Circular No. 868 - Regulation of FUNCHEQUE - Fund for the Promotion of Banking Operations and Proper Use of Checks

CIRCULAR NO. 000868

To
Banking Establishments, Savings Banks, and Credit Cooperatives participants of the Check and Other Papers Clearing Service

We communicate that the Board of the Central Bank, in a session held on 18.07.84, decided that item 1-XXVIII of Circular No. 559, of 29.07.80, currently codified in MNI 16-9-12-49 and 17-9-4-36, shall henceforth read as follows:

"The rate provided for in item XIV shall revert in favor of a fund managed by the Central Bank, named FUNCHEQUE, intended to improve banking operations, sponsor the dissemination of the correct use of checks, and cover the expenses for the preparation and dissemination of the Register of Issuers of Checks without Funds - CCF."

2. Consequently, the attached sheets contain the necessary alterations to update sections 11-9-12, 16-9-12, and 17-9-4 of the Manual of Norms and Instructions (MNI).

3. This Circular shall enter into force on the date of its publication, with item 1-XXVIII of Circular No. 559, of 29.07.80, being revoked.

Brasília-DF, July 19, 1984

José Luiz Silveira Miranda
Director

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TITLE: SAVINGS BANKS - 11
CHAPTER: Active and Passive Operations - 9
SECTION: Demand Deposits - 12

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a) insufficiency of funds; b) discrepancy or insufficiency in the issuer's signature; c) written counter-order by the issuer; d) account closed; e) absence or irregularity of the clearing stamp; f) formal irregularity or error in filling out; g) improper clearing.

26 - When refusing payment of a check, the savings bank must:
a) register on the back of the check, in a dated and signed declaration by an authorized employee, the time of presentation, the reason for the return, and the existence or non-existence of sufficient funds; b) if the check is returned due to lack of funds, record the occurrence on the back of the proposal form.

27 - The service rate referred to in MNI 4-3-4-27, equivalent to 3% (three percent) of the highest current reference value - rounding up, for the fraction of cruzeiro - which is charged by the Executive at the time of returning the document to the Clearing Chamber and reverted for the benefit of the Check and Other Papers Clearing Service, applies under the following conditions:
a) at the expense of the drawn institution and transferable to the issuer, when the return of the check results from lack of funds, discrepancy or insufficiency in the signature, written counter-order by the issuer, or closed account; b) at the expense of the presenting institution and not transferable to third parties, when the check is returned due to absence or irregularity of the clearing stamp, formal irregularity or error in filling out, or improper clearing.

28 - When the return occurs through the Check and Other Papers Clearing Service, in addition to the measures indicated in item 26, the drawn institution fills out, in triplicate, the specific form established by the Executive:
a) for the check challenged for the second time, with insufficiency of funds, which has been re-presented after the minimum interval of two business days, counted from the business day immediately following its first presentation; b) for the check returned due to a closed account.

29 - The first copy of the form referred to in the previous item is sent to the Executive, in the corresponding return session, with a view to including the name of the account holder in the Register of Issuers of Checks without Funds.

30 - The second copy of the form must constitute an archive in the branch, in alphabetical order of depositors, and the third copy, accompanied by the check, is destined for the sending institution, which will deliver it to its client. The model must contain information that the issuer of the challenged check will henceforth appear in the Register of Issuers of Checks without Funds.

31 - Each occurrence communicated in the manner of items 29 and 32 subjects the drawn institution, from 02.01.81, to the payment of a service rate equivalent to 50% (fifty percent) of the highest current reference value, rounded up, for the fraction of tens of cruzeiros, whose collection is effected by the Executive, through debit in its deposit account and only reimbursable to the client if the latter does not appear in the Register of Issuers of Checks without Funds or in the case of inclusion by contumacy.

32 - The issuer of checks without funds considered contumacious, thus understood as one in whose proposal form the return of six or more checks under those conditions appears, within a period of 180 (one hundred and eighty) days, shall have his name communicated in writing to the Executive, by the drawn institution, for inclusion in the Register of Issuers of Checks without Funds. The failure to take this measure can only be admitted, on an exceptional basis, with a reasoned justification to the Central Bank.

