Module: General Practice
Q23: Consider the following regarding "Third Party Payments" for Export/Import:
Assertion (A)- Banks can regularize payments for exports received from a "Third Party" (a party other than the buyer), provided certain conditions are met.
Reason (R)- The FATF (Financial Action Task Force) guidelines strictly prohibit third-party payments; hence, RBI allows them only under a specific waiver from the Ministry of Commerce.
Reason (R)- The FATF (Financial Action Task Force) guidelines strictly prohibit third-party payments; hence, RBI allows them only under a specific waiver from the Ministry of Commerce.
✅ Correct Answer: C
Assertion is True: RBI Master Directions allow third-party payments for both exports and imports, subject to conditions: 1. There must be a Tripartite Agreement (or clear declaration). 2. The third party should be FATF-compliant.
3. The payment must be routed through banking channels.
Reason is False: FATF does not "strictly prohibit" them; it calls for Enhanced Due Diligence (EDD) to prevent money laundering.
RBI permits it as a standard banking practice (not a Ministry waiver) provided the bona fides are established and the third party is not from a non-compliant jurisdiction.
3. The payment must be routed through banking channels.
Reason is False: FATF does not "strictly prohibit" them; it calls for Enhanced Due Diligence (EDD) to prevent money laundering.
RBI permits it as a standard banking practice (not a Ministry waiver) provided the bona fides are established and the third party is not from a non-compliant jurisdiction.