Instruction No. 002-CR/06 of November 24, 2006 Setting the Procedures for Declaring and Disseminating Information on Check Offenses

CENTRAL BANK OF MADAGASCAR

INSTRUCTION NO. 002-CR/06

dated November 24, 2006

setting the procedures for declaring and disseminating information on check offenses.

Declarations and processing of offenses provided for by Law No. 2004-045 of January 14, 2005, hereinafter referred to as "the Law", and its implementing decree No. 2006-281 of April 25, 2006, shall be carried out according to the procedures described in this instruction.

1.- The Declarants: The declarants are credit institutions and financial services authorized to maintain accounts on which checks may be drawn: banks and Postal Check Centers (PCC).

They are commonly referred to in this instruction as Check-Issuing Institutions or CIIs.

2.- Legal Obligations of CIIs: The Law prescribes the obligation for the CII to declare to the Central Bank the events listed below:

• Refusal of payment due to absence, insufficiency, or unavailability of funds, and banking prohibition (Article 3, Article 22),
• Cancellation of payment incident and banking prohibition declaration (Article 28),
• Regularization and non-regularization of unpaid checks (Article 9, Article 22),
• Violation of prohibition (Article 12, Article 22),
• Falsification of check or payment card or withdrawal card (Article 13, Article 22),
• Stop-payment for theft or loss of check (Article 23),
• Account closure (Article 8).

It is particularly recalled that failure to comply with this declaration obligation for the offenses mentioned in Article 15.1 of said Law exposes the defaulting declarant to fines.

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CENTRAL BANK OF MADAGASCAR - P.O. Box 550 - Tel 22 217 51 - 22 234 65 - Fax 22 345 32 Antananarivo

3.- Obligations of the Central Bank: The Law, in Chapter IV, entrusts the Central Bank with the management of the Central Check Register.

In this capacity, the Central Bank centralizes all declarations originating from CIIs relating to the incidents and events listed in paragraph 2 above.

For the application of the provisions of this instruction, each representation of the Central Bank (head office or branch, excluding representations under service lease agreements) is authorized to centralize the aforementioned declarations originating from each CII operating within its jurisdiction, according to the list in Annex 9, and to ensure the dissemination of information, including those provided for by Article 24 relevant to said jurisdiction.

Representations of CIIs located outside these zones correspond directly with the Central Bank head office.

Outside the jurisdiction of its branches and agencies, information dissemination is ensured by the Central Bank head office, which notifies the head offices of CIIs. These, in turn, will take the necessary steps with their respective branches.

4. Refusal of Payment and Banking Prohibition (Article 3): 4.1 Grounds Any refusal of payment resulting from one of the following grounds must be declared to the Central Bank in 4 copies according to models in Annexes 1.1, 1.2, and 1.3:

• Insufficient funds,
• Funds unavailable for attachment/garnishment,
• Funds unavailable for Notice to Third Holders,
• Funds unavailable for requisition,
• Funds unavailable for drawer's stop-payment,
• Account closed,
• Non-existent account.

4.2 Declaration Deadline
The declaration must be sent to the Central Bank within fifteen days from the date of presentation of the check.

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CENTRAL BANK OF MADAGASCAR - P.O. Box 550 - Tel 22 217 51 - 22 234 65 - Fax 22 345 32 Antananarivo

4.3 Dissemination Deadline:
The Central Bank, within fifteen days from the receipt at its counters of the unpaid check and banking prohibition declaration, informs other CIIs.

Any banker informed of the prohibition measure must comply with the provisions of Article 5 of the Law.

5. Cancellation of Non-Payment Declaration (Article 28) 5.1 Grounds for Cancellation Declaration cancellation is admissible only in one of the following cases:

• error by the drawee bank's services,
• disappearance of funds following an event not attributable to any of the persons authorized to draw checks on the account.

5.2 Declaration
The CII submits to the Central Bank a cancellation request according to the model in Annex 2, in accordance with the provisions of the aforementioned article.

5.3 Response of the Central Bank
Within fifteen days following the date of receipt of the request, the Central Bank notifies the drawee bank of the cancellation and, where applicable, notifies other CIIs of the lifting of the banking prohibition.

It also refers the matter to the relevant Courts if Article 25 has been applied.

6. Regularization, Non-Regularization (Article 22) 6.1 Reminder: Regularization must be carried out within a period of five days from the date of receipt by the drawer of the injunction letter, through the establishment on their account of sufficient and available funds intended to settle the amount of the check plus unpaid fees. To this end, direct cash payment to the beneficiary does not constitute a valid regularization within the meaning of this instruction.

