Methods of Deposit and Withdrawal of Money and Drawing of Cheques on Accounts Opened with BDL

183

Old Headquarters 1601, Section 1 / Decision No. 40 / Date - 31/12/2018

Basic Circular No. 40 Addressed also to financial institutions, exchange offices, financial intermediation institutions, and all depositors at the Central Bank of Lebanon.

We present to you the Basic Decision No. 6908 dated 26/2/1998 concerning the procedures for depositing and withdrawing cash amounts at the Central Bank of Lebanon, and the procedures for drawing cheques on accounts opened with it.

Beirut, 26 February 1998 Governor of the Central Bank of Lebanon Riad Tawfiq Salamah

1 - Addressed to all depositors at the Central Bank of Lebanon pursuant to Interim Decision No. 11370 dated 11/3/2013 (Interim Circular No. 319), which takes effect as of 1/5/2013. 2 - The title was amended pursuant to Article 1 of Interim Decision No. 9486 dated 14/12/2006 (Interim Circular No. 128), which takes effect as of 1/2/2007.

184

Basic Decision No. 6908 Procedures for depositing and withdrawing cash amounts at the Central Bank of Lebanon, and procedures for drawing cheques on accounts opened with it.

The Governor of the Central Bank of Lebanon, Based on the Monetary and Credit Law, particularly Articles 85 and 98 thereof, Based on Article 13 of Law No. 42/87 dated 21/11/1987 regulating the profession of money exchange, Based on Article 7 of Basic Decision No. 6213 dated 28/6/1996, Based on the decision of the Central Council taken in its meeting held on 25/2/1998, Decrees as follows:

Section I: Procedures for depositing and withdrawing banknotes and coins at the Central Bank of Lebanon.

Article 1: Banknotes and coins accepted in the vaults of the Central Bank of Lebanon:

1. Only banknotes issued in 2004 and subsequent issues, and correct and complete coins, are accepted in the vaults of the Central Bank of Lebanon, according to the concept of Basic Decision No. 6910 dated 26/2/1998, across various denominations of the Lebanese currency in circulation.
2. Banknotes and coins issued prior to 2004 remain subject to the provisions of Basic Decision No. 6910 dated 26/2/1998.

1 - Title amended per Article 1 of Interim Decision No. 9486 dated 14/12/2006 (Interim Circular No. 128), which takes effect as of 1/2/2007. 2 - Law No. 42/87 repealed by Law No. 347 dated 6/8/2001 (Official Gazette No. 39/2001) which replaced it. 3 - "Section I" heading added per Article 1 of Interim Decision No. 11370 dated 11/3/2013 (Interim Circular No. 319), which takes effect as of 1/5/2013. 4 - Latest amendment to this Article per Article 1 of Interim Decision No. 11370 dated 11/3/2013 (Interim Circular No. 319), which takes effect as of 1/5/2013. 5 - This paragraph amended per Article 1 of Interim Decision No. 11415 dated 13/5/2013 (Interim Circular No. 322).

185

3. Banknotes from issues prior to the 2004 issue will be exchanged at the vaults designated for exchange exclusively in the Central Bank of Lebanon's headquarters and branches, on Wednesdays and Saturdays each week, within the specified working hours of these vaults, without adhering to the procedures specified below.

Article 2: Arrangement of banknotes (issued in 2004 and subsequent issues) and coins intended for deposit in the Central Bank of Lebanon vaults: Deposits of banknotes are arranged into bundles and cases as follows:

1. Ensure that the banknotes are authentic and that each bundle contains one hundred notes.
2. Remove pins, clips, string bands, and rubber ties from the banknotes, and tie each bundle with a cross band.
3. Place banknotes of the same denomination and size in one bundle, and bundles of the same type in one case.
4. Arrange banknotes so that the face is always upward and uniformly oriented.
5. Bundle every thousand notes of the same denomination into a case consisting of ten bundles, secured with longitudinal and cross bands.
6. Remove the bands from bundles previously withdrawn from the Central Bank but unused by the client, and replace them with new bands.

1 - Latest amendment per Article 3 of Interim Decision No. 11415 dated 13/5/2013 (Interim Circular No. 322). 2 - Latest amendment per Article 1 of Interim Decision No. 12935 dated 4/12/2018 (Interim Circular No. 511), which takes effect as of 2/1/2019. 3 - Added per Article 1 of Interim Decision No. 12012 dated 15/6/2015 (Interim Circular No. 391).

