The saga of Cheerfully-changed, the Anglo owned money changing company that suffered a multi-million shekel collapse this summer, has provided a cautionary tale to one new venture which is seeking to take its place. The Association of Americans and Canadians in Israel recently launched its own foreign exchange program, which it says offers lower fees than banks while guaranteeing maximum security. AACI officials say Cheerfully's demise motivated the organization to review the venture and build in risk-reducing measures.
AACI and IsraTransfer, which runs the program, were close to inking the deal this spring, but when Cheerfully went bust the two parties went back to the drawing board. "We decided to hold off launching the program and to take a look at the system again, to double check it," AACI executive Director David London said.
Open to everyone but intended primarily for Israel's English speaking community, the "AACI Foreign Exchange Program" offers clients who want to transfer any amount over $3,000, or the equivalent in British or Canadian currency, with no fees and better exchange rates than conventional banks. The program is run by IsraTransfer, a private company founded in 2008 by two native Londoners, and supervised by staff from AACI's financial department. AACI receives a "very minor" stipend from IsraTransfer in return for its services, AACI executive director David London said.
The group created a number of fail safes within the program to ensure that consumers are not left high and dry. The system, which uses the services of Bank Mizrahi Tefahot, will have clients deposit foriegn currency with IsraTransfer, but the firm will not be able to touch the funds until AACI sees proof that IsraTransfer has given instructions for the equivalent amount in shekels to be transferred to the client's Israeli account.
"At no point are we holding clients' funds," said London-native Daniel Engelsman, IsraTransfer co-founder and head of trading. "If for whatever reasons the AACI does not accept the funds into our account the money is not put into our account and automatically after five days, Mizrachi will return the money from the client to from where it was sent."
Eli Clark, a Tel Aviv lawyer dealing with international transactions law, told Anglo File the system seemed like a good bet for those looking to change money.
"This sounds significantly safer than the Cheerfully Changed arrangement, without a doubt," said Clark, a Harvard graduate who moved from the U.S. to Israel. He generally recommends taking advantage of currency exchange companies that are cheaper and quicker than banks.
"AACI has put its reputation on the line by guaranteeing the safety of the customer's funds," said Don Shrensky, a certified public accountant, who also works for IsraTransfer. "As long as the responsible staff persons at AACI perform their tasks diligently and the Mizrahi Tefahot clerks adhere to the procedures, it would appear to be a safer procedure than if the customer were dealing directly with a money changer or bank."
Until this summer, Cheerfully Changed - which U.S. immigrant Jonathan Abeles founded in 1999 - was arguably the most popular private money changing company among local Anglos. In June, however, the firm's six branches in Jerusalem, Beit Shemesh and Modi'in suddenly closed, without notifying clients who had deposited or wired large sums through the firm. Although Abeles later pledged to repay all his debts, more than 90 former clients have since sued Cheerfully for a combined NIS 16.5 million.
A number of companies have tried to fill the gap left by Cheerfully, some of whom say their services are safe because they work with independent legal advisors as co-signers to the accounts who need to confirm every transaction.