RBI urges more caution from banks on curbing unauthorised forex transactions
banks to exercise more vigilance when it comes to preventing the misuse of traditional banking channels in enabling unauthorised trading in foreign exchange.
The central bank said in a notification on Wednesday that it has come across instances of unauthorised entities offering foreign exchange trading facilities to individuals with promises of disproportionate and exorbitant returns. Upon investigation, the RBI found that in order to facilitate such unauthorized foreign exchange trading, these entities have engaged local agents who then open accounts at different bank branches to collect money for margins, investments, and charges.
“AD Cat-I (authorized dealer category 1) banks are, therefore, advised to be more vigilant and exercise greater caution in this regard. As and when AD Cat-I banks come across an account being used to facilitate unauthorised forex trading, they shall report the same to the Directorate of Enforcement, Government of India, for further action, as deemed fit,” the RBI said.
AD Cat-1 banks are those that the RBI gives licenses to for purchasing and selling foreign exchange for certain purposes.
The RBI told banks to inform their customers and constituents of the central bank’s latest circular.
The banking regulator said that lender’s may advise their customers to deal in foreign exchange only with the RBI’s authorised list of persons and electronic trading platforms. Banks have also been asked to give “wide publicity” to the list of authorised persons and electronic trading platforms
