Central Office of Returned Cheques

53 / Basic Circular No. 20 / Interim Decision No. 8442 dated 17/7/2003 (Interim Circular No. 34), effective from 15/9/2003 replacing old number 1381.

We enclose a copy of Basic Decision No. 6060 dated 25/11/1995 and its attached system regarding the Central Office for Customers Defaulting on Payment.

Beirut, 25 November 1995 Governor of Banque du Liban: Riad Tawfiq Salamah

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Basic Decision No. 6060 Regarding the System of the Central Office for Customers Defaulting on Payment

The Governor of Banque du Liban, Pursuant to the Monetary and Credit Law, particularly Article 174 thereof, After consulting the Lebanese Bankers Association, And based on the Central Council's decision taken in its session held on 23/11/1995, Decrees as follows:

Article 1: Replaces the system regarding the Central Office for Customers Defaulting on Payment, implemented by Decision No. 5913 dated 23/6/1995 and its amendments, with the new attached system.

Article 2: This decision takes effect from 1/7/1996.

Article 3: This decision and its attached system shall be published in the Official Gazette.

Beirut, 25/11/1995 / Governor: Riad Tawfiq Salamah

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System of the Central Office for Customers Defaulting on Payment

Article 1: All banks and financial institutions registered with Banque du Liban automatically participate in the Central Office for Customers Defaulting on Payment established at Banque du Liban, hereinafter referred to as "the Office".

Article 2: Participating banks must organize and maintain a detailed record of information concerning cheques drawn on their customers which they are obliged to return unpaid due to total or partial lack of funds at the time of presentation within the legal period.

Article 3: (a) The bank on which the returned cheque is drawn must endeavor to notify the drawer, using available and appropriate means, of the return of the cheque and its reason, and invite him to settle the status of this cheque within a maximum period of 15 days from the date of return, under penalty of having his name communicated to "the Office". Note 2: The extended period from 15/3/2020 to 15/6/2020 (inclusive) does not count towards the calculation of the above 15-day period granted for settling returned cheques. (b) Settlement referred to in paragraph (a) above, regarding the status of the returned cheque, is achieved through one of the following means:

• The cheque is cleared from the customer's account after the reasons for return are resolved.
• The bank receives a written settlement covering the returned cheque, provided it was concluded between the drawer and the final beneficiary before a competent judicial authority or a notary public. If the original cheque is returned to the bank as proof of settlement, the bank must then invalidate or destroy it.
• Exceptionally for a legal person, if the final beneficiary is a legal entity, settlement is signed by an authorized signatory with power of discharge. Note 1: This article was amended by Article 1 of Interim Decision No. 9050 dated 13/6/2005 (Interim Circular No. 86). Note 2: Article 1 of Interim Decision No. 13137 dated 12/11/2019 (Interim Circular No. 533) stipulates: "The extended period from 15/10/2019 to 15/11/2019 (inclusive) does not count towards the calculation of the 15-day period granted for settling returned cheques specified in paragraph (a) of Article 3 of the system of the Central Office for Customers Defaulting on Payment attached to Basic Decision No. 6060 dated 25/11/1995." Note 3: This paragraph was added by Interim Decision No. 13233 dated 8/6/2020 (Interim Circular No. 560). Note 4: This paragraph was amended by Article 1 of Interim Decision No. 8884 dated 12/11/2004 (Interim Circular No. 70).
• A letter is submitted to the bank from a competent judicial authority requesting the freezing of proceedings regarding the returned cheque until a ruling is made on an existing dispute.
• The original cheque is returned to the concerned bank.

Article 4: Upon expiry of the 15-day period from the date of return, and in case the status of the returned cheque is not settled through one of the means mentioned in paragraph (b) of Article 3 above, the bank must request the inclusion of the customer's name in the list of customers defaulting on payment at "the Office".

Article 5: (a) The request to include the names of customers defaulting on payment at "the Office" is made through periodic data sent by banks to "the Office", indicating the following information:

