Exchange institutions and payment institutions

Exchange institutions and payment institutions

The primary activities of these bureaus are currency exchange and/or sending funds.

The term currency exchange (Foreign money exchange) means the:

• Exchange of coins and banknotes.
  This includes the exchange of one currency, into coins or banknotes of another currency. It also includes exchanging coins or banknotes of a particular currency into coins or banknotes of that same currency (for example, different denominations).
• Disbursement of funds on certain payment methods.
  This involves the disbursement of coins and banknotes on presentation of a credit or debit card, cheques and against delivery of certain bearer securities.

Sending funds (money transfer) involves transferring money, without opening current accounts, to a beneficiary. Often, a money transfer bureau (payment organisation) uses the infrastructure of another organisation (provider). The most well-known providers are Moneygram and Western Union, but there are also several other providers, often specializing in sending funds to one or a few specific countries. The usual working practice is for a client to identify himself at a money transfer bureau and indicate who is the recipient of the funds. The amount is paid with commission. A unique code allows the beneficiary to pick up the money almost instantly, anywhere in the world (after identification) at a money transfer bureau. Part of the strict requirements is that the money transfer bureau must investigate the origin of the funds being sent.

It is prohibited to conduct the activities of exchanging currency and sending funds without a permit granted by De Nederlandsche Bank (hereafter DNB). Strict laws and regulations must be met. If the license is granted; you will be classified as an exchange institution (in the case of currency exchange) or as a payment institution (in the case of sending funds). The licenses are listed in separate registers maintained by DNB. These are public records. 

DNB also monitors compliance with laws and regulations. In addition, an outside expert (such as auditor) is required to undertake work.

The strict compliance regulations arose because this industry was partially used to launder (criminal) money and finance terrorist activities.

The legislation for exchange and payment institutions is regulated by the Financial Supervision Act (Wft). Both exchange and payment institutions are also subject to the Money Laundering and Terrorist Financing (Prevention) Act [Wwft].

Rubicon has years of experience in this industry and can guide you through the permit application process, assist in writing the procedure manual and perform requested additional work. Recently, it has become necessary to have regular discussions with DNB concerning the interpretation of the legislation (including the composition of the board, which forms of money exchange fall under which legislation and which control measures must be in place).

If you have questions concerning currency exchange, sending funds or questions regarding the Wft or the Wwft please contact Wilco van der Pol (+31 (0)40-235 34 30 of via wilco@rubiconadvies.nl).