Circular OPASI 2-204: Regulation of Bank Current Accounts. Check Rejection. Modification

"1999 - Year of Export"

BANCO CENTRAL DE LA REPUBLICA ARGENTINA

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COMMUNICATION "A" 2864 19/02/99

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TO FINANCIAL ENTITIES:
Ref.: Circular
OPASI 2 - 204.
Regulation of the Bank Current Account. Rejection of Checks. Modification.

We address you to bring to your knowledge that this Institution adopted the following resolution:

"1. Substitute, with effect from 8.3.99, in the regulation of the bank current account, the provisions on the rejection of checks with the following:

"Section: Checks.

1. Instruments that lack value as checks.
   The instrument regarding which any of the following situations, enumerated taxatively below, occurs, will not be valid as a check:

1.1. Lack of any of the specifications contained in articles 2°, items 1 to 6; 23 and 54, items 1 to 9, of the Check Law.
1.2. Existence of strikethroughs or amendments not saved by the drawer.
1.3. That they are not drafted in the national language.
1.4. That they contain advertising inscriptions.

2. Rejection of checks.

2.1. Grounds

2.1.1. Insufficiency of funds.

2.1.1.1. Lack of sufficient available funds credited to the account and/or authorization for the account holder to draw in overdraft, without prejudice to the partial payment as provided in article 31 of the Check Law, which the entity must effectuate.

2.1.1.2. In the event that the return recognized causes concurrent with that of insufficiency of funds, the rejection will proceed exclusively for this latter circumstance, even when it concerns closed accounts or suspension of the payment service prior to the closing of the account, disposed of in accordance with this regulation and checks issued after the date of notification of the relevant closing.
For documents issued up to the date of notification of the closing, their payment or rejection will proceed for "Without sufficient available funds in account", depending on whether the corresponding provision was made or not, as provided for in the regulation. The criterion of recording the rejection for lack of funds will not prevail when the check is returned for the reasons provided in point 2.1.3. of this Section, except in the case that there are irregularities in the chain of endorsements, for which what is established in the first paragraph of this point will apply.

2.1.2. Formal defects.
A formal defect is defined as any one verified in the creation of the check that the beneficiary cannot notice by its mere appearance.
The following cases are included, among others:

2.1.2.1. The signature of the drawer differs manifestly from that recorded in the records of the drawee entity.
2.1.2.2. Signatory without valid or current power at the time of the issuance of the check.
2.1.2.3. Social contract expired at the time of the issuance of the check.
2.1.2.4. Lack of additional signatures to the existing one or ones, when the signature of more than one person is required.
2.1.2.5. Signatory disqualified at the time of the issuance of the check.
2.1.2.6. Lack of conformity in the receipt of checkbooks.
2.1.2.7. Draw on the drawer, unless it were a check drawn between different establishments of the same drawer.

2.1.3. Other grounds.
These are defined as those that generate the impossibility of proceeding to the payment of a check or that did not exist or were unknown to the drawer at the time of its issuance.
Taxatively, they are:

2.1.3.1. Report of loss, theft, or adulteration (effected under the conditions provided in the Check Law and in the regulation of the bank current account) of the formula in which it is extended.
2.1.3.2. Force majeure causes at the time of the presentation of the check that prevent its payment (that is, that constitute impediments motivated by an insurmountable obstacle, such as the legal prescription of any State or others of a category assimilable to the criterion of the Central Bank of the Republic Argentina).
2.1.3.3. Irregularities in the chain of endorsements.
2.1.3.4. Legal validity period expired.
2.1.3.5. Date of presentation for collection or deposit of a deferred payment check prior to the payment date.

2.2. Cases not susceptible of rejection.
Checks presented for collection, not included in the situations provided in point 2. of this Section, will be attended when:

2.2.1. The amount written in letters differs from that expressed in numbers, in which case the first will prevail.
2.2.2. The place of creation has been omitted, in which case it will be presumed as such the domicile of the drawer that appears in the body of the check.
2.2.3. It contains endorsed strikethroughs or that lack the formal requirements established, provided that this does not imply converting the chain of endorsements into irregular.
2.2.4. Spelling mistakes are observed.
2.2.5. Checks issued in the 30 days prior to the date of notification of the closing of the relevant account.
Identical treatment will correspond to be applied to deferred payment checks registered, even if they contain formal defects.

2.3. Grounds for non-registration.
The registration of deferred payment checks presented for registration must be rejected when:

2.3.1. They contain formal defects not corrected in the time and form established by the Central Bank of the Republic Argentina.
2.3.2. The current account is closed or there is suspension of the check payment service prior thereto -exclusively under the conditions referred to in this regulation- and it concerns checks issued subsequent to the relevant notification of closing.

