RBI cautions public against illegal forex trading apps

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The Reserve Bank of India (RBI) on Wednesday released an alert list of illegal forex trading platforms and cautioned the general public not to undertake transactions on these platforms. This is in continuation of an earlier press release dated 3 February 2022 where the central bank warned the public not to undertake forex transactions on unauthorised electronic trading platforms (ETPs) or remit/deposit money for unauthorised forex transactions. RBI, said despite the caution in February, it is still receiving queries, request for clarifications on status of forex apps.

The RBI reiterated that resident persons can undertake forex transactions only with authorized persons and for permitted purposes, in terms of the Foreign Exchange Management Act, 1999 (FEMA). While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorized for the purpose by the RBI or on recognised stock exchanges viz., National Stock Exchange of India Ltd., BSE Ltd. and Metropolitan Stock Exchange of India Ltd, the central bank said.

“Members of the public are once again cautioned not to undertake forex transactions on unauthorized ETPs or remit/deposit money for such unauthorized transactions. Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorized by the RBI shall render themselves liable for legal action under the FEMA,” it added. As the craze for investing in cryptocurrency has slowed down, investors are now looking for other options that promise quick money including illegal forex apps. 

In the background of continuous queries, it has, therefore been decided to place on the RBI website an “Alert List” of entities which are neither authorized to deal in forex under the Foreign Exchange Management Act, 1999 (FEMA) nor authorized to operate electronic trading platforms for forex transactions.

The “Alert List” is not exhaustive and is based on what was known to RBI at the time of this Press Release, the RBI said.

An entity not appearing in the Alert List should not be assumed to be authorized by the RBI. The authorization status of any person / ETP can be ascertained from the list of authorized persons and authorized ETPs, which are already made available in the RBI website, the press release added. There are 13 authorised electronic trading platforms as per RBI website.