Circular No. 103-1 Governing Rules for Checks Issued in Haiti

Bank of the Republic of Haiti

CIRCULAR
No. 103-1

TO FINANCIAL INSTITUTIONS

This circular determines the rules to which checks issued in Haiti are subject, in accordance with the operations referred to in Article 4 of the Law of May 14, 2012, on banks and other financial institutions, Article 111 of the Law of June 26, 2002, on savings and credit cooperatives, and Articles 215 and following of the Commercial Code.

SECTION I - DEFINITIONS

1.- The following definitions apply to this circular:

a. Beneficiary: natural or legal person in whose favor a check is issued.

b. Unpaid Check: a check that has been returned by the financial institution due to insufficient funds, opposition, forgery, expiration, or unavailability of the account.

c. Check Without Funds: a check issued and whose available balance of the account to which it is attached is less than its amount.

d. Checking Account: an account linked to the use of a payment instrument and opened by a financial institution to receive deposits mobilizable on demand, and which allows its holder to transfer funds, regardless of the support or technical method used.

e. Endorsee: beneficiary of a check or commercial instrument that has been endorsed to their benefit by their previous holder.

f. Endorser: natural person who transmits a check or commercial instrument in favor of another person.

g. Negotiating Institution: financial institution responsible for collecting the amount stated on a check for its client.

h. Drawee Institution: financial institution on which a check is drawn.

i. Financial Institution: institution controlled and approved by the BRH, primarily banks, federations of credit unions, and any other institution that has been authorized by the BRH to conduct operations through the electronic clearing and settlement system.

j. Business Day: day corresponding to the days of the week, excluding legal weekly rest days.

k. Place: area extending within a radius of twenty (20) kilometers from the location where the financial institution, its branches, or agencies are located.

l. Account Holder: natural or legal person, holder of the checking account on which the operations performed are recorded.

SECTION II - OPENING OF CHECKING ACCOUNT

2.- The checking account may be opened by one or more persons. In the latter case, operations performed by each co-holder (withdrawals, drawn checks, transfers, ...) also bind the other person(s).

3.- Upon opening a checking account, any Financial Institution must ensure the identity and address of the client (natural or legal person) by taking a copy of an official identification document with a photo and any other document likely to prove the address.

4.- The opening of a checking account requires the signing of an account agreement that specifies the rights and obligations of the parties. This agreement, issued by the financial institution, is signed by both parties and made in two (2) copies. One copy must be handed to the account holder before the checkbook is issued.

Furthermore, the account holder(s) must affix their signature specimen on the sheet intended for this purpose.

5.- The account agreement must contain at least the following elements:

a. Identification of the parties

• for natural persons: names, first names, exact address, telephone, date and place of birth, mention of an official identification document, professional activity, etc.;
• for legal persons: name, legal form, identity of the person(s) authorized to perform operations from the account, exact address, etc.;
  b. the formal commitment not to issue checks without funds and the consequences that may result therefrom;
  c. the mention that the account holder(s) may be deprived of the checkbook without closing the account;
  d. the obligation to return all checkbooks or check forms in case of checkbook ban or account closure; e. the cases of closure of the checking account without notice; f. the deadlines and procedures in case of claim; g. the penalty fees to be charged to the account.

6.- Before opening a checking account, the financial institution must consult the updated list of checkbook bans issued by the Bank of the Republic of Haiti and carry out the necessary verifications, particularly those relating to the identity of the client by means of all reasonable documents or means.

7.- A checking account is opened for an unlimited duration. The holder(s) may close it free of charge at any time. The financial institution may also close it, respecting a notice period unless otherwise provided in the account agreement.

8.- The account holder(s) must be informed of the tariffs and conditions in force and be aware of any changes. This information must be communicated to them either by postal mail or by display in the premises of the financial institution, without excluding any other means that the latter may deem necessary to use.

9.- Check forms must contain, for each account holder, the following information: names, first names, address, printed legibly. Checks must meet the standardization standards established by the BRH.

Upon handing over the check form, the financial institution is obligated to inform the client about the procedures related to the use and issuance of the check, particularly the mandatory mentions necessary for its validity, and the location of the information that must be written clearly and legibly.

The checkbook must be handed to the holder personally or to their representative, against receipt.

10.- The pricing of products and services related to the management of the checking account must be communicated by display, in a visible and legible manner, in the premises of the financial institution, or by tariff leaflets, without excluding any other means that the latter may deem necessary to use.

