SAFEMA deletes FEMA penalties for traders exchanging currency at authorised money changers.
SAFEMA Clears Traders in Authorised Forex Exchange
The SAFEMA Tribunal has set aside FEMA penalties of ₹50,000 and ₹5,000 imposed on traders who exchanged foreign currency through authorised money changers. The Directorate of Enforcement had alleged violations under the Foreign Exchange Management Act, 1999.
The Tribunal held that transactions conducted through RBI-authorised entities—such as Full-Fledged Money Changers (FFMCs)—do not constitute contraventions, provided KYC norms and reporting thresholds are met. Mere exchange of currency, even in large volumes, is not illegal if routed through legitimate channels.
This decision clarifies the boundaries of regulatory overreach. Businesses and individuals using authorised forex dealers for travel or trade purposes can rely on institutional compliance. Lawyers should challenge prosecutions that conflate routine exchange with structured evasion.
Citations
- Foreign Exchange Management Act, 1999
