ICICI Bank adds “no-crypto” declaration to foreign remittance form

ICICI Bank, the Indian banking giant, has updated the “Retail Outward Remittance Application – A2 Cum LRS Declaration” to seek a declaration that foreign “remittance is NOT for investment/purchase of bitcoin/cryptocurrencies/virtual currencies (such as ethereum, ripple [XRP], litecoin, dash, peercoin, dogecoin, primecoin, chinacoin, ven, bitcoin or any other virtual currency/cryptocurrency/bitcoin).” The move may impact foreign traders who use foreign exchanges like Binance.

The change comes at a time when global regulators are cracking down at crypto exchanges. In May, RBI has clarified that banks cannot cite the in-famous April 2018 circular to restrict crypto transactions but advised banks to carry out AML and CFT diligence as per existing laws. As per reports, several other banks are reluctant to add sweeping conditions to A2 cum LRS declaration in light of Supreme Court judgement.

Banks are required to certify that a foreign remittance is in conformity with the instructions issued by RBI. However, the ultimate responsibility is of the remitter to ensure compliance to the extant foreign exchange rules/regulations.

The A2 cum LRS declaration is sought as compliance under the requirements of Foreign Exchange Management Act, 1999 (“FEMA“) from customers intending to remit funds outside. The Liberalized Remittance Scheme (LRS) under FEMA allows individuals to remit up to USD 250,000 annually without RBI approval and users can retain and reinvest the income outside. The LRS option is not applicable to corporates, partnership firms, HUF, Trusts, etc.

The updated declaration form also seeks to prevent customers from investing in “units of mutual funds/shares or any other capital instrument of a company dealing in bitcoins/cryptocurrency/virtual currencies.” The modified form additionally seeks a declaration that the source of the funds to be remitted is not the redemption of crypto investments. ICICI bank was the first entity to cut ties with local crypto exchanges in April-May, this year.