Circular Letter No. 115/2013

Central Bank of Libya
P.O. Box 1103, Telegram Address: MasarifLibya - Tripoli, Libya

Reference: Arman/804
Circular Letter No. (115/2013)
Date: 30 Rajab 1434 AH
Corresponding Date: June 9, 2013

To: General Managers of Commercial Banks
To: Chairmen of Interim Administrative Committees of Commercial Banks
To: General Manager of the Libyan Foreign Bank

With greetings,

Based on the provisions of Law No. (1) of 2005 concerning Banks and its amendments, and on the supervisory and regulatory role exercised by the Central Bank of Libya over commercial banks in accordance with the aforementioned law.

And with reference to Circular No. (2004/5) issued on June 7, 2004, which alerted to the issue of clearing checks and the incorrect procedures practiced by some branch managers in commercial banks contrary to clearing regulations.

And to Circular No. (2005/1) dated January 1, 2005, concerning the procedures to be followed to activate internal control provisions in all banks and bank branches, adopting corporate governance practices, and keeping pace with directives aimed at advancing the national economy and improving management levels.

And to our Circular Letter No. (2006/50) dated May 17, 2006, concerning the necessity of establishing an Internal Audit Department, and Circular Letter No. (2009/67) issued on May 18, 2009, regarding the regulation of electronic and manual clearing procedures.

And based on our Circular Letter No. (2012/191) dated July 22, 2012, concerning the referral of electronic and manual clearing rules for implementation in all commercial banks.

(2)
And in light of what the Central Bank of Libya has recently observed regarding certain commercial banks not adhering to the regulations governing check clearing, and some branches depositing checks received for their clients that are drawn on other banks, allowing the beneficiary to withdraw the value or issue certified checks based on their face value before the specified clearing period expires, despite insufficient balances in the accounts from which these checks were drawn at the other banks.

And despite requiring banks to subject clearing systems and related accounts, and the procedures implemented for them, to continuous monitoring and evaluation by the competent departments in commercial banks, it has been repeatedly emphasized that necessary deterrent legal actions must be taken against those found violating these regulations, and that branch managers, agencies, and banks bear full responsibility in this regard, with such responsibility extending to executive department managers, general managers, and board chairmen of banks.

Therefore, the Bank requests the necessity of paying attention to the content of clearing checks, determining sound foundations and criteria for selecting branch managers, strengthening internal control systems, activating the work of the Internal Audit Department, exercising caution against embezzlement operations, and subjecting all clearing checks to the specified clearing period to limit associated risks that could lead to the deterioration of banks' conditions.

Peace, mercy of God, and blessings be upon you.

Abd al-Majid Muhammad al-Maqouri
Director of the Banks and Currency Supervision Department / Authorized

Copy to: The Governor
Copy to: The Deputy Governor
Copy to: Banking Follow-up and Compliance Monitoring Department

118 / Circular Letters / Hamza /

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