includes Certificate of Incorporation, Memorandum of Association, Articles of Association, Detailed Business Plan and audited financial statements.

Step 2: File the Application

You must fill out the FFMC application form available on the RBI website. Make sure all the details are filled in correctly. Attach all the required documents with the application form. Now, submit the application form to the Regional Office of the Foreign Exchange Department of the RBI. 

Step 3: Examination by RBI

After receiving the application, the Reserve Bank of India will review it. It may seek additional information and clarification if needed. Make sure to answer them promptly to avoid delays.

Step 4: Inspection of Premises

The RBI may conduct an inspection of the business premises in order to verify the submitted information. You must ensure your business operations comply with the regulatory standards and legal requirements. 

Step 5: Grant of FFMC License

If the review and inspection go smoothly, the Reserve Bank of India will grant you the FFMC license. Once this license is issued, your business can commence currency exchange operations. If you wish, you can even conduct online money-changing business with this license.

Points to Ponder

• If you've received a notification that there is something wrong with your application, you have to take immediate action to rectify the issues. If you don't, you'll soon receive the notification that says, "FFMC License cancelled".
• Although forex trading is part of Full Fledged Money Changer, don't mistake this license with the Forex trading license or the Forex broker license. To get a Forex trading license in India, you'll need to adhere to the Forex Trading License requirements beyond the scope of a simple FFMC.
• You'll encounter sources that claim to have a money changer license for sale over your research. Don't fall into that trap. Report it the moment any such entity or individual.

Compliance Requirements for FFMC License Holders

Once you have an FFMC license in India, you need to ensure compliance with certain legal and regulatory requirements. Some of these legal requirements are as follows:

• Business Commencement: After your business successfully secures FFMC license, you need to commence your business within 6 months and inform the same to RBI’s concerned Regional Office. In case you fail to commence business within 6 months of acquiring the license, the RBI may revoke or cancel it.

• Records and Registers’ Maintenance: Entities holding a Full Fledged Money Changer (FFMC) license are required to maintain specific records and registers for conducting money-changing operations in India. These include the following forms:

• Form FLM 1: Daily summary and balance book for foreign currency notes and coins.

• Form FLM 2: Daily summary and balance book for travellers' cheques.

• Form FLM 3: Register documenting purchases of foreign currencies from the public.

• Form FLM 4: Register for purchases from authorized dealers and authorized money changers.

• Form FLM 5: Register of sales involving foreign currency and foreign currency travellers' cheques to the public

• Form FLM 6: Register of foreign currency sales to or from authorized dealers, FFMCs, or overseas banks.

• Form FLM 7: Register of travellers' cheques surrendered to authorized dealers, money changers, or exported.

• Concurrent Audit: To ensure that all transactions carried out by an FFMC business are properly regulated, it is essential to implement a system of concurrent audits. Moreover, a concurrent auditor must be appointed to verify that all FFMC transactions adhere to the RBI guidelines.

• Balance Sheet and NOF Maintenance: The registered FFMC licence holder must provide, at the RBI's regional office, at least three years' worth of audited balance sheets and P&L accounts. The RBI's guidelines for net-owned funds must be followed by FFMC business organizations.

• Preservation of Documentary Evidence: You need to maintain documentary evidence at all times. This includes a copy of registration under shop and establishment act, rent receipt, business details and any other documentary evidence that the RBI may ask you to provide after you obtain a Full Fledged Money Changer License.

• Books of Account’s Inspection: The Foreign Exchange Management Act (FEMA) 1999 grants the Reserve Bank of India the authority to examine the books of accounts and related records of Full-Fledged Money Changers once they have been licensed. Failure by an entity to furnish the necessary documents or respond to queries during such inspections is considered a violation of the provisions of the Act.

• Additional Branch: To carry out money-changing operations in the remote areas of tourist attractions, the licencees can apply for additional branches. To do this, a written application must be filed with the RBI’s regional office in the region where the company’s registered office is located.

• Franchise Appointment: AMCs operating under Licensing and Franchise Agreements can appoint franchises if they want to expand their network and provide foreign exchange services to travelers/tourists/NRIs. These franchises must have Rs. 10 lakhs as minimum NOF. They are authorized to purchase foreign currency, with the exchange rate being similar to that of the franchiser's branches. 

• Reporting Compliance: Every full-fledged money changer license holder is required to follow certain reporting guidelines. The following set of compliance requirements must be reported by a licensee to the relevant RO of the RBI's Forex Department within ten days of the end of the month.

• Monthly Compliance: Monthly compliance involves the submission of Form FLM 8, which records all transactions related to the sale and purchase of foreign currency notes across different offices. It also requires a statement that details any receipt or purchase of USD 10,000 or more, or its equivalent in other currencies.

• Quarterly Compliance: To ensure quarterly compliance, the FFMC business must file quarterly statements pertaining to Foreign Currency Account(s) maintained within India.

• Annual Compliance: To ensure annual compliance, the FFMC business must file annual statements providing information regarding amount written off in a fiscal year.

By ensuring adherence to all the compliance requirements, you can run your FFMC business smoothly.

FFMC License Renewal 

• The renewal application from an FFMC license holder must be made two months before the expiry of the licence or the period as the Reserve Bank of India may prescribe.
• Suppose the RBI accepts the FFMC license renewal application. In that case, the licence can continue in force until the licence expiry date or if the RBI rejects the application.
• The RBI will not entertain any FFMC license renewal application after the expiry of the licence.

Under Which FFMC Guidelines RBI Can Revoke the License of AMC

The Reserve Bank has a right to revoke the license which is granted to an Asset Management Company at any time if they find an issue which is related to: 

• Issue related to public interest.
• In case of infringement of any statutory or regulatory provision.
• License which is related to any existing condition of a money changer and implement new conditions.
• AMC has failed to comply with the set standards of the Foreign Exchange Management Act, 1999 or any rule, regulation, or notification, made by the authority.

Our Assistance for FFMC License Registration

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With Registrationwala’s expertise, you can secure your FFMC license efficiently. Contact us today or request to call back through the given form.

FAQs 

Q1. What is the full form of an FFMC?

A. FFMC stands for Full-Fledged Money Changer.

Q2. Who grants FFMC license in India?

A. The Reserve Bank of India (RBI) grants the FFMC license to individuals who want to conduct foreign exchange transactions.

Q3. Can agents or franchisees be appointed by an FFMC?

A. Yes, they can be appointed by an FFMC to extend money-changing services.

Q4. How long does the FFMC license remain valid?

A. The FFMC license remains valid for a period of one year from the date of issuance. The license needs to be renewed every year by the business to continue providing money-changing services.

Q5. What is the estimated time when a licensed FFMC must commence its business operations?

A. A newly FFMC licensed registered firm must commence its business operations within six months from the date of issuance of the license.

Q6. How to get your FFMC license renewed in India?

A. The renewal application from an FFMC license holder must be made two months prior to the expiry of the license.

Q7. What is the FFMC license registration fee set by the RBI?

A. There is no application processing fee for the FFMC license registration under the RBI.