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CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Under FEMA, Arjun, an authorised person's customer, is suspected of contravening the Act by sending a remittance abroad without the required permission. Which statement about the consequence of a contravention is correct?

Where a FEMA contravention involves a quantifiable amount, the adjudicating authority may impose a penalty up to three times the sum involved. FEMA is mainly a civil law, so a flat fine, mandatory imprisonment or a wilfulness requirement is not the rule.

  1. AThe adjudicating authority may impose a penalty up to thrice the sum involved where the amount is quantifiableCorrect
  2. BFEMA contravention is always a criminal offence punishable only with imprisonment
  3. CThe penalty is fixed at a flat ₹1,000 for every contravention
  4. DNo penalty can be imposed unless the contravention is proved to be wilful

Explanation

Under FEMA, where a contravention involves a quantifiable amount, the penalty may be up to three times the sum involved. Where the amount is not quantifiable, a monetary penalty up to a stated limit applies. FEMA is primarily civil, unlike its predecessor FERA. Option B is wrong because it treats FEMA as a criminal statute.

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