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Exchange institutions – cash to non-cash transactions

Q&A

Published: 12 July 2023

Question:

Are exchange institutions permitted to accept cash (at the counter, through a money courier or in a sealbag) so that it can be credited to a bank account held by the customer or another beneficiary as a non-cash amount?

Answer:

No, this is a payment service (service 6 – money remittance) for which the service provider must be licensed as a payment institution.

Due to the non-cash component this service does not qualify as an exchange transaction but as a payment transaction. Payment service providers and payment institutions, and the services provided by each of them (including money remittance) are differently defined in the Wft, and they are subject to different licence requirements from exchange institutions.

Notes:
Exchange transactions, as defined in Section 1:1 of the Wft, include:

A – A money exchange transaction
This is a transaction in which coins or banknotes are exchanged against other coins or banknotes, and the funds are not held in a payment account.

B – The disbursement of coins or banknotes upon presentation of a credit card
The service described in the question clearly has a non-cash component. It must be noted that the inherent risks surrounding the identification and verification of the identity of online customers will be much greater than those involving customers who present themselves at the counter.

Due to the non-cash component this service does not qualify as an exchange transaction but as a payment transaction. Payment service providers and payment institutions, and the services provided by each of them (including money remittance) are differently defined in the Wft, and they are subject to different licence requirements from exchange institutions. Although payment institutions (i.e. authorised payment service providers) may under specific circumstances effect exchange transactions, the reverse does not apply: an authorised exchange institution may not perform payment services, such as money remittance.

Therefore, payment service providers and payment institutions are subject to stricter requirements in terms of notifications. For example, money remittances of EUR 2,000 or more (or equivalent) must always be reported to FIU-NL.

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