Instruction No. 001-DCR/2010 of November 8, 2010 on the procedures for reporting, processing and utilization of information regarding payment incidents on cheques

Instruction No. 001-DCR/2010 of November 8, 2010 on the procedures for reporting, processing and utilization of information regarding payment incidents on cheques

The Governor of the Central Bank of Madagascar, Having regard to the amended Act No. 94-004 of June 10, 1994 on the statutes of the Central Bank of Madagascar, Having regard to the amended Act No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions, Having regard to Act No. 2004-045 of January 14, 2005 on the prevention and prosecution of offences concerning cheques, Having regard to Decree No. 2006-281 of April 25, 2006 setting out the implementation procedures for certain provisions of Act No. 2005-045 of January 14, 2005 on the prevention and prosecution of offences concerning cheques, Having regard to Decree No. 2007-027 of January 29, 2007 on the appointment of the Governor of the Central Bank of Madagascar,

DECIDES:

Article 1: General Provisions
This instruction aims to establish the procedures for centralizing and monitoring payment incidents as provided by Act 2004-045 of January 14, 2005 on the prevention and prosecution of offences concerning cheques, hereinafter referred to as "the Act". These procedures include those relating to the reporting, processing and utilization of information concerning payment incidents. For the purposes of this instruction, reporting entities are credit institutions authorized to maintain accounts on which cheques may be drawn and Postal Check Centers (PCC). The attachments in the annex form an integral part of this instruction.

Article 2: Objects of Reporting
2.1. Reporting entities are required to report the following events to the Central Bank:
a. Payment incidents, namely:
o insufficient available funds, o unavailability of funds due to garnishment, third-party holding notice or requisition, o unavailability of funds due to drawer's opposition or closed account, o refusal to pay a cheque issued prior to the date of acknowledgment of receipt of the notification letter regarding a banking prohibition or a judicial prohibition order, o refusal to pay a cheque issued during the period of execution of a judicial prohibition, o refusal to pay a cheque issued on a non-existent account. b. Regularization or failure to regularize following total or partial refusal of payment,
c. Violation of banking or judicial prohibition consisting in issuing a cheque after notification of a banking prohibition, from the date of acknowledgment of receipt of the notification letter or upon pronouncement of a judicial prohibition,
d. Opposition due to loss or theft, e. Account closure, f. Cancellation of payment incident declaration meeting the conditions set out in the Act, g. Counterfeiting, forgery of payment or withdrawal cards, use or attempted use, or acceptance of payment by a counterfeit or forged payment card.

2.2. To be admissible, any declaration of refusal to pay a cheque subject to opposition must be supported by a prior opposition declaration on separate forms. Failing such prior declaration, the reporting entity immediately regularizes it by specifying the reasons for the delay. The opposition declaration is accompanied by a two-copy copy of the initial notification letter from the drawer.

Article 3: Procedures for Transmission and Consultation
3.1. Information transmission is carried out via secure electronic means in accordance with the exchange file descriptions in the annex.
3.2. Paper confirmation of these electronic transmissions, using the forms attached to this instruction, is nevertheless mandatory for the following declarations:
a. Regularization certificate (Annex 3), to be submitted systematically regardless of whether regularization occurred. In case of non-regularization, the certificate is accompanied by the following documents in two copies:
o non-payment certificate with the date of dispatch and acknowledgment of receipt of the notification/injunction letter by the drawer or their legal representative, or the date of the bailiff's deed, o copy of the injunction letter, o copy of the acknowledgment of receipt of the notification/injunction letter by the drawer or their known representatives. Failing a receipt, notification is made by bailiff to person or at the domicile of the drawer and their representatives. b. Violation of prohibition (Annex 4) accompanied by a two-copy copy of the notification/injunction letter and acknowledgment of receipt as noted above,
c. Payment instrument forgery (Annex 5),
d. Opposition (Annex 6), e. Account closure (Annex 7) with a two-copy copy of the account holder's handwritten request or explanatory note from the reporting entity in case of voluntary closure. Given the importance of each detail, incomplete declarations will not be processed and will be returned.
3.3. For any declaration or consultation, user access to the Non-Payment Central must be strictly secured. For reporting entities, security measures include:
 user definition with authorized access rights: declaration, consultation, modification, cancellation or other actions defined by the Central Bank,  official request for registration, user replacement, or modification of access rights to be filed with the Central Bank,  user customization and password management.
3.4. The access code is personal. Each reporting entity must take necessary measures for its preservation and security. It is responsible for any abusive or unauthorized use of this code.
3.5. The reporting entity must promptly communicate to the Non-Payment Central any significant event occurring until the end of the prohibition period, such as: change of director or representative, modification of address or location, or generally, any modification in previous declarations.
3.6. The deadline for transmitting accompanying paper documents is five days from the date of the relevant event.

