Rbi: RBI takes stringent measures to curb THESE illegal forex trading apps- DETAILS


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RBI takes stringent measures

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RBI takes stringent measures to curb THESE illegal forex trading apps- DETAILS

In an effort to combat illegal forex trading activities, the Reserve Bank of India (RBI) is actively engaging with banks and the government to implement more robust measures. This move follows the recent arrest of two businessmen by the Directorate of Enforcement for their involvement in illicit forex trading.

RBI’s Vigilant Stance

The RBI, in a letter to all stakeholders issued last month, has sought suggestions and collaboration to reinforce measures preventing the misuse of banking channels for illegal forex trading. The central bank is emphasizing the importance of increased public awareness on this issue.

Notably, investigations earlier this year led to the arrest of two businessmen linked to illegal activities. These individuals, based in Kolkata, were found to be in control of and managing a staggering 180 bank accounts, resulting in the seizure of Rs 120 crore.

To strengthen the regulatory framework, the RBI has compiled an alert list, naming 75 entities, including platforms and websites unauthorized to engage in foreign currency dealings or execute forex transactions. The central bank aims to intensify scrutiny by financial institutions on account holders conducting forex transactions on non-authorized platforms, including various apps.

Collaboration with MeitY

The Ministry of Electronics and Information Technology (MeitY) is set to collaborate with the RBI to identify additional illegal platforms involved in forex trading. Officials from MeitY emphasize the need for joint efforts to curb such activities, with a focus on social media platforms. The RBI has encouraged MeitY’s participation in awareness programs to educate the public about the risks associated with illegal forex trading.

While the RBI has not responded to queries regarding these initiatives, it is evident that a concerted effort is underway to address the challenges posed by unregulated forex transactions.

Technology Controls and Government Collaboration

To enhance controls and ensure compliance with Know Your Customer (KYC) norms, the RBI is urging banks to scrutinize forex transactions more closely. Technology controls, in conjunction with the government, are being explored to strengthen the regulatory framework. Both public and private-sector banks are expected to submit their suggestions to the RBI, reflecting a collaborative approach to combatting illegal forex trading.

Last year, the RBI identified 34 entities unauthorized to engage in forex transactions under the Foreign Exchange Management Act, 1999 (FEMA). These entities were also prohibited from operating electronic trading platforms (ETPs) for forex transactions. The central bank has expressed concerns about misleading advertisements from unapproved electronic trading platforms, cautioning against dealing with entities like Alpari, AnyFX, Ava Trade, Binomo eToro, Exness, Expert Option, FBS, FinFxPro, Forex.com, Forex4money, and Foxroex.

Through repeated advisories over the past two years, the RBI has warned residents against engaging with unauthorized entities, emphasizing that legal action under FEMA could be taken against those undertaking forex transactions outside the permitted scope.





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