Preparing for a CNB Inspection

How does the CNB inspect exchange offices?

The Czech National Bank supervises bureau-de-change operators in two main ways:

• test purchases (mystery shopping) – a CNB officer acts as an ordinary customer, performs an exchange and then assesses whether it complied with the law (exchange rate list, pre-contractual information, receipt, notice of the right of withdrawal, refund upon withdrawal);
• on-site and off-site inspections – the CNB reviews the office's documentation, transaction records, AML compliance and reporting.

A refusal to reverse an exchange transaction after a customer's valid withdrawal is treated by the CNB as a serious breach of the law.

What does the CNB most often find fault with?

The CNB's enforcement practice reveals these typical failings:

• an exchange rate list contrary to Section 11 of the Act (missing data, lack of clarity, displaying better rates than those actually applied, "VIP rates" in fine print);
• defective or missing pre-contractual information under Section 13 (in particular failure to provide the information in text form before the transaction);
• a defective transaction receipt under Section 14, including a missing notice of the right to withdraw within 3 hours (Section 16a);
• refusing to reverse a transaction after a timely withdrawal by the customer;
• deficiencies in the records of exchange transactions and document retention;
• AML failings – outdated or purely formal internal policies, missing identification, missing staff training, no sanctions screening;
• non-compliance with reporting to the CNB (the DEV 26-04 report);
• unnotified premises or changes of data.

What sanctions can follow?

For breaches of the Act on Bureau-de-Change Activity and the AML Act, the CNB imposes fines ranging from tens of thousands to millions of Czech crowns, depending on severity; final decisions are published on its website, with a tangible reputational impact. In the most serious cases, the CNB may withdraw the operator's licence.

How will we prepare you?

• we will carry out a review of your exchange office through an inspector's eyes – we will go through the premises, the rate list, receipts, records and AML documentation and flag everything the CNB would object to;
• we will perform a simulated test purchase at your premises;
• we will remedy the identified deficiencies – from the rate list to the internal AML policy;
• we will train your counter staff on how to act during an inspection and when a customer withdraws from a transaction;
• if an inspection has already taken place, we will represent you in the proceedings before the CNB and help minimise the sanction.

Where to next?

• Duties of a bureau-de-change operator
• AML obligations of an exchange office
• Legal audit of an exchange office
• CNB reporting for exchange offices