Regulatory Alerts2013-01-01
Phasing Out of Cross-Border Cheques and Drafts within Common Monetary Area Countries
The Bank of Zambia issued Circular No. 11/2013 to instruct all financial institutions to cease issuing cross-border cheques and Rand drafts effective July 22, 2013. This regulatory change aligns with the Payments Association of South Africa's announcement that such paper instruments will no longer be accepted for payments within the Common Monetary Area due to their high risk, inefficiency, and low usage. Institutions are required to advise customers of this discontinuation and ensure the provision of suitable electronic payment alternatives.
DEPUIY GOVERNOR - OPERATIONS June 5, 2013 CB Circular No. 11/2013 TO All Financial Institutions PHASING OUT OF CROSS-BORDER CHEQUES AND DRAFTS WITHIN COMMON MONETARY AREA (CMA) COUNTRIES OF LESOTHO, SWAZILAND, SOUTH AFRICA AND NAMIBIA Kindly take note that the Payments Association of South Africa (PASA) has announced that with effect from 22 July, 2013 no cross border cheques or Rand (ZAR) drafts will be accepted as a means of payment across countries in the Common Monetary Area (CMA). "This means that customers in these countries will not be able to use paper based instruments like cheques and drafts issued by a bank in one of these countries, when paying for goods and services purchased from another of the CMA countries (Lesotho, Swaziland, South Africa and Namibia). This change has been necessitated by the increasing availability of suitable electronic payment alternatives for cross-border payments and money transfers, a low usage of such paper instruments, the high inherent risk and the inefficiency of such instruments. As the Southern African region under the auspices of SADC will be implementing the SADC Integrated Settlement System (SIRESS), cross boarder paper based instruments will eventually cease to be use in the whole region. All financial institutions in Zambia should ensure that they cease to issue such paper based instruments to their customers as these instruments will not be accepted after 22 July, 2013 in the CMA countries. All Financial institutions should ensure that they offer alternative payment mechanism to their customers. Kindly advise your customers accordingly. r ---...""~~ Bwal a K. E. Ng'andu (Dr.) DEP Y GOVERNOR - OPERATIONS Cc Governor Deputy Governor - Administration Acting Director - Bank Supervision Acting Director - Banking, Currency .& Payment Systems Acting Director - Non-Banks Financial Institutions Supervision Bank Square. Cairo Road P.O. Box 30080. Lusaka. Zambia. TeI:+ 260- 211-226844. 228888. Fax: +260-211-237070. E-malf: bngandu@6oz.zm, hitp.i160i.ZIIi