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2017-01-01

Instructions No. (2) of 2017 Concerning Returned Cheques, Settlements, Stopped and Lost Cheques

The Palestine Monetary Authority issued Instructions No. (2) of 2017 to automate banking operations and mitigate credit and operational risks by establishing standardized systems for returned cheques, amicable settlements, and stopped or lost cheques. The regulations mandate banks to verify customer data, report cheque books upon issuance, adhere to specific return reasons for classification, and enforce a fee structure of 50 shekels per returned cheque for settlement requests, while prohibiting additional bank charges. Furthermore, the instructions repeal previous directives and circulars, require immediate reporting of stopped or lost cheques, and mandate customer authorization forms for all system inquiries, with enforcement effective from February 5, 2017.

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Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (2) of 2017

Concerning Returned Cheques, Settlements, Stopped and Lost Cheques

Based on the provisions of Legislative Decree No. (09) of 2010 concerning Banks, particularly Article (72) thereof, and based on the provisions of Decision No. (132) of 2011 on the Licensing and Supervision of Specialized Credit Institutions, particularly Article (35) thereof, and in accordance with the powers delegated to us, and in pursuit of the public interest, we have issued the following Instructions:

Article (1)

Purpose

These Instructions aim to automate banking operations and reduce the volume of credit and operational risks faced by the banking sector by developing the Returned Cheques System, the mechanisms for amicable settlements, and the Stopped and Lost Cheques System.

Article (2)

Definitions

The words and phrases listed below shall have the meanings assigned to them, unless the context indicates otherwise:

The System: The Returned Cheques System, the Amicable Settlements System, and the Stopped and Lost Cheques System in effect with the Palestine Monetary Authority.

Returned Cheques File: The daily file of returned cheques on customer accounts between branches of the same bank, and from Israeli clearing and foreign clearing houses.

Fees: The fees collected from the customer who submits a settlement request.

Settlement: The amicable settlement submitted by the customer to the bank to modify their classification on the Returned Cheques System.

Stopped Cheque: A cheque whose payment is halted upon the drawer's request after the full value of the cheque is frozen.

Article (3)

Scope of Application

The provisions of these Instructions shall apply to banks and system users.

Article (4)

Declaration of Data Accuracy and Authorization for Inquiry and Disclosure

  1. The bank must obtain the signature of the customer or the account manager on the "Declaration of Data Accuracy and Authorization for Inquiry and Disclosure" form, prior to opening any new accounts or issuing new cheque books.

  2. The declaration and authorization referred to in paragraph (1) of this Article shall remain valid throughout the duration of the banking relationship between the customer and the bank, and its validity shall expire upon the final closure of the account.

Article (5)

Bank Obligations Regarding the Returned Cheques System

The bank shall comply with the following:

  1. Inquire about the customer using the designated form when the customer submits a request for new cheque books, whether in writing or electronically, as well as inquire about the customer before delivering the new cheque books.

  2. Enter all personal data of the inquired customer and verify its accuracy.

  3. Report cheque books delivered to customers on the Returned Cheques System at the same time the customer receives the cheque books.

Article (6)

Approved Reasons for Return for Classification Purposes

The bank shall adhere to the following cheque return reasons for classification purposes on the Returned Cheques System:

  1. Insufficient funds.
  2. Drawer's funds are frozen for legal reasons.
  3. Multiple dates written on the cheque.
  4. Correction (amendment) requires a signature.
  5. Signature discrepancy.

Article (7)

Authorized Agent Classified on the System

An agent or signatory for a natural or legal person may be issued a cheque book if the agent or signatory on the account is classified under classification grades (C or D, normal or expired).

Article (8)

Bank Obligations Regarding the Settlements System

The bank shall comply with the following:

  1. Submit the settlement request on the Settlements System, ensuring that the settlement covers all returned cheques on the customer's account.

  2. Obtain the customer's signature on the settlement request and on a declaration releasing the Palestine Monetary Authority and the bank from any liability, or any other party, in any manner whatsoever, in the event that the cheque(s) subject to settlement are paid.

  3. Collect a fee of (50) fifty shekels for each returned cheque, and deposit the fees into an escrow account pending approval or rejection of the settlement request. At the end of each month, the fee amount shall be credited to the bank's account with the Palestine Monetary Authority if the settlement request is approved.

  4. Retain the settlement request submitted by the customer at the bank, and do not forward it to the Palestine Monetary Authority unless specifically requested.

Article (9)

Fees and Correction of Errors

  1. The Palestine Monetary Authority shall credit an amount of (20) twenty shekels for each settlement request approved by the Authority to the bank's account that submitted the request on behalf of the customer at the end of each month.

  2. The bank is prohibited from collecting any additional fees or commissions for itself in exchange for submitting the settlement request.

  3. If the bank errs in disclosing the customer's cheque data, the bank must submit a written request to the Palestine Monetary Authority or act upon an objection submitted by the customer to correct the error and pay a correction fee of (100) one hundred shekels.

Article (10)

Stopped and Lost Cheques System

The bank shall comply with immediately reporting stopped or lost cheques on the Stopped and Lost Cheques System.

Article (11)

System User Inquiry

The system user must obtain the customer's signature on the Authorization for Customer Inquiry form on the Cheques System before executing the inquiry process.

Article (12)

Repeal

  1. Regarding the Returned Cheques System for Banks and Instructions (2010/02) concerning the Stopped and Lost Cheques System (2012/10)

  2. Circular No. (2010/29) and Circular No. (2010/55) concerning amicable settlements are hereby repealed, as well as Circular No. (2014/42) concerning attaching original cheques and Circular No. (2017/17) concerning accuracy in declaring returned cheque data, and Circular No. (2011/109) regarding dealing with principals and authorized signatories for legal persons.

Article (13)

Implementation and Enforcement

All competent authorities shall implement the provisions of these Instructions according to their respective jurisdictions, and the provisions of these Instructions shall apply as of 2017/02/05

Issued in Ramallah on 2017/02/02

Market Discipline Department
Palestine Monetary Authority

Ramallah - Palestine P.O. Box 452 | Tel: +970 2 2415250 | Fax: +970 2 2409922 | Fax: +970 2 2409922 | Tel: +970 2 2415250 | P.O. Box 452 Ramallah - Palestine
Gaza - Palestine P.O. Box 4026 | Tel: +970 8 2825292 | Fax: +970 8 2844487 | Fax: +970 8 2844487 | Tel: +970 8 2825292 | P.O. Box 4026 Gaza - Palestine
Email: info@pma.ps | Email: info@pma.ps
www.pma.ps

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