Article 4: Centralization
4.1. The Central Bank is responsible for managing the Central Cheque File.
In this capacity, it centralizes all declarations from reporting entities relating to the incidents and facts listed in Article 2 of this instruction.
4.2. Reporting entity agencies operating within the jurisdictions of the Central Bank's Territorial Representations (list in Annex 20) send directly to them the paper declarations mentioned in Article 3.6.
4.3. Reporting entity representations located outside these jurisdictions correspond directly with the Central Bank headquarters.
4.4. The Central Bank headquarters is the sole authority authorized to hold, make available or disseminate all centralized information relating to cheque offences.

Article 5: Provision of Centralized Information
5.1. The Central Bank makes the centralized information available to all reporting entities, who can thus consult their clients' status by accessing the Integrated Business Information System (SIIE) website.
5.2. Other reporting entities informed of the prohibition measure instruct their clients included in the list made available to them to return the cheque forms in their possession, in accordance with Article 5 of the Act.

Article 6: Drawer Notification
6.1. The reporting entity notifies the drawer of the banking prohibition by registered letter with acknowledgment of receipt or, failing that, by bailiff's service to person or at the drawer's domicile and their representatives.
6.2. The reporting entity attaches in two copies a copy of the acknowledgment of receipt of the notification letter duly signed by the drawer or one of their representatives as provided by the Act, to subsequent declarations relating to the relevant incident, in particular non-regularization or prohibition violation declarations.
6.3. The reporting entity must require non-resident clients to provide an address in Madagascar to which all necessary notifications will be sent.

Article 7: Cancellation of Non-Payment Declaration
7.1. Declaration cancellation is admissible only in one of the following cases:
 error by the drawee bank's departments,
 disappearance of funds following an event not attributable to one of the persons authorized to draw cheques on the account.
7.2. Reporting entities submit the cancellation request to the Central Bank using the model in Annex 2 and the exchange file in Annex 2.1. Reporting entities take measures to inform their respective clients that requests originating directly from bank customers are inadmissible at the Central Bank level.
The Central Bank reserves the right to request additional information from reporting entities, particularly in case of repeated cancellation requests from an agency.
7.3. Within ten days of receiving the request or, if applicable, the last requested supplementary information, the Central Bank notifies the drawee bank of its decision and, where applicable, notifies other reporting entities of the lifting of the banking prohibition.
It also refers the matter to the relevant Court if it has already been seized previously.
7.4. Reporting entities must recall in the prohibition notification letter the possible legal remedies provided by the Act, in case of contestation of banking prohibitions, namely:
 request for suspension due to serious contestation before the Summary Court,  or request for cancellation before reporting entities as stipulated in this instruction, or failing that, before the Civil Court.

Article 8: Regularization and Non-Regularization
8.1. Regularization must be carried out within five days from the date of acknowledgment of receipt of the injunction letter by the drawer, by establishing on the account linked to the cheque a sufficient and available fund intended for settling the cheque amount, independent of any non-payment fees that may be charged by the drawee institution. To this end, direct cash payment to the beneficiary, by transfer or in any other form, does not constitute a valid regularization within the meaning of the Act. The fund thus established remains otherwise unavailable for a period of one year.
8.2. Within fifteen days following the expiration of the regularization period, reporting entities send to the Central Bank an individual certificate of regularization or non-regularization for each regularized or non-regularized unpaid cheque.
In case of non-regularization, the declaration must be accompanied by a copy of the documents listed in the first point of Article 3.2 of this instruction.
8.3. The Central Bank headquarters sends to the Public Prosecutor of the jurisdiction where the drawer resides, before the 15th of each month, the list of unpaid cheques not followed by regularization, with non-payment certificates and documents listed in the first point of Article 3.2 of this instruction, which it has been informed about during the previous month.

Article 9: Judicial Prohibition
After the Public Ministry notifies the Central Bank of the pronouncement of Court judgments, the latter has a period of 10 days from this notice to inform the headquarters of reporting entities, which are responsible for notifying their respective agencies.

Article 10: Violation of Banking or Judicial Prohibition
10.1. Violation of banking or judicial prohibition refers to any cheque issued during the period between the date of acknowledgment of receipt of the prohibition notification letter and the end of this prohibition.
10.2. If the issue date of a cheque presented during the prohibition period is nevertheless prior to the date of acknowledgment of receipt of the prohibition notification letter, the account-holding reporting entity proceeds with payment if funds are available. In case of an incident, the relevant provisions of this instruction apply, without requiring a violation of prohibition declaration. A new one-year prohibition period is calculated from the date of presentation of the new rejected cheque.
10.3. Within five days of the date of violation confirmation, reporting entities send the corresponding declaration to the Central Bank (Annex 4 and exchange file Annex 4.1).
10.4. Within ten days of receiving this declaration, the Central Bank informs the competent Court based on the drawer's domicile.

Article 11: Cheque Forgery
Within ten days from the date of cheque forgery confirmation, the relevant reporting entity informs the Central Bank (Annex 5 and exchange file Annex 5.1).
Within ten days of receiving this declaration, the Central Bank informs the competent court.

