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The Reserve Bank of India (RBI) is actively speaking with banks and the government to implement more robust measures to prevent the misuse of banking channels for illegal forex trading. This move comes in response to recent arrests related to illegal activities and aims to address the rising concern of unauthorised forex transactions, according to a report by The Economic Times (ET).
Earlier this year, the Directorate of Enforcement arrested two businessmen in connection with illegal forex trading activities. Investigations revealed that the accused, based in Kolkata, controlled and managed 180 bank accounts, leading to the seizure of Rs 120 crore. The RBI has compiled an alert list comprising 75 entities, including unauthorised platforms and websites involved in unauthorised forex transactions.
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In a letter to all stakeholders issued last month, the RBI called for suggestions on combating illegal forex trading and emphasised the need for heightened public awareness. The central bank is reportedly seeking closer cooperation with banks to ensure that Know Your Customer (KYC) norms are strictly adhered to for all parties involved in forex transactions.
Bank executives have suggested the implementation of additional technology controls, working in collaboration with the government, to enhance oversight of forex transactions. Both state-run and private-sector banks are expected to submit suggestions to the RBI to strengthen regulatory measures, the ET report added.
The Ministry of Electronics and Information Technology (MeitY) will also collaborate with the RBI to identify more illegal platforms engaged in unauthorised forex transactions. The regulator aims to leverage technology to identify and curb such activities, seeking support from government entities to enforce stringent controls.
The RBI has issued multiple advisories cautioning against dealing with unauthorised entities and platforms, stressing that resident persons engaging in forex transactions on non-authorised platforms can face legal consequences under the Foreign Exchange Management Act, 1999 (FEMA).
In addition to regulatory measures, the RBI has urged stakeholders to participate in awareness programs to educate the public about the risks associated with dealing with unauthorised electronic trading platforms (ETPs). The central bank has noted misleading advertisements on social media, search engines, gaming apps, and other platforms, promoting unauthorised ETPs offering forex trading facilities to Indian residents. Entities like Alpari, AnyFX, Ava Trade, Binomo eToro, Exness, Expert Option, FBS, FinFxPro, Forex.com, Forex4money, and Foxroex are highlighted in the RBI's list.