• The name and title/role of the cheque signatory as stated in paragraph (b) of this article.
• The customer's account number.
• The returned cheque number and its issue date.
• The value of the returned cheque and the currency in which it is drawn.
• The date of return. This statement is submitted according to Form No. (1) attached to this system. (b) If the drawer is a natural person, it requires stating his parents' full names along with a summary of his complete identity (date and place of birth, civil registry number), provided that the matter is limited to a customer who signs a cheque drawn on a joint account. If the customer is a legal person, it requires stating his commercial registration number or the number and date of the trade certificate issued to him, as applicable. Note 1: This paragraph was repealed by Article 2 of Interim Decision No. 9050 dated 13/6/2005 (Interim Circular No. 86). Note 2: The phrases "reason for return" and "address of the drawer" were repealed from this paragraph by Article 2 of Interim Decision No. 9050 dated 13/6/2005 (Interim Circular No. 86). Note 3: The phrase "place of residence" was repealed from this paragraph by Article 2 of Interim Decision No. 9050 dated 13/6/2005 (Interim Circular No. 86). In all cases, in addition to the above, it requires stating the same information if it concerns an agent for the drawer or a person holding legal or statutory authority to sign on his behalf. (c) The right to submit the data specified in this article is restricted to the General Manager or his deputy, provided that "the Office" is notified of the names of authorized persons and their signature specimens.

Article 6: "The Office" stores the information sent by banks as follows:

• Alphabetically, mentioning the specific information regarding the returned cheque exactly as stated in the data issued by banks, and showing the date and number of times the defaulter's name has been previously included.
• Chronologically by date of receipt.

Article 7: All banks and financial institutions operating in Lebanon must, each regarding its own matter, before granting any direct or indirect facilities, or cheque books to one of their customers, inquire about him electronically on "the Office" website (UPCS) at Banque du Liban. The electronic records of Banque du Liban for this purpose constitute proof that the bank or financial institution has made the aforementioned inquiry. Printed copies by banks and financial institutions of the data available on "the Office" electronic website are, in all cases, not considered to be issued by Banque du Liban.

Article 8: All banks and financial institutions must determine the number of branches that will access "the Office" website electronically, and the name of the Primary System Administrator and Secondary System Administrator according to Form No. (2) attached herewith. All banks and financial institutions must fill out the attached Form No. (3) for each branch that will use "the Office" electronic website. The aforementioned Forms (2) and (3), duly signed, are delivered to the Security of the Information Directorate at Banque du Liban before 15/8/2003. Note 1: This article was amended by Article 1 of Interim Decision No. 8442 dated 17/7/2003 (Interim Circular No. 34), effective from 15/9/2003. Note 2: This article was amended by Article 2 of Interim Decision No. 8442 dated 17/7/2003 (Interim Circular No. 34), effective from 15/9/2003.

Article 9: In case of any temporary malfunction or failure leading to the inability to access "the Office" website electronically, banks and financial institutions may submit a written inquiry request to "the Office", specifying the complete identity of the concerned customer. "The Office" sends a reply letter to the requesting party, whether a bank or financial institution, within a maximum period of three working days.

Article 10: Banks must refrain from issuing cheque books to customers whose names are listed according to the provisions of Article 6 above. The customer's name is removed from the data referred to in Article 6 above after ten years have elapsed since his name was included at "the Office", or if the following two conditions are met: The returned cheque is first notified to "the Office" by the drawn bank, according to the attached Form No. (4), with one of the following options:

1. The customer fulfills the obligations imposed due to the return of the cheque.
2. An amount equivalent to the value of the returned cheque is attached/seized at the concerned bank upon confirmation that a written settlement with the beneficiary cannot be obtained, according to the regulations by this attachment:
   • For a period equal to the time elapsed on filing a lawsuit against the drawn bank for returned cheques (three years starting from the end of the 8-day presentation period from the date of issue).
   • For one year if the remaining period in paragraph (a) above is less than one year.
   • For one year if the required amount is not attached during the period mentioned in paragraph (a) above. Note 1: This article was amended by Article 3 of Interim Decision No. 8442 dated 17/7/2003 (Interim Circular No. 34), effective from 15/9/2003. Note 2: The last amendment to this article was introduced by Article 1 of Interim Decision No. 9050 dated 13/6/2005 (Interim Circular No. 86). Secondly: A time period elapses after the customer's name is included at "the Office", following the last returned cheque, amounting to:
3. Six months if the customer's name is included for the first time due to his first returned cheque.
4. Eighteen months if a second cheque is returned to him.
5. Thirty-six months if three or more cheques are returned to him.

Article 11: Any person wishing to view or correct information concerning him and stored at "the Office" may submit an inquiry request through his bank or any other bank, without prejudice to the concerned person's right to directly review "the Office" if he wishes, provided that in this latter case he attaches the following documents with his request:

• A copy of the identity card or civil registry extract if a natural person, or a copy of other evidentiary documents if a legal person.
• The number(s) of bank account(s) operated by cheques that this person owns and wishes to inquire about. "The Office" delivers the requested information, upon the Governor of Banque du Liban's approval and if available.