6.2 Declaration
Fifteen days after the expiration of the period, the CII sends to the Central Bank the duly completed statement of unpaid checks, followed or not by regularization, according to the model in Annex 3.

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CENTRAL BANK OF MADAGASCAR - P.O. Box 550 - Tel 22 217 51 - 22 234 65 - Fax 22 345 32 Antananarivo

6.3 Court Referral.
In application of the provisions of Article 25, the Central Bank head office sends to the Public Prosecutor before the fifteenth of each month, the statement of unpaid checks not followed by regularization, along with the corresponding non-payment notices, which it was informed about during the previous month.

7. Judicial Prohibition (Article 17)
Within a period of ten days from the receipt of court judgments, the Central Bank notifies the head offices of CIIs, which will inform their respective branches.

8. Violation of Banking or Judicial Prohibition (Articles 12 and 17) Within a period of ten days from the date of detection of the offense, any violation of banking or judicial prohibition, followed or not by payment, must be declared by letter in three copies, according to the model in Annex 4.

Within a period of ten days from the receipt of this declaration, the Central Bank refers the matter to the competent Court based on the drawer's domicile.

9. Falsification of Check or Payment Card (Article 13) Within a period of ten days from the date of detection of the falsification of a check, payment card, or withdrawal card, the concerned CII informs the Central Bank by letter according to the model in Annex 5, in three copies.

Within a period of ten days from the receipt of this declaration, the Central Bank refers the matter to the competent Court.

10. Stop-Payment for Theft or Loss of Check or Card (Article 23) Within a period of ten days from the date of receipt of the stop-payment letter for a stolen or lost check or card, the concerned CII informs the Central Bank by letter according to the model in Annex 6, in three copies.

11. Account Closure (Article 8)
11.1 Restitution
: At the time of account closure, the banker must require the account holder to return all check forms issued on the closed account.

11.2 Declaration
The declaration must be made to the Central Bank within five days from the closure date, according to the model in Annex 7.

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CENTRAL BANK OF MADAGASCAR - P.O. Box 550 - Tel 22 217 51 - 22 234 65 - Fax 22 345 32 Antananarivo

12. Request for Individual Payment Status (Article 26): Upon request by the CII before the issuance of a first check form during account opening, the Central Bank provides the individual payment status of the concerned client.

This request is made on a two-copy form duly completed according to the model in Annex 8. The Central Bank's response, annotated on this same document, is returned to the requesting CII within a period of fifteen days from the date of receipt of the request at the head office or its representations.

13. Monthly Summary Statements:
The Central Bank communicates to the head offices of CIIs, no later than the fifteenth of each month, summary statements of information received during the previous month concerning the following events:

• payment incident followed or not by regularization, with indication of the effective date of the banking prohibition,
• account closure,
• cancellation of banking prohibition,
• judicial prohibition with indication of the effective date and expiration date.

14. Lifting of Banking and Judicial Prohibitions: In addition to prohibitions lifted following declaration cancellations mentioned in point 5 above, the Central Bank communicates before the end of the month to CIIs a monthly statement of banking and judicial prohibitions scheduled to expire during the following month.

15. Dispatch Procedures
15.1 Deadlines
The deadlines referred to in this instruction are understood as "clear", defined as not including the term days.
If the last day of the indicated period is a holiday, this deadline will be extended until the first working day following the holiday.

15.2 Signature Accreditation:
For obvious security reasons, a specimen signature of persons authorized by CIIs to sign the declarations cited in this instruction must be deposited with the Central Bank within a period of 30 days from the date of entry into force of this instruction, under the cover of the General Director of the concerned Institution.

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CENTRAL BANK OF MADAGASCAR - P.O. Box 550 - Tel 22 217 51 - 22 234 65 - Fax 22 345 32 Antananarivo

16. Miscellaneous Provisions
Previous provisions inconsistent with those of this instruction are repealed concerning unpaid checks issued from April 26, 2005, inclusive.

For uniformity of forms, declarations concerning unpaid checks issued before April 25, 2005, inclusive, will also be made according to the models in Annex 1 of this instruction.

Unpaid checks issued up to April 25, 2005, may also be regularized and will accordingly be declared to the Central Bank, under the conditions of this instruction.

17. Entry into Force: this instruction enters into force on 02 JAN 2007

[Seal of the Central Bank of Madagascar]
The GOVERNOR,
Gaston E. RAVELOJAONA

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CENTRAL BANK OF MADAGASCAR - P.O. Box 550 - Tel 22 217 51 - 22 234 65 - Fax 22 345 32 Antananarivo