Circular on Compliance with Cheque Book Issuance Regulations

10/1/5134 10/8 /1442 AH 24/ 3 /2021 AD Circular to all licensed banks

Greetings,

Further to the instructions of the Returned Cheques Unit No. (55/2011) dated 24/10/2011 and subsequent circulars regarding the necessity of ensuring that the size of the cheque book issued to a customer is commensurate with the size of their financial transactions, their balances at the bank, and the credibility of their dealings in general, in accordance with Article No. (12) of the aforementioned instructions, I emphasize the necessity of full compliance with the content of the aforementioned instructions and the need to give due importance to the following points regarding the process of issuing cheque books to customers:

• Ensuring that the size of the cheque book issued to the customer is commensurate with the size of their financial transactions and their balances at the bank.
• Refraining from issuing cheque books within a short period from the date of account opening at the bank, except in the narrowest of circumstances and based on a deep study regarding this matter, which includes assessing the customer's financial solvency before issuing a cheque book.
• Not issuing cheque books without justification or to customers whose nature of dealings or volume of cash flows for the account is not suitable for issuing cheque books, and ensuring that cheque books are not issued to customers for personal purposes (or to the minimum extent) and are restricted to commercial activities, and verifying the manner and extent of the use of cheque books and the existence of genuine sales transactions corresponding to them.
• Not issuing cheque books to customers in large numbers within a short period of time or issuing more than one cheque book at the same time before confirming the complete utilization of previous cheque books.
• The necessity of having a supervisory body within the bank to monitor and follow up on the process of issuing cheque books.
• The necessity of having scenarios in the automated systems in force at the bank in the field of anti-money laundering and counter-terrorism financing to monitor the movement and circulation of cheques and detect any movements that are inconsistent with the customer's profile and declared annual income or the nature of the customer's activity.

And the bank must take the necessary measures to address any weaknesses related to the process of issuing cheques and follow them up, noting that the Central Bank will take the necessary measures to ensure your compliance with our instructions in this regard.

Please accept my highest respect,

The Governor Dr. Ziad Fariz