Article 12: Opposition due to Theft or Loss of Cheque
Within ten days from the date of receiving the opposition letter for payment of a cheque due to theft or loss, the relevant reporting entity informs the Central Bank according to Annex 6 and exchange file Annex 6.1, accompanied by a copy of the corresponding opposition declaration made by the account holder and documents issued by the competent authority.

Article 13: Account Closure
13.1. Upon account closure, the reporting entity requires the account holder to return all unused cheque forms linked to the closed account and mentions the numbers of unissued cheques in the corresponding declaration.
13.2. The declaration must be made within five days from the closure date according to the model in Annex 7.
13.3. In anticipation of disputes in case of contestation of prohibition for closed account, the reporting entity systematically attaches to the corresponding declaration a two-copy copy of the closure request made by the concerned account holder, or a copy of the closure notification to its client in case of unilateral closure decided by the reporting entity itself.

Article 14: Request for Individual Payment Status
14.1. The Central Bank permanently updates the summary list of cheque-prohibited persons. This list is posted on the SIIE website for reporting entities. The mandatory individual payment status request will cover persons not registered on this list.
14.2. The payment subrogation mentioned in Article 18.3 does not constitute under any circumstances a reason for refusing to issue a chequebook.

Article 15: Monthly Summary Statements
The Central Bank makes available to reporting entities, for consultation by the 15th of each month at the latest, the summary statements of information received during the previous month covering the following events:
 payment incidents, with or without regularization,  cancellation of prohibition,  lifting of prohibition,  account closure.

Article 16: Lifting of Banking and Judicial Prohibition
In addition to prohibitions lifted following declaration cancellations referred to in Article 7 above, the Central Bank posts on the SIIE website, before the end of each month, a monthly statement of banking and judicial prohibitions due to expire during the following month. This statement is accessible according to procedures described elsewhere in this instruction.

Article 17: Authorized Signatures
For obvious security reasons, a specimen signature of persons authorized by reporting entities to sign the paper declarations cited in this instruction must be filed with the Central Bank within 30 days of the entry into force of this instruction, under the cover of the First Responsible Officer of the concerned reporting entity.

Article 18: Sanctions
18.1. All breaches of the provisions of this instruction are subject to sanctions or penalties stipulated in Articles 49, 52 and 83 of the amended Act No. 95-030 of February 22, 1996 on the activity and supervision of credit institutions. This applies in particular to delays in transmitting information, or communication of inaccurate documents or information.
18.2. It is particularly recalled that failure to comply with the declaration obligation for offences referred to by the Act exposes the defaulting reporting entity to fines.
18.3. As a reminder of the terms of Article 19 of the Act, reporting entities must pay, despite insufficient or unavailable funds, any cheque:
 issued using a form for which they have not obtained return under the conditions provided in Articles 3 and 8 of the Act, unless they prove having implemented the due diligence provided by these articles,  issued using a form that they delivered in violation of the provisions of Article 5 of the Act.

Article 19: Effects of Repeated Payment Incidents
19.1. The Central Bank excludes from its refinancing system the signatures of repeat defaulters (cheques and bills combined). It periodically makes the corresponding statement available to all reporting entities for consultation.
19.2. The rehabilitation of excluded signatures is carried out in the following cases:
 systematic rehabilitation upon expiration of the sanction period in case of no new unpaid items or other adverse information during the twelve months preceding the end of the sanction period,  formal agreement of the Central Bank upon reasoned request on behalf of the concerned party. This request is admissible only after six months of exclusion and must, for legal entities subject to regular accounting, include the financial statements of the last three fiscal years.
19.3. A corresponding periodic statement is made by the Central Bank available to reporting entities for consultation.
19.4. Before any rehabilitation request, the reporting entity ensures that the concerned party is listed on the statement of excluded signatures.
19.5. The rehabilitation request falls exclusively within the jurisdiction of reporting entities, which must inform their clients so that they refrain from any direct contact with the Central Bank.
19.6. It is customary for reporting entities to bring to the attention of their clients the risks incurred in case of repeated unpaid items.

Article 20: Miscellaneous Provisions
20.1. Within ten days from the date of confirmation of forgery of a payment or withdrawal card, the relevant reporting entity informs the Central Bank (Annex 5 and exchange file Annex 5.1).
20.2. Within ten days of receiving this declaration, the Central Bank informs the competent court.
20.3. Within ten days from the date of receiving the opposition letter for payment by stolen or lost card, the relevant reporting entity informs the Central Bank according to Annex 6 and exchange file Annex 6.1, accompanied by a copy of the corresponding opposition declaration made by the account holder and documents issued by the competent authority.

Article 21: Final Provisions
This instruction enters into force upon its notification to Professional Associations and other reporting entities not members of a Professional Association.
All provisions of Instruction No. 002-CR/06 of November 24, 2006 are hereby repealed.

Antananarivo, November 8, 2010
The Governor,
Frédéric RASAMOELY.
N.B.: Please contact the Central Bank of Madagascar for the annexes.