33 - The Check and Other Papers Clearing Service publishes, every fifteen days, to the financial institutions registered in the Service in each Clearing Chamber, the occurrences included in the Register of Issuers of Checks without Funds in the immediately preceding fifteen-day period. Establishments that require extra quantities of Register relations, to be distributed to their premises, may obtain them through agreements with the Executive.

34 - The occurrences referred to in the previous item must be consolidated, each month, into a single relation prepared in alphabetical order of account holders. The Executive may also provide, through agreements made with interested parties, magnetic tape files containing the names appearing in the Register of Issuers of Checks without Funds, or the consolidated relations of names, already printed, in extra quantities to be distributed to their premises.

35 - The Register of Issuers of Checks without Funds has only a managerial function, leaving it to the discretion of each institution to open, maintain, or close demand deposit accounts of whose holder he appears, except for the right of the Central Bank to determine the closure of the account, if it is proven that its holder has been adopting irregular practices in the use of checks.

36 - To effect the closure of demand deposit accounts, if so decided, the savings bank must:
a) transfer the balance, within the same accounting title, to the impersonal subtitle "Accounts in Closure", which may accept withdrawals provided the balance is sufficient; b) issue notice to the holder, requesting the withdrawal of the balance available and, if applicable, the return of checks still unused; c) record the occurrence on the account holder's proposal form.

37 - When filling out the form referred to in item 28, for the case of a check issued by an account holder of a joint account, only the name of the issuing holder should be indicated, adding the type of current account.

38 - In the case of deposit accounts titled by federal, state, and municipal departments, only the names of the respective persons responsible for the issuance of the check without funds (attorneys, directors, collectors, mayors) should be included in the Register of Issuers of Checks without Funds.

39 - An account opened for the credit of salaries, pensions, or allowances, in the event that its holder appears in the Register of Issuers of Checks without Funds, may, at the institution's discretion, be operated exclusively by means of a blank, nominative check in favor of the holder himself, or against receipt.

40 - Occurrences are excluded from the Register of Issuers of Checks without Funds:
a) automatically, if included for more than 24 (twenty-four) months; b) at the request of the drawn institution or by the initiative of the Executive itself, if the inclusion was commanded by proven error; c) at any time, at the request of the drawn institution, provided the client proves to it the payment of the check that gave rise to the occurrence; d) by determination of the Central Bank.

41 - The request for exclusion of registration in the Register of Issuers of Checks without Funds, formulated in accordance with the "c" clause of the previous item, subjects the interested party to the payment of a service rate to the drawn institution, corresponding to 50% (fifty percent) of the highest current reference value, per occurrence, rounded up, for the fraction of tens of cruzeiros.

42 - The rate provided for in item 31 shall revert in favor of a fund managed by the Central Bank, named FUNCHEQUE, intended to improve banking operations, sponsor the dissemination of the correct use of checks, and cover the expenses for the preparation and dissemination of the Register of Issuers of Checks without Funds - CCF. (*)

43 - In places where the Check and Other Papers Clearing Service does not exist, the discipline established in this section applies to cases of checks returned in the manner of item 26, insofar as applicable.

44 - The drawn institution may not charge the client the service rate provided for in item 41 if it has already reimbursed itself, in the manner of item 31, for the same occurrence.

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TITLE: COMMERCIAL BANKS - 16
CHAPTER: Active and Passive Operations - 9
SECTION: Demand Deposits - 12

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names of the respective persons responsible for the issuance of the check without funds (attorneys, directors, collectors, mayors).

46 - An account opened for the credit of salaries, pensions, or allowances, in the event that its holder appears in the Register of Issuers of Checks without Funds, may, at the bank's discretion, be operated exclusively by means of a blank, nominative check in favor of the holder himself, or against receipt.

