Informist, Thursday, Feb 3, 2022

--Source: Enforcement Directorate to lead probe on FX trade portals

--Govt to seek RBI feedback on unauthorised FX trade portals

--Govt may ask bks to stop svc to unauthorised FX trade portals

--Govt may consider blocking unauthorised FX trade portals

By T. Bijoy Idicheriah 

MUMBAI - The government is likely to ask the Directorate of Enforcement to look into the modus operandi of online portals offering unauthorised foreign exchange in violation of Reserve Bank of India norms, a source aware of the development told Informist.

"The issue had already been flagged by the RBI to the ED in specific cases in the past," the source said. "Now the government is also getting involved after noticing the problems it has caused due to leverage being provided for such transactions, offshore antecedents of such portals, lotteries and offers and blatant advertising in the online and even traditional media."

Earlier today, the RBI issued a press release cautioning the public against such unauthorised electronic trading platforms that offer forex trading to Indians, by advertising on social media platforms, search engines, online media, gaming applications and so on. 

The central bank also said that agents of these portals even directly contact gullible people to undertake foreign exchange trading and investment schemes, under promises of exorbitant returns. This, in turn, has led to cases of frauds, with Indian citizens losing large sums of money.

The government along with the investigative agencies is likely to work on feedback from the RBI on the issue as such portals are also providing leverage to customers and even offering introductory offers to entice them to participate in forex trades, the source said.

"The alarm bells got triggered when such an unauthorised foreign exchange portal was even sponsoring a cricket team in the Indian Premier League. Separately, in violation of RBI norms and FEMA laws, such portals permit transactions and payments using cryptocurrencies to avoid scrutiny," the source said. There is also widespread use of wallets such as PayPal or Skrill to facilitate such payments. 

The authorities are likely to also ask banks to tighten the use of Indian banking services by customers on such portals as that is a direct violation of existing rules. 

"The government may also ask the Ministry of Electronics and Information Technology to consider blacklisting and blocking such unauthorised portals altogether," the source said.  End 

Edited by Aditya Sakorkar

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