State Regulator Initiates Currency Exchange Audit Revamp

Program centers on addressing at-risk licensees

SPRINGFIELD - With a focus on efficient assessment and mitigation of risk, the Illinois Department of Financial and Professional (“IDFPR”) has implemented a new program for its licensed currency exchanges. Under the program, examinations of Illinois currency exchanges by IDFPR will focus on risk-based assessments to determine overall financial health. IDFPR believes this approach will assist in averting crisis for troubled currency exchanges, while improving the overall strength of the industry in Illinois, providing better consumer protections.

“By switching to a risk-based examination model for our currency exchanges, we are afforded a closer look at operational aspects from an informational gathering vantage point,” said Bryan A. Schneider, IDFPR Secretary. “Historically, assessing the types of checks cashed, who is presenting them and ensuring compliance with anti-money laundering laws was not part of our review. By incorporating these elements into the examination, we look to focus our resources on the troubled currency exchanges, while affording those entities in good standing the potential for reprieve from the annual examination process.”

In addition to previously existing examination review requirements (cash count, bank reconciliation, various reports and financial statements), the new examination includes review of:

Business operations-Review of the overall operation of the currency exchange, looking at its policies and procedures, business plan, succession plan, etc.
Corporate checks – Ensuring proper record keeping procedures are in place, with review of a select number of checks to determine policy adherence.
Money Orders – Verification of daily money order activity, with emphasis on the accuracy of the daily sheet to the actual items issued.
Bank Secrecy Act/anti-money laundering compliance – Review of policy manual to ensure compliance
ATM – Review of ownership and reconciliation with company balance sheets.

"The Community Currency Exchange Association applauds the efforts of the IDFPR in their efforts to make the audits of our stores more in touch with the needs of today's regulatory requirements,” said Martin Lieberman, Community Currency Exchange Association President. “As an association we pledge our full cooperation in seeing that this program is successful."

The Currency Exchange Audit Program commenced in January 2017, and will continue indefinitely as the Division of Financial Institutions at IDFPR continues to adjust currency exchange audit procedures to provide for a smooth transition for all currency exchange licensees.