The general conditions applicable to products and services related to the management of a checking account must be made available free of charge to customers and the public by any appropriate means.

11.- The financial institution is required to make available to the account holder a periodic statement tracing the operations recorded on the account during the relevant period, subject to the existence of operations during the period, by any appropriate means.

SECTION III - PRESENTATION OF CHECK

12.- The presentation of the check is a request for payment. It may be made:

a. by mail; b. through the Clearing House of the Bank of the Republic of Haiti:

• by manual clearing;
• by electronic clearing;
  c. directly at the counter of the drawee bank.

13.- When the presentation is made directly at the counter of the Drawee Institution, it must follow at least the following steps (without being limited to them):

a. identification of the bearer; b. verification of signatures;
c. verification of the availability of funds;
d. affixing of a "paid" stamp on the check; e. posting of entries to the holder's account; f. posting of any reversal or correction entries related to the check.

14.- The Negotiating Institution is required to verify that the check is endorsed. The beneficiary of the check must affix their signature on the back of the check, in the space reserved for endorsement.

The Institution also verifies that the name of the legal person on the front, or its stamp on the back of the check, are respectively printed and affixed legibly and in full letters in the space reserved for this purpose.

15.- A check issued to the order of a legal person must be deposited into their account. It cannot be cashed at the counter of a financial institution.

SECTION IV - ENDORSEMENT OF CHECKS

16.- Any person, even the drawer or the bearer, can be an endorsee.

The signature of the endorser and the identification number issued from an official document must follow the mention "endorsed to the order" printed on the back of the check, in the case of a natural person. The endorser's ink stamp and the date must follow the mention "endorsed to the order" printed on the back of the check, in the case of a legal person.

The Negotiating Institution must verify that the stamp of the legal person is legibly affixed to the endorsement of the check and in the designated space, followed by any other information required by the Negotiating Institution.

17.- The Negotiating Institution that endorses a check must affix its stamp or seal in black ink in the space reserved for this purpose before transmitting it to clearing. The stamp must state "Pay to any bank". It guarantees and replaces any prior endorsement.

18.- Financial institutions recognize that the absence of endorsement constitutes a cause for the return of checks subject to the provisions provided for in case of incidents in Section VII of this circular.

SECTION V - CLEARING OF CHECKS

19.- Financial institutions are required to participate directly in operations carried out within the framework of the electronic clearing and settlement system.

20.- Checks presented within the framework of the electronic clearing system are exchanged in dematerialized form (check image), provided that financial institutions are able to carry out any necessary verification before proceeding to their payment or return.

The list of codes and reasons for the return of checks is annexed to this document and forms an integral part of it. Any modification of the codes and reasons for the return of checks will be communicated to the Financial Institutions participating in the electronic clearing and settlement system.

21.- The processing time, by electronic clearing, of the check deposited in a Negotiating Institution is two (2) business days, regardless of the distance existing between the Negotiating Institution and the Drawee Institution.

22.- The amount of a non-standardized check drawn on the counters of a financial institution located in the same clearing place as the Negotiating Institution will be available within five (5) business days after the date of deposit. The deadline will be ten (10) business days if the check is drawn on an institution located in provincial cities.

23.- The Negotiating Institution transmits the check for payment in dematerialized form to clearing. This implies that the Negotiating Institution holds the check and has previously ensured the verification and formal regularity of the mandatory mentions.

The Negotiating Institution guarantees that the data transmitted in dematerialized form are strictly identical to the corresponding information appearing on the check.

24.- The presentation for payment of a check in dematerialized form implies the handing over to the Drawee Institution of the information allowing certain identification of the drawer, the check, and its amount.

25.- The transmission of the check in dematerialized form for payment does not prevent the physical delivery of the check, concomitant or not, to the Drawee Institution.

The transmission deadlines for the physical check must in no case influence the decision of payment or non-payment, nor exempt from respecting legal and regulatory obligations.

26.- The archiving of exchanged checks carried out under the responsibility of the Drawee Institution is for a duration of ten (10) years.

During this period, except in cases of force majeure, the Drawee Institution is subject to an obligation of result regarding the production of the original of the check or its copy on front and back, a copy certified as conforming to the original.