Article 3: Packaging (boxing) of banknotes (issued in 2004 and subsequent issues) and coins intended for deposit in the Central Bank of Lebanon vaults: As of 1/5/2013, deposits by banks and financial institutions of banknotes issued in 2004 and subsequent issues are packaged according to the following mechanism:

1. These deposits are packaged in banknote containers (hereinafter "boxes" or "the box"), the types and specifications of which are defined in the annex related to banknote containers attached to this decision, according to each "box" type.
2. Each compartment in the "box" contains exactly one case.
3. The "box" is sealed tightly from both sides using a security belt.
4. A label card containing details of the deposit (client's name, branch, location at BDL - headquarters or specific branch) is placed in the pocket of each "box" cover. Delivery of "boxes" and their label cards is made at BDL vaults, and a box consumption fee of L.L. 30,000 (thirty thousand Lebanese pounds) is deducted immediately from the client's account opened at BDL.
5. Only "boxes" without any defects (breakage, deformation, etc.) are accepted in BDL vaults, whether at the headquarters or any branch. In such cases, banks and financial institutions must return them empty to BDL.
6. As an exception to Paragraph (1) of this Article: a. Banks may perform a single deposit outside the boxes, exclusively at the vaults of the Central Bank headquarters, provided that the following conditions are met collectively:
   • The concerned bank complies with Article 1(h) of Basic Decision No. 7299 dated 10/6/1999.
   • The deposit is performed monthly, specifically on the 20th of any month.
   • The deposited banknotes are from the 2004 issue and subsequent issues, of a single denomination only.
   • These deposits are arranged according to Article 2 of this decision. b. If the deposit cannot be completed on one of the specified days due to it falling on a holiday, the deposit is performed on the first working day following that day. c. If the reason for non-execution is due to force majeure (security, climatic conditions...), BDL may postpone the operation to a date it deems appropriate according to the nature of this circumstance. d. BDL collects a fee of L.L. 750,000 (seven hundred fifty thousand Lebanese pounds) from the concerned banks for each deposit performed according to Paragraph (6) of this Article.
7. Deposits by exchange offices of banknotes issued in 2004 and subsequent issues are packaged as follows:
   • Deposits are placed in cases, each containing one thousand notes of a single denomination divided into ten bundles, each containing one hundred notes.
   • Bundles containing one hundred notes may be deposited for the L.L. 100,000 and L.L. 50,000 denominations at the Central Bank headquarters.
   • Bundles containing one hundred notes may be deposited for the L.L. 100,000, L.L. 50,000, and L.L. 20,000 denominations at all BDL branches.
   • Each case and bundle of banknotes is accompanied by a white form bearing the client's name, branch, denomination, quantity, value, deposit date, and the signature of the authorized person after verification.
8. Deposits by banks, financial institutions, and exchange offices of coins are packaged in transparent sealed nylon bags, each containing one thousand pieces, after sorting by denomination, shape, color, and physical condition.

186 bis

4. The public sector and employees of the Central Bank may deposit banknotes and coins without adhering to the packaging procedures mentioned above.

Article 4: Deposit and withdrawal operations at BDL vaults for banknotes (issued in 2004 and subsequent issues) and coins:

1. Deposit and withdrawal operations at BDL vaults are performed entirely at the client's responsibility, in the presence of one or more representatives, within the specified working hours of these vaults.
2. No deposit operation is executed at BDL vaults unless the client (except BDL employees) presents a table clearly showing the denominations and quantities of funds intended for deposit, organized according to Form No. (3) attached to this decision.
3. Banks and financial institutions wishing to deposit and/or withdraw banknotes and/or coins at BDL vaults must comply with the following:
   1. Notify the Monetary Operations Department at BDL headquarters electronically, at least one working day in advance, via the eSTR Project (according to the daily deposit and withdrawal status statement - Form 1CDW, available on BDL's website as specified in Paragraph "8" of this Article): a. The type, quantity, and total value of the "boxes" intended for deposit and/or withdrawal. b. The denominations, quantities, and total value of the coins intended for deposit and/or withdrawal. c. The type and quantity of empty "boxes" requested to be delivered to the client.
   2. Submit one request per day until 1:00 PM on Monday, Tuesday, Wednesday, and Thursday, and until 10:00 AM on Saturday, and until 12:00 PM on Friday. The request must not include: a. One deposit operation each at BDL headquarters and all its branches. b. One withdrawal operation each at BDL headquarters and all its branches.
   3. The deposit request, performed according to Paragraph (6) of Article 3 ("outside boxes"), is sent to BDL headquarters (Monetary Operations Department) via fax or email, according to the procedures specified in this decision regarding deadlines and submission date.
   4. BDL may, when necessary, adjust the type and quantity of "boxes" and denominations and quantities of coins requested for withdrawal according to its available inventory management policy.
   5. Banks and financial institutions may modify requests for withdrawal and deposit of banknotes and coins at BDL vaults within the specified deadlines for sending these requests.
   6. When necessary, additional deposit and/or withdrawal requests from banks and financial institutions may be accepted on the same day, provided that the Monetary Operations Department is notified electronically according to Form 1CDW (referenced in Paragraph (1) of Article 4, Paragraph "3"). Additional requests are subject to the provisions of Paragraph (13) of Article 6 of this decision.
   7. If a server failure occurs during the specified deadline for submitting requests by banks and financial institutions, this deadline is extended for the same period during which the receiving server was down.
   8. Banks and financial institutions may access the approved programs for deposit and withdrawal requests, the technical annex, and the user manual via BDL's website: www.bdl.gov.lb/str/index.html
   9. Banks and financial institutions must provide the Secretariat of the Information Department at BDL with the names of responsible persons and operators authorized to access the eSTR Project, along with any amendments to these names, according to Forms No. (1) and (2) attached to this decision.
   10. Deposit and withdrawal operations by other BDL clients (non-banks and non-financial institutions) are not subject to the procedures specified in Paragraphs "3" through "9" of this Article.