2.4. Procedure.

2.4.1. When a financial entity refuses to pay a check -common or deferred payment-, whether presented directly by the holder before the drawee or through clearing systems, before returning it, it must record that refusal on the back of the same instrument or in an attached related document, with express mention of:

2.4.1.1. Ground on which it is based. Terms not provided for in the Check Law or in this regulation cannot be used.
2.4.1.2. Date and time of presentation. When the return is processed through a clearing chamber, the date and time will refer to the moment when the rejection took place by the drawee entity.
2.4.1.3. Name of the account against which it was drawn.
2.4.1.4. Domicile registered at the drawee bank when this does not coincide with that inserted in the body of the check.
2.4.1.5. Full names and surnames of the signer/s of the check and their respective real domicile/s.
2.4.1.6. Signature of an authorized person.
2.4.1.7. The absence of any of these requirements will make the entity responsible for the damages it originates.

2.4.2. If a check is rejected because there were not sufficient available funds in the respective account at the time of its presentation, the mention of the reason will be "Without sufficient available funds credited in account".

2.4.3. When the drawee entity rejects the registration, it will proceed to record such determination on the back of the check and return it to the presenter (beneficiary of the instrument or depositary entity, as the case may be). Likewise, it will correspond that it produces the relevant information to the Central Bank of the Republic Argentina, in accordance with the operational regime established.

2.4.4. Upon the occurrence of each of the rejections provided for in points 2.1.1., 2.1.2. and 2.3. of this Section, the drawees will proceed to communicate them -through the models established for that purpose- to the drawer, account holder, agent, attorney, administrator, etc., within 48 business hours of its occurrence, leaving a record in their respective file, and to the Central Bank of the Republic Argentina at the opportunity and through the specifications of the operational guide.
Each communication to the Central Bank will include information, referred to those situations, with an age not greater than 10 business banking days.

2.4.5. Simultaneously, the drawee will proceed to communicate it -using the established model- to the holder or presenter with indication of the date and number of the aforementioned communication to the Central Bank, which will be considered fulfilled if those data are included in the returned check.

2.4.6. The holder of a check rejected for insufficiency of funds or lack of registration may verify the communication of such circumstance to the Central Bank of the Republic Argentina by presenting a request -for charge- for each check consulted, through the procedure established for that purpose.

2.4.7. Communication to the Central Bank of the Republic Argentina of the rejections motivated by:

2.4.7.1. The forgery or adulteration of checks.
It will be an indispensable requirement that the account holder complies with the requirement referred to in point 1.3.9.2.6. of the regulation of the bank current account. In the case of adulteration, the rejection of the check will not be counted when there are sufficient funds to pay it had the fraudulent act not occurred.

2.4.7.2. The payment of forged or adulterated checks.

2.4.7.3. Errors attributable to the drawee entity itself. The rejection of the check regarding which there has been verbal authorization to draw in overdraft will not be considered an error.

2.4.7.4. Having disposed of precautionary measures on the funds destined for the payment of the check, as long as this circumstance has been unknown to the drawer at the time of its issuance, which must be sufficiently accredited by him, to the satisfaction of the drawee entity.

2.4.7.5. Having judicially declared the preventive bankruptcy of the drawer and always that the deferred payment check has been issued up to the day prior to that on which the relevant resolution of opening of that process was declared and its payment date is subsequent to it.

In addition, in the cases of points 2.4.7.2. to 2.4.7.4. the rejections will not be counted, only, up to the concurrence of their amounts with the balance that the account would have had had the payment not been effected, the error incurred or the precautionary measure disposed.

