What changed
The cash payment threshold for foreign exchange encashment by AMCs was increased from USD 1,000 to USD 2,000 per transaction for foreign visitors/NRIs. Record-keeping requirements for photocopies of identification documents were revised: no photocopy needed for purchases under USD 200 (only details to be maintained); for encashment between USD 200 and USD 2,000, photocopies must be kept for one year or until statutory audit; for encashment above USD 2,000, photocopies must be retained for five years.
What it means for you
Banks and other authorised persons handling money changing can now offer higher cash payouts to foreign visitors and NRIs, improving customer convenience. The tiered record-keeping reduces compliance burden for smaller transactions while maintaining robust AML controls for larger ones. These changes apply mutatis mutandis to Authorised Dealers Category I and II for their money changing activities, so banks must update their internal AML procedures accordingly.
What you must do
- Update internal AML policies and procedures for money changing transactions to reflect the new cash limit of USD 2,000 and revised record-keeping tiers.
- Train staff handling foreign exchange on the amended identification document retention requirements for different transaction value bands.
- Ensure systems are configured to track transaction values and apply correct record retention periods (no photocopy for <USD 200; 1 year for USD 200-2,000; 5 years for >USD 2,000).
- Communicate these changes to all branches and authorised persons involved in money changing activities.
Who it affects
Authorised Money Changers (AMCs), Authorised Dealers Category I and II (banks) for their money changing transactions, Foreign visitors and Non-Resident Indians (NRIs) using money changing services
What is the new cash payment limit for foreign exchange encashment?
For foreign visitors and NRIs, the cash payment limit has been increased from USD 1,000 to USD 2,000 per transaction. All other provisions regarding payment methods remain unchanged.
How long must we retain photocopies of identification documents for different transaction values?
For encashment between USD 200 and USD 2,000, photocopies must be retained for one year or until completion of statutory audit. For encashment exceeding USD 2,000, photocopies must be retained for a minimum of five years. For purchases under USD 200, no photocopy is needed, but full details of the identification document must be maintained.
Do these amended guidelines apply to banks as Authorised Dealers?
Yes. The circular states that the AML guidelines issued to AMCs, along with these amendments, apply mutatis mutandis to Authorised Dealers Category I and II in respect of their money changing transactions.