Legal is ‘illegal’
You cannot even participate in legal overseas lotteries
WHAT'S UP BY SAJAD BAZAZ
IN response to the million dollar question - last Sunday’s column - I received some feedback. Among all the feedback, it was a medical doctor working in one of our prestigious healthcare institutions who had touched a very sensitive issue involving foreign exchange remittances.
‘Let us know the rules and regulations governing for participation in international lotteries as there are many famous legal lotteries in Britain and in other European counties and USA. Is it legal to participate in such overseas lotteries (by using credit cards of Indian Banks) and if someone wins a jackpot, is it legal to bring such amount to Indian banks?’
This is what this doctor has asked. Before I answer this question, which I believe is a common question of many of the likes of this medical doctor, I want to share a unique incident when a top ranking government official sought my guidance to transfer funds from UK to Kashmir. Basically he wanted a cash loan of about Rs.1.75 lacs. I just guided him through some formalities required to obtain this cash loan and during the process he narrated his urgency to raise the loan.
I was shocked to know the reason. He showed me a printout of an email which was addressed to his daughter who was doing graduation in some college outside the state. The email was basically a ‘confirmation’ of winning some lottery in UK which was in millions of pounds. To claim the amount and get it transferred to Kashmir, she was asked to comply with certain formalities – mostly sending some money to the senders under different heads, such as, processing fees, transaction fees, tax clearance charges, conversion charges, clearing fees, etc. She had already remitted some 1500 dollars to the senders and now they had asked her to make final payment of 2500 dollars for transfer of one million pounds in her account. She was even made to believe that the amount had reached India and was lying with the Reserve Bank of India for some conversion charges. So under tremendous pressure to remit these 2500 dollars, this top ranking government official was in a hurry to raise a loan at almost 16 per cent rate of interest.
Thank God, I was able to convince him that his daughter was lured by fraudsters who globally have been active in cheating people through these fake lotteries. But he had already lost 1500 dollars.
It has been observed that multiple accounts are being opened in the name of individuals or proprietary concerns by the fraudsters, at different bank branches for collecting the transaction charges, etc. from gullible people like the one mentioned above. These fraudsters have even defrauded best brains. However, the Reserve Bank of India has advised banks to exercise due caution and to be extra vigilant while opening or allowing transactions in such accounts. The apex bank has clarified that any person resident in India collecting and effecting / remitting such payments directly /indirectly outside India would make himself/ herself liable to be proceeded against with, for contravention of the Foreign Exchange Management Act, 1999 besides being liable for violation of regulations relating to Know Your Customer (KYC) norms / Anti Money Laundering (AML) standards.
What I have seen that with the advent of internet and other new communication technologies in our state, many people have been lured to fake offers and many have lost their hard earned money. Even as almost everyone dreams of winning the lottery, online scammers take advantage of this wishful thinking to rip off people.
Even I have been receiving such email where I receive ‘congratulation’ messages for being ‘declared a winner’. It’s very easy to identify a fraud email. One has to simply concentrate on the content of the mail. Firstly, I have observed that these are poorly written emails full of spelling and grammatical errors. A real letter from a legitimate company wouldn’t be full of mistakes. Secondly, most of the time, these fake lotteries are claimed to be sponsored by company like Microsoft. Thirdly, the winning notification is impersonal referring the winner as “Dear Luck Winner” instead of by your name and the winner is instructed to keep the prize a secret. Otherwise, legitimate communication would always be personalized and never asked to keep the prize money a secret.
I have also noticed that these scam emails create a sense of urgency in order to get you to act without thinking and possibly recognizing the scam. Above all one should ask himself if he had entered the supposed lottery. Because a legitimate lottery requires one to buy a ticket or make an entry.
Meanwhile coming to the questions of medical doctor wherein he has sought clarification about participation in legal lotteries outside India. There are certain prohibitions laid down in the Foreign Exchange Management (Current Account Transactions) Rules, 2000. Participation in international lotteries is banned as it’s illegal to participate in such overseas lotteries. So there is no question of bringing winning amount to Indian banks.
The Reserve Bank of India notification states that remittance in any form towards participation in lottery schemes are prohibited under the Foreign Exchange Management Act, 1999. Further, these restrictions are also applicable to remittances for participation in lottery like schemes existing under different names like money circulation scheme or remittances for the purpose of securing prize money/awards, etc.
Meanwhile, gone are the days when a person here in possession of a few dollars was booked for criminal offence under Foreign Exchange Regulation Act (FERA). One has heard so many stories of people being imprisoned for trivial offences. In this regard, the case of the eminent industrialist, S.L.Kirloskar, being proceeded against under FERA for having the princely amount of some $80 odd in his possession is a well known case. FERA primarily prohibited all transactions, except to the extent permitted by general or specific permission by RBI. So violation of FERA was a criminal offence.
But, with the winds of liberalization blowing in the early 1990’s, FERA over a period of time was replaced by the Foreign Exchange Management Act (FEMA) and today possession of foreign currency is no longer a crime, but up to a prescribed limit. Any offence under FEMA is not regarded as criminal offence and only invites penalty, not prosecution and imprisonment.
Under FEMA, one can purchase foreign exchange up to a certain limit without taking permission from the reserve Bank of India. For example, for a business trip to any country other than Nepal & Bhutan, which includes visits in connection with attending of an international conference, seminar, specialised training, study tour, apprentice training, etc., one can buy up to $25000. For medical treatment one can buy up to $100,000 on self declaration basis. Above this limit, he can buy US dollars as per estimate of medical expenses from doctor/hospital abroad or doctor in India. Additionally, $25,000 can be drawn for meeting boarding/lodging/travel expenses of the patient and also the accompanying attendant on self-certification. Students for studies abroad can buy foreign exchange up to $100,000 per academic year or estimate from the institution abroad whichever is higher. If one is employed abroad, he or she can buy foreign exchange up to $100,000 without seeking RBI approval.
However, one should contact foreign exchange dealers check the permissible limits as these are subject to change any time.
(The views are of the author and not that of the institution he works for. Feedback at email@example.com)
Lastupdate on : Sat, 4 Dec 2010 21:30:00 Makkah time
Lastupdate on : Sat, 4 Dec 2010 18:30:00 GMT
Lastupdate on : Sun, 5 Dec 2010 00:00:00 IST
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