RBI orders banks to monitor forex trading more closely and notify ED of any unauthorized activity

In response to reports of some companies engaging in illicit currency trading, the Reserve Bank of India (RBI) has sent an order to banks.
The Reserve Bank of India (RBI) has instructed banks to notify the Directorate of Enforcement (ED) of any account that is being utilized to enable illicit foreign exchange transactions.

The RBI has observed that some organizations are providing currency trading services to citizens of India with the promise of unjustifiable or extravagant profits.

Investigations revealed that these illegal organizations pay local agents to create accounts at several bank branches in order to get funds for investments, margins, and other expenses. Nevertheless, these accounts’ transactions contradict the stated reason for opening them.

“The Reserve Bank of India (RBI) has come across instances of unauthorised entities offering foreign exchange (forex) trading facilities to Indian residents with promises of disproportionate/exorbitant returns,” according to a notice from the RBI.

The notice also includes, “After conducting an investigation, it was found that these entities have resorted to hiring local agents to open accounts at various bank branches in order to collect funds for margin, investments, and fees in order to facilitate unauthorised forex trading.””
Furthermore, by enabling citizens to send or deposit money in rupees via domestic payment methods like internet transfers and payment gateways, these organizations are aiding illicit foreign exchange operations.

The RBI has stressed that no one should trade in or transfer any foreign money or foreign security to any company not approved by the RBI, except under general or specific approval, in an effort to stop such operations.

“RBI directs that no person shall deal in or transfer any foreign exchange or foreign security to any person not being a ‘Authorized Person’, unless under general or special permission of the Reserve Bank, “stated the RBI notification.
Additionally, the RBI has declared that no organization is allowed to run an Electronic Trading Platform (ETP) without first receiving permission from the RBI. Furthermore, banks are asked to be extra watchful and cautious in this respect.