2.4.8. In no case will the entities leave without effect the communications of rejection subject to the present provisions, except when it concerns any of the grounds provided for in point 2.4.7. of this Section.
When any of those grounds has been presented, the relevant communication to the Central Bank of the Republic Argentina must be effected, in accordance with the procedure established separately, in which the reason will be specified, keeping the supporting documentation, in order to cancel or modify the relevant record, without prejudice to the possibility of effecting the subsequent verification of said documentation. The cases must count with the approval of the boards of directors or administrative councils of the entities or of the highest authority in the country when it concerns local branches of foreign entities. These authorities -without this implying delegating their responsibility- may authorize the general manager or officials of equivalent level, according to their respective structures, to effect such approval. The entities that opt for the alternative of delegation must send to the Superintendence of Financial and Exchange Entities a certified copy of the Board of Directors act or equivalent body in which that decision is recorded. In those cases, it will correspond that those authorities -at least monthly- take knowledge of the rectifications sent to the Central Bank of the Republic Argentina -in full accordance with the agreed delegation- in the immediate previous calendar month, circumstance that must be recorded in the relevant acts. Quarterly, the banks must inform the aforementioned Superintendence of the number and date of the act in which the Board of Directors or the equivalent authority, as appropriate, has taken knowledge of the requests for reversal. The responsibility for the sending to the Central Bank of the Republic Argentina of the communications referred to in the second paragraph of this point rests on personnel of a level not lower than deputy general manager or, if such hierarchy does not exist, on the official of the highest category. When the Central Bank of the Republic Argentina must modify a computation -whatever its reason- in the database that it administers, it must pay the sum of $ 100 for each one of them as compensation for operational expenses. In the case that it corresponds to rectify the "Database of disqualified account holders", the compensation to be disbursed will be of $ 200. These expenses cannot be transferred to the account holder unless the request for cancellation of the communication originates in causes attributable to the client. Equal procedure will be employed in the cases of disqualifications of account holders that are inappropriate, derived from the erroneous notification to the Central Bank of the Republic Argentina -by the entity- of the non-payment of fines provided for in the legislation, when such fines have been paid by the clients.

2.4.9. For the purposes of the application of this regime, all information that is sent to the Central Bank of the Republic Argentina must be sent through the medium and under the conditions established in the operational guide.

2.4.10. Facing a check presented for collection on which there is a report of loss, theft, or adulteration, as well as in the case that the bank detects the latter situation or forgery of signature, what is provided in point 1.3.9. of the regulation of the bank current account will apply.

2.5. Fines.
The rejection of checks will generate the fines established in the Check Law, as noted below and will determine the obligation of the entity, as established in point 2.4.4. of this Section, to inform them to the Central Bank of the Republic Argentina, in accordance with the operational regime established.

2.5.1. Determination of the amount.

2.5.1.1. The common or deferred payment check not registered, rejected for formal defects, will be subject to a fine charged to the drawer equivalent to 2% of the rejected value, with a minimum of $ 50 (fifty pesos) and a maximum of $ 25,000 (twenty-five thousand pesos).
The amount will be reduced to 1%, with a minimum of $ 25 (twenty-five pesos) and a maximum of $ 12,500 (twelve thousand five hundred pesos), when the check has been paid within 7 business banking days of having been notified of the rejection or when the check has been paid by the drawee through a second presentation of the holder, circumstances that must be credibly accredited before the drawee.

2.5.1.2. The rejection for insufficient provision of funds in account to attend the debit of common checks or of deferred payment checks or for the rejection of the registration of the latter, will give rise to a fine equivalent to 4% of the rejected value -with a minimum of $ 100 (one hundred pesos) and a maximum of $ 50,000 (fifty thousand pesos)-.
The amount will be reduced to 2% with a minimum of $ 50 (fifty pesos) and a maximum of $ 25,000 (twenty-five thousand pesos), when the drawer cancels the check subject to the sanction within 30 calendar days from the rejection, circumstance that must be credibly accredited before the drawee.

2.5.2. Procedure for the perception.

2.5.2.1. The amount of the fines will be debited on the last business day of the month following that in which the respective rejection had occurred, from the current account of the entity opened at the Central Bank of the Republic Argentina, based on the information that the entity supplies referred to the fines perceived.
It will be considered that that perception is configured when the corresponding amount has been debited from the current account generating a debit balance and the entity had not proceeded to its closure within 60 calendar days of the rejection that gives rise to it. The reimbursement of the amounts corresponding to decreases in the fines by application of the legal provisions will be effected in accordance with the procedure that is established separately.

2.5.2.2. If the debit of the fine could not be effected due to the respective account being closed, the account holder will be disqualified in accordance with what is provided in point 1.4.2.3. of the regulation of the bank current account, and must be notified to the Central Bank of the Republic Argentina according to the operational regime established."

2. Leave without effect, from 8.3.99., points 1.3.7.9., 1.3.8., 1.4.1., 1.4.3., 1.4.4. and 1.4.5. of the regulation of the bank current account (text according to Communication "A" 2514 and complementary).
3. Establish, with effect from 8.3.99, in 10 business days the maximum admitted age of the data that are sent to the Central Bank, referred to in the last paragraph of point 1.2.2. of the regulation of the bank current account (text according to Communication "A" 2514 and complementary)."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Hector O. Biondo
Submanager of Norms for Financial Entities General Submanager of Operations