Regulatory Alerts1999-11-11
Clarification on Implementing BID 12 for the Compulsory Suspension of Cheque Accounts
The Bank of Namibia issued this circular to clarify the implementation of BID-12, which mandates compulsory suspension for customers who present five insufficient-fund cheques within three months. Banking institutions must process suspensions independently across different banks, treat multiple presentations of the same cheque as a single contravention, and promptly notify affected customers. The regulator further stresses that robust public awareness campaigns are required to highlight insufficient-fund issuance as a criminal offense, while ensuring customers remain protected from internal bank communication gaps or system failures.
# BANK OF NAMIBIA
## BANKING INSTITUTIONS ACT
### CIRCULAR – BIA 5/99
TO: ALL BANKING INSTITUTIONS
DATE: 17 NOVEMBER 1999
CLARIFICATION RELATING TO THE IMPLEMENTATION OF THE DETERMINATIONS ON THE COMPULSORY SUSPENSION OF CHEQUE ACCOUNTS BY BANKING INSTITUTIONS (BID-12).
## 1. BACKGROUND
This Circular is issued for the purpose of providing clarification on certain issues pertaining to the implementation of the Determinations on the Compulsory Suspension of Cheque Accounts by Banking Institutions (BID-12).
The issues that banking institutions had problems with, with regard to the implementation of these Determinations have been addressed in this Circular.
## 2. PUBLIC AWARENESS OF BID-12
The Bank regards public awareness of BID-12 as the major step towards educating the general public about the fact that issuing of cheques with insufficient funds available in the cheque account constitutes a criminal activity punishable by law. Therefore, the Bank is to approach the public with the objective of highlighting such undesirable activity and reinforcing awareness of the Determinations on the Compulsory Suspension of Cheque Accounts by Banking Institutions (BID-12). The Bank also takes note of and appreciates the actions undertaken by the banking institutions to reinforce public awareness about the implications and consequences of these Determinations.
## 3. ACCOUNTS MAINTAINED AT DIFFERENT BANKS
A bank should only suspend a cheque account in respect of which five cheques are referred to drawer due to insufficient funds over a period of three months. Banking institutions that came to know about the suspension of one of their customer’s cheque accounts at another banking institution have no basis on which they can suspend the cheque account of the same customer at their institution. This means that, where a customer has more than one cheque account at different banking institutions, say one at Bank X and another at Bank Y, the suspension of the cheque account at Bank X should not result in an automatic suspension of the cheque account at Bank Y in terms of the Compulsory Suspension of Cheque Accounts by Banking Institutions (BID-12).
## 4. THE SAME CHEQUE BEING PRESENTED MORE THAN ONCE
When one cheque is presented more than once and each and every time is referred back to drawer, then this should be treated as one contravention in respect of the same cheque irrespective of the number of times it is presented and referred to drawer.
## 5. SUBSEQUENT FUNDING BECOMING AVAILABLE
The Bank is conscious of the fact that whenever a cheque is dishonoured, the payee of such a cheque is the one who is negatively affected by such activities. Therefore, in an event where the cheque account has been suspended, a banking institution should immediately inform their customer that the cheque account has been suspended and the implication thereof in terms of BID-12.
## 6. COMMUNICATION GAPS BETWEEN OFFICIALS, SYSTEM FAILURES IN a BANKING INSTITUTION
It is important to understand that customers should not be unfairly prejudiced merely because of events for which they were not responsible. Therefore, where 1999
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