Currency Exchange Act

Act No. 277/2013 Sb., on currency exchange, as amended (hereinafter the “Currency Exchange Act”), regulates the conditions for the performance of the activities of a currency exchanger and other conditions for the operation of exchange activities in the Czech Republic. If necessary, our law firm will be happy to prepare a complete application for the registration of exchange activities with the Czech National Bank, draft all necessary internal regulations and procedures, help you process an exchange rate table or process all necessary measures against money laundering and terrorist financing (AML/CFT).

Who can carry on exchange business?

Entities authorised to carry out foreign exchange activities in the Czech Republic are:

1. Banks, foreign banks and foreign financial institutions
2. Savings banks and credit cooperatives
3. Currency exchangers
4. Czech National Bank

Pursuant to Section 4 of the Currency Exchange Act, a currency exchanger is a person authorised to provide currency exchange on the basis of a licence granted by the Czech National Bank. It is therefore a non-banking foreign exchange operator. All currency exchangers are registered in an electronic register managed and operated by the Czech National Bank.

What is currency exchange?

Pursuant to Section 2(3) of the Currency Exchange Act, currency exchange is a consistent activity carried out on own account and responsibility for the purpose of producing a profit. This activity then consists in carrying out exchange transactions. An exchange transaction is a transaction consisting in the exchange of banknotes, coins or cheques (including non-cash means of payment and electronic money) denominated in a certain currency for banknotes, coins or cheques denominated in another currency.

Exchange rate, fees for exchange transactions, exchange rate table

The Currency Exchange Act does not set or limit the exchange rate, which expresses the price of one currency in units of another. The amount of the exchange rate is therefore left to the agreement of the parties to the exchange transaction.

In contrast, the exchange fee is limited by the Currency Exchange Act, whereby the providers of currency exchange may charge customers only in the following cases:

1. Exchange transaction consisting of coins deposited by the customer
2. Exchange transaction consisting of a cheque deposited by the customer
3. Exchange transaction consisting of non-cash means of payment or electronic money if the customer has given a payment order to transfer them through the provider of currency exchange

The publication of the exchange rate table in the establishment is one of the most important obligations of currency exchange providers as stipulated by the Currency Exchange Act. The exchange rate table must always contain, for example, information on the currencies between which the exchange is made, information on the exchange rates, the fee for the exchange transaction or the right of withdrawal from the exchange contract. This information must be specified in the exchange rate table in Czech and English, clearly, in an appropriate size, in a clear and comprehensible manner.

Withdrawal from an exchange contract and financial arbitrator

In accordance with the Currency Exchange Act, customers have the right to withdraw from an exchange transaction within three hours of the transaction taking place at the establishment where it was carried out. Such withdrawal is only possible up to an amount of EUR 1,000. The three-hour withdrawal period runs only during the opening hours of the establishment where the exchange transaction was carried out. In exceptional cases, the withdrawal period may be extended to six months. The withdrawal results in the cancellation of the exchange transaction from the outset, and the parties are obliged to reimburse each other for the mutual performance.

For the sake of completeness, it should be noted that certain disputes arising from exchange activities can be decided out of court by a financial arbitrator. These may include, for example, disputes relating to withdrawal, the amount of the fee for an exchange transaction or the exchange rate.

What situations do we typically handle for our clients regarding the Currency Exchange Act?

• Assistance in setting up an exchange office
• Help with enrolling in courses for currency exchangers
• Negotiations with the Czech National Bank
• Amendment to the Currency Exchange Act
• Legal assistance to exchange office operators
• Assistance in withdrawing from a contract with an exchange office