186 ter

Article 5: Recording the value of deposits in the client's account at BDL:

1. BDL matches the quantity, type, and content of "boxes" deposited by banks and financial institutions, and cases/bundles of banknotes deposited by other clients, and bags of coins deposited with it, against the table in the client's request on the same day of deposit.
2. The value of the deposit is credited to each client's account on the same day of deposit, as stated in the BDL vaults.
3. BDL branches send all deposit "boxes" to the Monetary Operations Department at headquarters, which counts and sorts them. Branches also count and sort deposits by banks/financial institutions of coins, and other clients' banknotes and coins.
4. If discrepancies are found in the quantity of deposited banknotes or coins, the differences are recorded on the client's account at BDL on the date of counting and sorting.
5. If accepted deposits contain contaminated, non-exchangeable, forged, counterfeit, tampered, or deformed banknotes and/or coins, the mentioned banknotes/coins are confiscated, their value is deducted from the client's account at BDL on the counting/sorting date, and a copy of the confiscation report is provided to the client.

Article 6: Violation of deposit and withdrawal procedures by banks and financial institutions.

1. Each bank or financial institution violating the deposit/withdrawal procedures specified in this decision pays an amount corresponding to the costs incurred by BDL due to non-compliance. This amount is collected via deduction from the violating client's account opened at BDL, as follows:
   1. L.L. 100,000 (one hundred thousand Lebanese pounds) for an error in the number of banknotes within one "box".
   2. L.L. 100,000 for each banknote of a different denomination than the case's denomination within one "box".
   3. L.L. 100,000 for each banknote of a different size than the case's size within one "box".
   4. L.L. 100,000 for each foreign currency banknote or non-banknote within one "box".
   5. L.L. 100,000 for each forged or counterfeit banknote within one "box".
   6. L.L. 100,000 for each deformed, contaminated, or tampered banknote within one "box".
   7. L.L. 200,000 for each box containing banknotes not packaged according to standard procedures (mandatory packaging of notes face-up and direction-uniform).
   8. L.L. 2,000 for each extra or missing coin within one bag.
   9. L.L. 60,000 for each forged or deformed coin within one bag.
   10. L.L. 60,000 for each coin of another denomination, non-coin piece, or foreign currency coin within one bag.
   11. L.L. 100,000 if the deposit or withdrawal request is submitted outside the deadlines specified in Paragraph (2) of Article 4, Paragraph "3".
   12. L.L. 100,000 if the client withdraws from executing the request at either headquarters or any branch.
   13. In case of error in "box" type: a. If the box type provided by banks/financial institutions to any BDL branch does not match its content, the concerned branch rejects the deposit operation until the error is corrected within specified working hours. If the bank/financial institution withdraws from executing, or if correction occurs outside working hours, the operation is considered unexecuted and the bank/financial institution pays L.L. 100,000 (one hundred thousand Lebanese pounds). At BDL headquarters, the erroneous box is removed from the client and counted; the bank/financial institution pays L.L. 400,000 (four hundred thousand Lebanese pounds) for each box whose type does not match its content. b. If the box type matches its content but does not match the bank/financial institution's request, the client modifies the request to match the intended "boxes". In this case, L.L. 100,000 is paid for the first request (considered unexecuted) and L.L. 100,000 for the second request (considered additional). The same procedure applies if coin bags violate the deposit request.
   14. If additional requests are submitted to perform deposit and/or withdrawal operations at BDL vaults on the same day, L.L. 100,000 is paid for the second request on that day for both banknotes and coins. The amount doubles with each additional request, becoming L.L. 200,000 for the third and L.L. 400,000 for the fourth, etc.
   15. L.L. 50,000 for each case deposited outside the boxes according to Article 3, Paragraph (6), containing banknotes not packaged according to standard procedures.
2. In cases of force majeure (climatic or security conditions), which BDL alone has the right to assess, banks and financial institutions violating any deposit/withdrawal procedures are exempt from paying any of the amounts specified in this decision.
3. If BDL is responsible for a flaw in the proper execution of any deposit or withdrawal operation, banks/financial institutions are exempt from paying the amount due to said flaw.
4. The provisions of Paragraphs (1) through (6) of Article 6, Paragraph "1" apply to errors within each case of deposits made outside boxes, based on Article 3, Paragraph (6).

186 quater

Section II: Procedures for drawing cheques on accounts opened with the Central Bank of Lebanon.

Article 7: Depositors with accounts in their names at the Central Bank of Lebanon, particularly banks, financial institutions, and exchange offices operating in Lebanon, are requested to comply with the following when drawing cheques on these accounts:

• Clearly and explicitly indicate the relevant account number on the cheque.