The Telegraph
Monday , April 11 , 2011
Since 1st March, 1999
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Illegal forex trade alert

Mumbai, April 10 (PTI): The Reserve Bank of India has asked credit card issuing firms not to permit payments for illegal online forex trading introduced by certain companies.

The regulations under the Foreign Exchange Management Act (Fema), 1999, do not permit resident Indians to trade in foreign exchange in the domestic or overseas markets.

The RBI’s instruction comes in the wake of the introduction of overseas foreign exchange trading on a number of Internet and electronic trading portals, luring the residents with offers of guaranteed high returns. Several people have lost heavily in such transactions.

“The advertisements by these Internet or online portals exhort people to trade in forex by way of paying the initial investment amount in rupees,” the RBI said.

Many companies even engage agents who contact gullible people to undertake forex trading and investment schemes and entice them with promises of exorbitant returns.

Such firms ask people to make the margin payments for such deals through credit cards or deposits in various accounts maintained with banks in India, the RBI said.

“The card issuing companies who may also be advised to remain alert against permitting payments for such unauthorised transactions,” the RBI said. The apex bank said it had also observed that accounts were being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin and investment money.

The banks have been asked to exercise “due caution and be extra vigilant”.

Any resident Indian collecting or remitting such payments outside the country is liable to be proceeded against for the contravention of Fema and violation of regulations relating to know-your-customer norms and anti-money laundering standards, the circular said.

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