SECTION VI - CHECKS WITHOUT FUNDS

27.- The checking account must show a sufficient balance to allow the settlement of ongoing operations. In the event of issuance of a check without sufficient funds and unless regularized, a procedure is initiated. This may result in prohibiting the issuer of the unpaid check from issuing new checks, for a duration of one (1) year, on all their accounts in accordance with Article 32 of this circular.

28.- The Negotiating Institution will attach a form to the unpaid and returned check for lack of funds with the following mentions:
a. the name of the financial institution; b. the mention "check returned for lack of funds";
c. the number of the check;
d. the date of refusal of payment.

29.- The Negotiating Institution has a deadline of two (2) business days from the date of return to notify the beneficiary of an unpaid check, without penalty or any fees.

30.- The Drawee Institution must notify the issuer of the refused check within a maximum deadline of two (2) business days from the date of return.

31.- The Drawee Institution is required to automatically inform the BRH of checks returned for lack of funds. The BRH maintains the central file of unpaid checks and checks returned for lack of funds. This file is made available to financial institutions on a server.

32.- Any holder of a checking account who, over a period of twelve (12) months, has issued five (5) unpaid checks returned for lack of funds, will be prohibited from issuing checks for one year.

33.- Upon the fifth incident declaration, the BRH will inform the Financial Institution holding the deposit account, as well as the entire financial system, of its decision to ban the holder of said account from issuing checks.

34.- The Drawee Institution as well as any other Financial Institution in which the offender has maintained a deposit account will send to the holder of the checking account the injunction of the BRH accompanied by a notice asking them to return the checkbooks that are still in their possession. This formality does not include the closure of the account(s).

35.- The prohibition begins from the date of the BRH's injunction.

36.- The Drawee Institution will send a daily report to the BRH on checks returned for checkbook ban.

37.- During the entire duration of the checkbook ban, the account holder cannot recover all or part of their funds except by transfer or at the counter of the financial institution.

38.- Upon receipt of the BRH's injunction, the Drawee Institution will refuse to honor all checks from the issuer banned from issuing checks, regardless of their date of issuance.

39.- The BRH reserves the right to make public, via the press, the name of any account holder banned from issuing checks who continues to issue checks despite the prohibition.

SECTION VII - APPEAL FOR CANCELLATION OR RECTIFICATION OF A CHECKBOOK BAN

40.- The BRH will only consider requests for cancellation or rectification emanating from the Drawee Institution.

41.- The conditions for requesting cancellation or rectification are as follows:
a. if the Drawee Institution made an error regarding the refusal of payment or the establishment of the incident declaration; b. if the drawer established the occurrence of an event not attributable to them that led to the disappearance of the funds.

42.- The client submits the requests for cancellation to the Drawee Institution, which assesses whether the conditions stipulated in Article 41 are met.

43.- The BRH notifies the Drawee Institution as well as other financial institutions in the system of the cancellation of the ban.

44.- The Drawee Institution is required to notify the account holder of the cancellation of the ban within two (2) business days.

SECTION VIII - INFORMATION TO BE SUBMITTED TO THE BRH IN CASE OF INCIDENT

45.- The Drawee Institution is required to submit a report to the BRH regarding payment refusal incidents due to lack of funds by day J+2.

46.- The declaration of payment incidents will contain the following information:

a. the account number; b. the identification of the holder: name and first name, date and place of birth, national or tax identification number, if it is a natural person; denomination, trade name, legal form, tax identification number, if it is a legal person;
c. the number of the check;
d. the amount of the check and its date of issuance; e. the name of the beneficiary; f. the date of presentation of the check to the Drawee Institution; g. the cause of the refusal of payment.

47.- The repetition of a payment incident for the same check must be the subject of a special remark by the Drawee Institution indicating notably the date of its previous declaration.

48.- The Drawee Institution will communicate to the issuer of the returned check the reason for the return and will also send them a copy of the payment incident declaration. The Institution is required to remind its client of the respect for the procedures related to the use and issuance of the check.

SECTION IX - SANCTIONS

49.- The Drawee Institution that has not declared, in accordance with Article 46 of this regulation, payment incidents, is subject to a fine of two thousand five hundred gourdes (2500.00 HTG) per day of delay.

50.- In the event that the BRH has established proof that a Drawee Institution has accepted to honor a check whose issuer is banned from issuing checks, the faulty financial institution will be fined two thousand five hundred gourdes (2500.00 HTG) per check honored. This amount will be automatically deducted from its account held at the BRH.

