Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

Instructions No. (06) of 2017

Regarding the Security and Technical Specifications of Cheques

Based on the provisions of Decree-Law No. (9) of 2010 concerning Banks, particularly Articles (3), (54), and (72) thereof, and in the public interest, we have issued the following Instructions:

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Article (1)

Definitions

The words and phrases appearing in these Instructions shall have the meanings assigned to them below, unless the context indicates otherwise:

Classification	Definition
Forgery	The deliberate alteration of facts and data in a cheque, which has resulted or may result in material, moral, or social harm, whether by issuing a duplicate copy of the cheque from an unauthorized source or by deliberately tampering with a cheque with the aim of fraud or deception to change its ownership, value, or characteristics.
Security and Technical Specifications	Coordinated elements, whether physical or technological, that form part of the cheque.
Person	A natural or legal person.
Cheque	As defined in the prevailing Commercial Law.
Basic Cheque Elements	Data issued by the cheque drawer.
Pre-printed	Data pre-printed on the cheque that does not require issuance by the drawer.
Non-pre-printed Basic Cheque Elements	The strip located at the bottom of the cheque sheet containing the cheque number, bank code, branch number, and customer account number (Magnetic Ink Character Recognition).

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Article (2)

Scope of Application

The provisions of these Instructions shall apply to all banks licensed to operate by the Palestine Monetary Authority.

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Article (3)

Objectives

The provisions of these Instructions aim to achieve the following:

1. Develop and enhance the security features of cheques by defining security specifications at different levels.
2. Facilitate the electronic processing of cheque collections between banks.

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Article (4)

Printing of Cheques

Banks shall comply with the following:

1. Print cheques in accordance with the provisions of the Annex on Security and Technical Specifications of Cheques.

2. Prepare work procedures that define the controls for the cheque printing process, which shall include at a minimum the following:

   a. Define mechanisms to maintain the confidentiality of the bank's security level.
   b. Define mechanisms for receiving cheque book issuance requests.
   c. Define mechanisms for printing cheque books.
   d. Define mechanisms for delivering cheque books to customers and activating them on the banking system under dual control.
   e. Define mechanisms for managing cheque paper inventory according to the specifications stipulated in these Instructions, and manage and organize the authorities and responsibilities regarding receiving cheque issuance requests from authorized employees who receive and submit customer requests for printing cheque books.
   f. Identify employees responsible for delivering books to customers and employees responsible for activating them on the banking system under dual control.

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Article (5)

Storage of Cheque Books

Banks shall establish and adopt work procedures that define the mechanism for storing and safeguarding printed cheque books for customers, which shall include at a minimum the following:

1. Prepare forms for inventorying cheque books that have not been delivered to customers.
2. Store printed cheque books that have not been delivered to customers in iron safes under dual control.
3. Conduct periodic inventories of undelivered cheque books.

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Article (6)

Handling Suspected Forged Cheques

Banks shall establish and adopt work procedures for handling suspected forged cheques, which shall include at a minimum the following:

1. A mechanism to inspect the security and technical specifications in deposited cheques for collection to determine their authenticity.
2. Providing devices that assist in detecting forgery cases.
3. Training and qualifying all employees tasked with handling customer cheques on security and technical specifications and detecting forgery cases.

Handling mechanism for suspected forged cheques shall include at a minimum the following:

a. Completion of a suspicion form by the employee receiving the cheque, signed by them, the cheque presenter, and the branch manager.

b. Obtaining a copy of the personal identification of the cheque presenter and attaching it to the suspicion form.

c. Storing the suspected forged cheque in iron safes fortified against theft and fire.

d. Notifying the official authorities and handing over the suspected forged cheque under an official report.

e. Notifying both the Palestine Monetary Authority and the drawee bank of the suspicion, via a notification form containing details of the detected case, how it was discovered, a copy of the cheque submitted for collection, a copy of the personal identification of the cheque presenter, and a copy of the handover report to the official authorities.

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Article (7)

Cheque Book Printing Agreement

In the event a bank outsources the printing of cheque books, it must do so through an agreement with a printing press that regulates the cheque printing process, conditional upon obtaining the prior written approval of the Palestine Monetary Authority in accordance with these Instructions. The agreement shall include at a minimum the following:

1. Basic data of the contracting party as recorded in the registration certificate and the authorized signatories.
2. The nature of the relationship.

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Article (8)

Cheque Inventory

Banks shall provide the Palestine Monetary Authority with the following information regarding cheque inventory within one week from the date of issuance of these Instructions:

1. The number of cheque books in inventory.
2. The number of issued cheque books in customer possession.
3. The number of cheque books on order and those not yet delivered.
4. The number of cheque books and sheets expected to be requested within three months from the date of issuance of these Instructions.
5. The monthly consumption rate of cheques.

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Article (9)

General Provisions

1. Banks must take all necessary measures to control the current cheque inventory and restrict the issuance of new books.
2. Banks must begin the preliminary qualification process for potential suppliers based on these Instructions and the Annex on Security and Technical Specifications of Cheques, with the qualification process to be completed within six months from the date of issuance of these Instructions.
3. Banks must provide the Palestine Monetary Authority with samples of cheques featuring the new specifications during the period mentioned in paragraph (2) of this Article to verify their compliance with the new organization of security and technical specifications for cheques before finalizing the printing contract.

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Article (10)

Penalties

Any person who violates the provisions of these Instructions shall be penalized in accordance with the provisions of the prevailing Banking Law.

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Article (11)

Repeal

All provisions conflicting with these Instructions are hereby repealed.

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Article (12)

Implementation and Entry into Force

1. All competent authorities shall, each within their respective jurisdiction, implement the provisions of these Instructions.
2. The provisions of these Instructions shall apply six months from the date of their issuance.

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Issued in Ramallah on 19/04/2017

Signature of the Palestine Monetary Authority

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