What Is Currency Exchange Activity?

What is an exchange transaction and currency exchange activity?

Under Section 2 of Act No. 277/2013 Coll., on Bureau-de-Change Activity, an exchange transaction is a transaction consisting in the exchange of banknotes, coins or cheques denominated in one currency for banknotes, coins or cheques denominated in another currency.

Currency exchange activity then means a continuous activity carried out in one's own name and on one's own responsibility for the purpose of making a profit, consisting in the performance of exchange transactions. A one-off or occasional exchange is therefore not currency exchange activity – the decisive features are continuity and a business character.

Who may carry out currency exchange activity in the Czech Republic?

The range of authorised persons is defined in Section 3 of the Act. Currency exchange activity may only be carried out by:

• banks, foreign banks and foreign financial institutions (under the conditions of the Banking Act);
• credit unions;
• bureau-de-change operators – i.e. persons holding a licence granted by the Czech National Bank;
• the Czech National Bank.

If you are not a bank or a credit union, you need a bureau-de-change operator licence and an entry in the register of bureau-de-change operators, which is maintained and published online by the Czech National Bank.

Who is a bureau-de-change operator?

A bureau-de-change operator (směnárník) is a person authorised to carry out currency exchange activity on the basis of a licence granted by the Czech National Bank. The operator may be a natural or a legal person. The CNB maintains a public register of operators, recording the operator's identification data and the date on which the licence arose, expired or was withdrawn.

What is not an exchange transaction?

The Act expressly provides that an exchange transaction does not include, for example, the payment of cash by a supplier of goods or services over and above the payment itself (cashback), or currency conversion offered via an ATM or at the point of sale before a payment transaction is initiated (dynamic currency conversion). The line between an exchange transaction, a payment service and other activities can be contentious in practice – we will gladly help you assess which regulatory regime your business model falls under.

Is a bureau-de-change operator supervised by the CNB?

Yes. A bureau-de-change operator is subject to full supervision by the Czech National Bank. The CNB regularly carries out on-site inspections and test purchases (mystery shopping) at exchange offices, imposes fines for identified breaches and, in serious cases, withdraws licences. The operator is also an obliged entity under the Czech AML Act, with all the associated duties.

Considering your own exchange office?

We will prepare everything for you on a turnkey basis – from the licence application through the AML documentation to preparing your premises. Get in touch via the form below.

Where to next?

• Turnkey exchange office setup
• Duties of a bureau-de-change operator
• AML obligations of an exchange office
• CNB reporting for exchange offices
• Preparing for a CNB inspection