What changed
Previously, export payments had to come from the named buyer and import payments had to go to the original seller. Now, AD banks can allow third party payments for both exports and imports under specific conditions, including tripartite agreements, FATF compliance, and a USD 100,000 limit on import transactions.
What it means for you
This liberalization aligns with global trade practices, giving Indian exporters and importers more flexibility in payment arrangements. Banks must ensure strict compliance with conditions like tripartite agreements and FATF compliance to mitigate risks of money laundering or trade misinvoicing.
What you must do
- Update internal policies to process third party payments for exports and imports under the new conditions.
- Verify tripartite agreements or firm irrevocable orders for each transaction.
- Ensure third party payments come from or go to FATF-compliant countries only.
- Cap import third party payments at USD 100,000 per transaction and monitor for revisions.
- Train staff on reporting third party remittances in Export Declaration Forms and XOS for exports.
Who it affects
AD Category-I banks, Exporters receiving payments from third parties, Importers making payments to third parties
What is the maximum limit for third party import payments?
The limit is USD 100,000 per transaction, subject to revision by RBI.
Do we need a tripartite agreement for every third party payment?
Yes, a firm irrevocable order backed by a tripartite agreement is mandatory for both export and import transactions.
Can third party payments be made to or from non-FATF countries?
No, payments must be to or from a Financial Action Task Force (FATF) compliant country only.