KYC/AML norms for money changing: payment rules clarified
Current · Source: Reserve Bank of India · RBI/2012-13/219 · issued FY 2012-13 · ~2 min read
Quick answerRBI clarifies that for foreign exchange sales exceeding Rs.50,000, authorised persons must accept payment only via crossed cheque, bank draft, or card—not cash. This applies to single drawals and subsequent drawals within 30 days for the same trip.
The rule, in the simplest words
If you buy foreign money (like dollars or euros) worth more than Rs.50,000 in one go, you must pay using a crossed cheque (a cheque with two lines that can only go into a bank account), a bank draft (a payment order from a bank), or a card (debit/credit/prepaid). You cannot use cash.
If you buy foreign money for the same trip more than once within 30 days, and the total of all your payments goes over Rs.50,000, then the second and later payments must also be by crossed cheque, bank draft, or card—not cash.
This rule helps stop bad people from hiding illegal money (money laundering) by using cash for big foreign money purchases.
How it plays out — a real example
A KYC & compliance officer in Indore has a customer who wants to buy Rs.60,000 worth of US dollars for a business trip. The officer remembers the RBI rule and tells the customer, 'Sorry, I cannot take cash for this amount. You need to pay with a crossed cheque from your company's bank account or use your debit card.' The customer nods and pays with a debit card, and the officer processes the sale smoothly.
What changed
RBI issued a clarification on payment modes for foreign exchange sales under money changing activities. For single drawals exceeding Rs.50,000, payment must be by crossed cheque, bank draft, or card. For multiple drawals within 30 days for the same journey, if total payments exceed Rs.50,000, second and subsequent payments also require these non-cash instruments.
What it means for you
Banks and authorised persons must enforce stricter payment verification for larger forex transactions to curb money laundering. This aligns with PMLA obligations and reduces cash usage in forex sales. Lenders need to update their internal processes to ensure compliance with these payment thresholds.
What you must do
Update your forex transaction systems to flag any single drawal or cumulative drawals within 30 days exceeding Rs.50,000 for mandatory non-cash payment.
Train staff to accept only crossed cheque, bank draft, pay order, demand draft, debit/credit/prepaid card for such transactions.
Review and amend your internal KYC/AML policies for money changing activities to reflect this circular.
Communicate these payment rules to all branches and forex counters handling foreign exchange sales.
Who it affects
Authorised Persons (banks, forex dealers, money changers), Customers purchasing foreign exchange for travel or business visits, Compliance and AML teams at banks and financial institutions
❓ Common questions
Does this rule apply to all forex sales or only those above Rs.50,000?
It applies only when the rupee payment for a single drawal exceeds Rs.50,000, or when cumulative payments for multiple drawals within 30 days for the same journey exceed Rs.50,000.
Can a customer still pay in cash if the amount is below Rs.50,000?
Yes, the circular does not restrict cash payments for amounts up to Rs.50,000. The restriction applies only above that threshold.
What payment methods are acceptable for amounts above Rs.50,000?
Only crossed cheque drawn on the applicant's firm/company account, banker's cheque, pay order, demand draft, debit card, credit card, or prepaid card are acceptable.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/219
A. P. (DIR Series) Circular No. 33
September 24 , 2012
To
All Authorised Persons in Foreign Exchange
Madam/Sir,
Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards / Combating the Financing of Terrorism (CFT) Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 – Money changing activities
Attention of Authorised Persons (APs) is invited to Para 4.4 (f) of F-Part- I of the Annex to the A.P. (Dir Series) Circular No.17 [A.P.(FL/RL Series) Circular No.04] dated November 27, 2009 on the captioned subject and condition (iv) of Para 5 (Part-E) of Annex-I to the A.P. (Dir Series) Circular No.57 [ A.P.(FL/RL Series) Circular No.04] dated March 9, 2009 on Memorandum of Instructions governing money changing activities, as amended from time to time.
2. It is clarified that for sale of foreign exchange to a person within his/her eligibility on single drawal, APs may receive payment only by crossed cheque drawn on the bank account of the applicant's firm / company sponsoring the visit of the applicant / Banker's cheque / Pay Order /Demand Draft / debit cards / credit cards / prepaid cards, if the rupee payment exceeds Rs.50,000/-. For sale of foreign exchange to a person within his/her eligibility through more than one drawal within 30 days or for a single journey/visit abroad, APs may receive second and subsequent payments only by crossed cheque drawn on the bank account of the applicant's firm/company sponsoring the visit of the applicant/Bank's cheque / Pay Order / Demand Draft / debit cards / credit cards / prepaid cards, if the total rupee payment, including payments on earlier drawal /s, exceeds Rs. 50,000/- on the second or subsequent drawals.
3. All the other instructions contained in the A.P.(DIR Series) Circular No. 17 [A.P.(FL/RL Series) Circular No.04] dated November 27, 2009, as amended from time to time, shall remain unchanged.
4. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned.
5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/219 · issued FY 2012-13. The plain-English explanation above is BankPulse’s own independent summary.
Communicate these payment rules to all branches and forex counters handling foreign exchange sales.
💻 IT / Systems
Update your forex transaction systems to flag any single drawal or cumulative drawals within 30 days exceeding Rs.50,000 for mandatory non-cash payment.
📜 Compliance
Train staff to accept only crossed cheque, bank draft, pay order, demand draft, debit/credit/prepaid card for such transactions.
Review and amend your internal KYC/AML policies for money changing activities to reflect this circular.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (Authorised Persons (banks, forex dealers, money changers), Customers purchasing foreign exchange for travel or business visits, Compliance and AML teams at banks and financial institutions), your first concrete step on “KYC/AML norms for money changing: payment rules clarified” is: “Update your forex transaction systems to flag any single drawal or cumulative drawals within 30 days exceeding Rs.50,000 for mandatory non-cash payment.” (RBI issued this FY 2012-13).
Action required: Update your forex transaction systems to flag any single drawal or cumulative drawals within 30 days exceeding Rs.50,000 for mandatory non-cash payment.
Action required: Train staff to accept only crossed cheque, bank draft, pay order, demand draft, debit/credit/prepaid card for such transactions.
Action required: Review and amend your internal KYC/AML policies for money changing activities to reflect this circular.
Action required: Communicate these payment rules to all branches and forex counters handling foreign exchange sales.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=7581&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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