47 - Occurrences are excluded from the Register of Issuers of Checks without Funds:
a) automatically, if included for more than 24 (twenty-four) months; b) at the request of the drawn bank or by the initiative of the Executive itself, if the inclusion was commanded by proven error; c) at any time, at the request of the drawn bank, provided the client proves to it the payment of the check that gave rise to the occurrence; d) by determination of the Central Bank.

48 - The request for exclusion of registration in the Register of Issuers of Checks without Funds, formulated in accordance with the "c" clause of the previous item, subjects the interested party to the payment of a service rate to the drawn bank, corresponding to 50% (fifty percent) of the highest current reference value, per occurrence, rounded up, for the fraction of tens of cruzeiros.

49 - The rate provided for in item 35 shall revert in favor of a fund managed by the Central Bank, named FUNCHEQUE, intended to improve banking operations, sponsor the dissemination of the correct use of checks, and cover the expenses for the preparation and dissemination of the Register of Issuers of Checks without Funds - CCF. (*)

50 - In places where the Check and Other Papers Clearing Service does not exist, the discipline established in this section applies to cases of checks returned in the manner of item 30, insofar as applicable.

51 - The drawn bank may not charge the client the service rate provided for in item 48 if it has already reimbursed itself, in the manner of item 35, for the same occurrence.

52 - The names contained in the Monthly Relations of Closed Accounts must be considered included in the Register of Issuers of Checks without Funds for a period of 180 (one hundred and eighty) days, constituting, at the discretion of each bank, a subsidy to evaluate the integrity of the depositor.

53 - The timely non-accounting of debits in deposit accounts subjects the bank to an administrative process instituted by the Central Bank.

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TITLE: CREDIT COOPERATIVES - 17
CHAPTER: Operations and Services - 9
SECTION: Demand Deposits - 4

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22 - The first copy of the form referred to in the previous item is sent to the Executive, in the corresponding return session, with a view to including the name of the account holder in the Register of Issuers of Checks without Funds. (*)

23 - The second copy of the form shall constitute an archive in the credit cooperative, in alphabetical order of depositors, and the third copy, accompanied by the check, is destined for the sending institution, which will deliver it to its client. The model must contain information that the issuer of the challenged check will henceforth appear in the Register of Issuers of Checks without Funds. (*)

24 - Each occurrence communicated in the manner of items 22 and 26 subjects the credit cooperative drawn, from 02.01.81, to the payment of a service rate equivalent to 50% (fifty percent) of the highest current reference value, rounded up, for the fraction of tens of cruzeiros, whose collection is effected by the Executive, through debit in its deposit account and only reimbursable to the client if the latter does not appear in the Register of Issuers of Checks without Funds or in the case of inclusion by contumacy. (*)

25 - It is the Executive's responsibility to monitor, during the return session, compliance with the provisions of items 21 and 23. If any irregularity is verified, the Central Bank will be immediately notified by the Executive, with a view to adopting the appropriate administrative procedures. (*)

26 - The issuer of checks without funds considered contumacious, thus understood as one in whose proposal form the return of six or more checks under those conditions appears, within a period of 180 (one hundred and eighty) days, shall have his name communicated in writing to the Executive, by the drawn institution, for inclusion in the Register of Issuers of Checks without Funds. The failure to take this measure can only be admitted, on an exceptional basis, with a reasoned justification to the Central Bank. (*)

27 - The Register of Issuers of Checks without Funds shall contain the following identifier data, for each occurrence: (*) a) code-number of the institution/branch that commanded the inclusion; b) number of the check that gave rise to the record; c) full name of the account holder; d) place of domicile; e) CPF or CGC, even in its justified absence, number of identity document; f) reference number given by the Executive.