Article 12: Subject to the provisions of Article 11 above, the data mentioned in Articles 2, 5, 6, 7, and 9 above are subject to absolute confidentiality and are used solely for informing banks and financial institutions about returned cheques.

Article 13: The costs of "the Office" are distributed among its participants according to a schedule organized by the participants, subject to the approval of the Governor of Banque du Liban after consulting the Lebanese Bankers Association and the Lebanese Financial Institutions Association. Note 1: This article was amended by Article 1 of Interim Decision No. 9050 dated 13/6/2005 (Interim Circular No. 86).

Article 14: Each bank must print on the cover of cheque books delivered to its clients, or on any prominent paper thereof, in addition to the text of Article 666 of the Penal Code which obliges banks to print, the following text: "In addition to the above penalties, the customer's name is included in the list of customers defaulting on payment at the 'Central Office for Customers Defaulting on Payment' established at Banque du Liban, and he is prohibited from using a cheque book, as stipulated by the system attached to Basic Decision No. 6060 dated 25/11/1995, subject of Basic Circular for Banks No. 20 dated 25/11/1995."

Article 15: From the date of issuance of this system, each bank that opens a cheque account for one of its customers or delivers him a new cheque book must obtain from this customer his prior written consent, without any reservation, to apply the provisions of this system in case one of the cheques drawn on him is returned for the reason mentioned in Article 2 of this system. This consent is kept on file by the bank in a special folder that can be reviewed by the Banks Supervision Committee at any time. Note 2: This phrase was added by Article 5 of Interim Decision No. 8442 dated 17/7/2003 (Interim Circular No. 34), effective from 15/9/2003. Banks must, within a period of six months starting from the date of issuance of this system, obtain similar consent from their customers who previously had cheque accounts opened for them.

Article 16: Decision No. 5913 dated 23/6/1995 and its attached system, and Decision No. 5937 dated 6/7/1995 are repealed. This system was approved in the Central Council session held on [Date]. Governor: Riad Tawfiq Salamah

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Form No. 1: Report of Returned Cheques (Basic Circular No. 20 / Interim Decision No. 8442) Bank Name/No.: _______________ Date: _______________ Drawer's Full Name & Title/Identity: _______________ Cheque Signatory Title/Identity: _______________ Customer Account No.: _______________ | Cheque No.: _______________ Value: _______________ | Currency (Lebanese/Foreign): _______________ Issue Date: _______________ | Return Date: _______________

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Form No. 2: Access Rights for Branches (Primary & Secondary System Administrators) (Basic Decision No. 6060 / Interim Circular No. 34 & 86) Bank/Institution Name: _______________ | Banque du Liban List No.: _______________ Date: _______________ | Number of Branches Accessing System: _______________

Primary System Administrator: First Name / Last Name / Father's Name: _______________ Department / Title: _______________ | Phone / Fax / Mobile: _______________ Email: _______________

Secondary System Administrator: First Name / Last Name / Father's Name: _______________ Department / Title: _______________ | Phone / Fax / Mobile: _______________ Email: _______________

Board Chairman & General Manager Signature / Institution Stamp: _______________

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Form No. 3: Branch Access Request (User 1 & User 2) (Basic Decision No. 6060 / Interim Circular No. 34 & 86) Bank/Institution Name: _______________ | Banque du Liban List No.: _______________ Branch Name: _______________ | Date: _______________

User 1: First Name / Last Name / Father's Name: _______________ Department / Title: _______________ | Phone / Fax / Mobile: _______________ Email: _______________

User 2: First Name / Last Name / Father's Name: _______________ Department / Title: _______________ | Phone / Fax / Mobile: _______________ Email: _______________

Board Chairman & General Manager Signature / Institution Stamp: _______________

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Form No. 4: Certificate of Settlement (Bank to UPCS) (Basic Decision No. 6060 / Interim Circular No. 86) Bank Name: _______________ | Banks List No.: _______________ Account Status No.: _______________ | Letter Ref. No./Date: _______________

We hereby certify that our customer listed below has completed the settlement of the cheques detailed in this letter, and we request the Office to proceed accordingly per the system.

Customer Name: _______________ Customer Identity Details (Nationality, Birth Date/Place, Civil Registry No.): _______________ Account No.: _______________ | Cheque No.: _______________ Value: _______________ | Currency: _______________ Issue Date: _______________ | Return Date: _______________

Bank Seal & Signature: _______________