RegAlert2023-07-12
Added · Updated
Non-cash to cash transactions
Exchange institutions are prohibited from accepting non-cash funds and subsequently disbursing cash, as this constitutes money remittance rather than a money exchange transaction. This activity requires licensing as a payment institution under the Financial Supervision Act (Wft), subjecting providers to stricter notification requirements, such as reporting money remittances of EUR 2,000 or more to FIU-NL. Authorized exchange institutions may not perform payment services, although payment institutions may effect exchange transactions under specific circumstances.
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Q&A
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Question:
Are exchange institutions permitted to accept non-cash funds (for example through an iDeal or credit card payment) and subsequently disburse the cash amount in the desired currency (for example at the counter or through a money courier?
Published: 12 July 2023
Answer:
No, this is a payment service (service 6 – money remittance) for which the service provider must be licensed as a payment institution.
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 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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Source: De Nederlandsche Bank — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works