The BRH will take into account the date of presentation of the check and the date of the prohibition as a basis for penalization.

51.- No financial institution is authorized to open a checking account in the name of a person subject to a checkbook ban.

52.- Any financial institution that opens a checking account for a person banned from issuing checks will be penalized with a fine of two thousand five hundred gourdes (2500.00 HTG) without prejudice to administrative sanctions. In case of recidivism, the fine will be doubled and so on.

53.- The BRH is required to notify the Drawee Institution as well as other financial institutions of the lifting of the checkbook ban, at the expiration of the period provided for in Article 32.

SECTION X - TRANSITIONAL AND FINAL PROVISIONS

54.- This circular repeals Circular No. 103 of June 18, 2013. It enters into force as of September 23, 2013.

Port-au-Prince, September 12, 2013.

Charles Castel
Governor

ANNEX

CODE	LABEL	DEFINITION
A	Insufficient Funds	The account balance is less than the amount of the check.
B	Funds Unavailable	The available balance of the account is less than the amount of the check.
C	Payment Stopped	The Negotiating Institution is formally warned that payment is stopped.
D	Account Closed	The account balance is zero and no kind of operation is accepted following its closure.
E	Incorrect, Omitted, Illegible Account Number	Impossible to read the account number with certainty. The account number recorded in the received file is not in the bank's registers or is different from that of the check image.
F	Frozen Account / Blocked Account	There is a legal prohibition, justified, to carry out transactions on an account.
G	Incorrect / Omitted Check Number	The check number recorded in the received file is not in the bank's registers. The check number of the received file is different from that of the check image.
H	Incomplete Date / Incorrect Date / Inexact Date	One of the 3 elements (day/month/year) is missing. The three elements are not placed in the correct order or one of the three elements is inexact compared to the date of presentation of the check.
I	Check Poorly Negotiated.	Case of checks in gourdes negotiated in dollars or checks in dollars negotiated in Gourdes.
J	Missing / Irregular / Incorrect Endorsement / Endorsed in Pencil or Erasable Ink.	The signature or stamp of the beneficiary is not on the endorsement of the check. The beneficiary has not correctly inscribed their name or affixed their stamp (in case of a legal person) on the endorsement of the check.
K	Missing Signature(s)	The check is not signed. One or more signatures are missing.
L	Irregular, Incorrect / Unauthorized Signature.	The signature(s) is (are) not in conformity with the deposited specimen(s) / No specimen is registered.
M	Non-Negotiable / Beneficiary Name Omitted / Overwritten / Erased / Incomplete.	The check is not issued in Gourdes currency or in US Dollars. / No word is inscribed after "Pay to the order of". / A word is corrected, crossed out. / Only a name or first name is inscribed.
N	Fraudulent / Forged Check.	One of the parameters (beneficiary name, amount(s)) is modified fraudulently / serious doubts exist regarding the authenticity of one or more parameters validating the check.
O	Non-Clearable / Altered Check	Mandatory parameters are deteriorated, unidentifiable, washed (felt tip ink), dissolved by water or other liquid.
P	Checkbook Ban	The Negotiating Institution is formally informed that the drawer is banned from issuing checks following a decision of the Bank of the Republic of Haiti.
Q	Erroneous Drawee Institution	The title and account number do not belong to the directory of accounts that the Negotiating Institution takes for the Drawee Institution.
R	Unusable Image	The data of the incoming clearing file are different from those of the check image.
S	TP Check Not Loaded / GCC System	The physical check does not exist in the electronic file previously transmitted by the MEF to the BRH.
T	Image Failing Security Control	At least one of the security criteria is not present.
U	Different / Incorrect Amounts	The amount inscribed in figures is not that written in letters. / One or the other of the 2 amounts does not correspond to the writing standards for numbers.
V	Not Validated by Public Accountant or CSC/CA - MEF	Whenever, by letter, the MEF sets clauses as mandatory.
W	Duplicated Check	The same check number has already been processed.
X	Expired Date	The check drawn on the treasury whose validity period has expired.
Y	Not Endorsed by Negotiating Institution	The stamp of the Negotiating Institution: "Pay to any bank" is not present on the back of the check. Guaranteed endorsement: This stamp replaces any prior endorsement.
Z	Judicial Opposition	The issuer has a judicial prohibition against them.
1	Amount Different from Electronic System	The amount of the physical check transmitted by the MEF to the BRH does not correspond to that appearing in the electronic system.