28 - The Check and Other Papers Clearing Service publishes, every fifteen days, to the banking financial institutions registered in the Service in each Clearing Chamber, the occurrences included in the Register of Issuers of Checks without Funds in the immediately preceding fifteen-day period. Establishments that require extra quantities of Register relations, to be distributed to their premises, may obtain them through agreements with the Executive. (*)

29 - Other financial institutions and Credit Protection Services, or similar, legally constituted, registered, and recorded at Banco do Brasil S.A., also have access to the Register of Issuers of Checks without Funds, through agreements made with the Executive and for exclusive use in registration forms. (*)

30 - The occurrences referred to in item 28 shall be consolidated, each month, into a single relation prepared in alphabetical order of account holders. The Executive may also provide, through agreements made with interested parties, magnetic tape files containing the names appearing in the Register of Issuers of Checks without Funds, or the consolidated relations of names, already printed, in extra quantities to be distributed to their premises. (*)

31 - The Register of Issuers of Checks without Funds has only a managerial function, leaving it to the discretion of each institution to open, maintain, or close demand deposit accounts of whose holder he appears, except for the right of the Central Bank to determine the closure of the account, if it is proven that its holder has been adopting irregular practices in the use of checks. (*)

32 - To effect the closure of demand deposit accounts, if so decided, the credit cooperative must:
a) transfer the balance, within the same accounting title, to the impersonal subtitle "Accounts in Closure", which may accept withdrawals provided the balance is sufficient; b) issue notice to the holder, requesting the withdrawal of the balance available and, if applicable, the return of checks still unused; c) record the occurrence on the account holder's proposal form.

33 - When filling out the form referred to in item 23, for the case of a check issued by an account holder of a joint account, only the name of the issuing holder should be indicated, adding the type of current account.

34 - Occurrences are excluded from the Register of Issuers of Checks without Funds:
a) automatically, if included for more than 24 (twenty-four) months; b) at the request of the drawn bank or by the initiative of the Executive itself, if the inclusion was commanded by proven error; c) at any time, at the request of the drawn institution, provided the depositor proves to it the payment of the check that gave rise to the occurrence; d) by determination of the Central Bank.

35 - The request for exclusion of registration in the Register of Issuers of Checks without Funds, formulated in accordance with the "c" clause of the previous item, subjects the interested party to the payment of a service rate to the drawn institution, corresponding to 50% (fifty percent) of the highest current reference value, per occurrence, rounded up, for the fraction of tens of cruzeiros.

36 - The rate provided for in item 24 shall revert in favor of a fund managed by the Central Bank, named FUNCHEQUE, intended to improve banking operations, sponsor the dissemination of the correct use of checks, and cover the expenses for the preparation and dissemination of the Register of Issuers of Checks without Funds - CCF. (*)

37 - In places where the Check and Other Papers Clearing Service does not exist, the discipline established in this section applies to cases of checks returned in the manner of item 19, insofar as applicable.

38 - The drawn institution may not charge the client the service rate provided for in item 35 if it has already reimbursed itself, in the manner of item 24, for the same occurrence.

39 - The timely non-accounting of debits in deposit accounts subjects the credit cooperative to an administrative process instituted by the Central Bank.

40 - Deposits are made in cash or checks, by filling out, by the depositor, a specific form.

41 - The credit cooperative must reserve, in its forms for deposits in checks, space for indication of the name of the drawn establishment and respective branch (or of the respective code numbers with the Check and Other Papers Clearing Service) and the number and value of each check.

42 - The provision of funds resulting from deposits made with checks issued by the account holder himself is unavailable, before the said checks are settled by the Check and Other Papers Clearing Service or collected directly from the drawees.

43 - The unavailability referred to in the previous item applies equally to checks issued by persons or firms directly linked to the account holder, invested with powers to operate the account.

44 - The credit cooperative must institute adequate control mechanisms, regarding deposits in checks, that prevent the release of resources on provision still unavailable.

45 - The accounting of a deposit made with checks, as having been made in cash, constitutes fraud in writing, subjecting the infringer to the penalties provided by law.

46 - The norms contained in items 11 to 38 of this section apply only partially - insofar as applicable - to credit cooperatives that do not participate in the Check and Other Papers Clearing Service.