Directorate of Enforcement (ED) on Illegal Operations by FFMCs under FEMA, 1999

Headnote:

The Enforcement Directorate (ED), Hyderabad Zonal Office, conducted search operations under the Foreign Exchange Management Act (FEMA), 1999 at five locations in Hyderabad on 16 October 2025. The operations revealed that several Full Fledged Money Changers (FFMCs) were operating illegally without a valid licence from the Reserve Bank of India (RBI). ED recovered incriminating documents, unaccounted Indian and foreign currency, and digital records evidencing illegal forex dealings.

Background:

1. The search operations were conducted at the premises of Prism Forex Pvt. Ltd., Garuda Forex Services Pvt. Ltd., Sree Vimal Nath Forex Pvt. Ltd., Victory Forex & Travel Services Pvt. Ltd., and Digital Forex Pvt. Ltd.
2. RBI Hyderabad inspections had earlier revealed multiple irregularities, including:
3. KYC documents without corresponding travel tickets
4. False/fictitious traveller names
5. Fake/forged flight tickets
6. Manipulation of flight dates and numbers
7. Signature mismatches of customers
8. Multiple copies of same travel tickets with forged details
9. FFMCs primarily showed sales against travel to destinations like Indonesia, Maldives, Thailand, and Sri Lanka, where visas are not required.
10. Following RBI inspections, these FFMCs surrendered their licences in June–July 2025.

Court / ED Observations

1. Despite surrendering licences, Prism Forex Pvt. Ltd., Victory Forex & Travel Services Pvt. Ltd., and Digital Forex Pvt. Ltd. continued illegal operations, displaying fake/forged RBI licences.
2. ED’s searches under FEMA led to the recovery of:
3. Incriminating documents
4. Mobile phones and laptops containing records of illegal foreign currency dealings
5. Unaccounted Indian currency: Rs. 11.99 Lakh
6. Foreign currency: equivalent to Rs. 26.77 Lakh (approx.)
7. The operation highlights ongoing illegal money changing activities and potential regulatory violations despite prior RBI licence surrender.

Legal Provisions Discussed:

1. Foreign Exchange Management Act, 1999 (FEMA) – Unauthorized money changing and regulatory compliance obligations.
2. Reserve Bank of India (RBI) Guidelines – Licensing requirements for Full Fledged Money Changers (FFMCs).
3. Indian Penal Code & Anti-Money Laundering Laws – Handling of unaccounted and illegally obtained currency.

Further Investigation:

1. ED investigation is ongoing to ascertain the full scope of illegal operations, the network involved, and potential prosecution of responsible entities and individuals.

Citation: 2025:ED:FEMA:002

Case: Directorate of Enforcement v. Prism Forex Pvt. Ltd. & Ors.

Court / Authority: Directorate of Enforcement, Hyderabad Zonal Office

Case / File No.: Search & Seizure Operations under FEMA, 1999