FOREIGN EXCHANGE >> OBJECTIVE OF FAME >> CONTRAVENTIONS AND PENALTIES
If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.
Any Adjudicating Authority adjudging any contravention may, if he thinks fit in addition to any penalty which he may impose for such contravention direct that any currency, security or any other money or property in respect of which the contravention has taken place shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, of the persons committing the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
"Property" in respect of which contravention has taken place, shall include deposits in a bank, where the said property is converted into such deposits, Indian currency, where the said property is converted into that currency; and any other property which has resulted out of the conversion of that property.
If any person fails to make full payment of the penalty imposed on him within a period of ninety days from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment.

Investigation
The Directorate of Enforcement investigate to prevent leakage of foreign exchange which generally occurs through the following malpractices :
  • Remittances of Indians abroad otherwise than through normal banking channels, i.e. through compensatory payments.
  • Acquisition of foreign currency illegally by person in India.
  • Non-repatriation of the proceeds of the exported goods.
  • Unauthorised maintenance of accounts in foreign countries.
  • Under-invoicing of exports and over-invoicing of imports and any other type of invoice manipulation.
  • Siphoning off of foreign exchange against fictitious and bogus imports.
  • Illegal acquisition of foreign exchange through Hawala.
  • Secreting of commission abroad.