Compounding Of Contravention Under Fema

Objective:

Objective:

The objective is to rationalize and streamline the process and the procedure of compounding and to enhance transparency for the smooth implementation of the compounding process.

Voluntary:

Persons who have flouted / contempt the FEMA will be allowed to settle the offence by paying monetary penalty and will not have to go for litigation if such a person acknowledges contravention. This, however, will not apply to hawala transactions.

The Reserve Bank also advises the persons concerned with an option to make an application for compounding as and when such contraventions come to its notice.

Compounding Powers:

Compounding Powers of RBI: Reserve Bank has been empowered to compound the contraventions of all the Sections of FEMA, 1999, except clause (a) of Section 3 of the Act.

Compounding Powers of DOE: Directorate of Enforcement would exercise powers of compounding under clause (a) of Section 3 of FEMA, 1999 (dealing essentially with Hawala transactions).

Conclusion of Compounding Proceedings:

As per the new norms, the RBI will be required to conclude case proceedings within 180 days from the receipt for application for compounding and the sum worked out after compounding has to be pay within 15 days from the order of compounding.

Immunity:

Once the Compounding Authority has compounded a contravention, no proceeding or further proceeding will be initiate or continue, as the case may be, against the contravener.

However, the order passed by RBI will be applicable for a period of three years. If a second offence is committed after the expiry of three years, it will be deem as a fresh contravention and not a repetition of the earlier one.

Kriti Advisory Services with its team of professionals having vast experience in this area provides solutions to corporate clients related to FEMA. We can be contacted at info@kritiadvisory.com or at +91-11-41608147

by: Kritiadvisory

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