Resolution 081/2001: Approval of the Check Regulation

BOARD RESOLUTION NO. 081/2001
SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVAL OF THE CHECK REGULATION.

HAVING SEEN:
The Commercial Code and the Penal Code.
Law 1488 of April 14, 1993.
Law 1864 of June 15, 1998.
Law No. 1670 of October 31, 1995.
Law 765 of March 20, 1929.
Supreme Decree 12011 of November 29, 1974.
Supreme Decree 21660 of July 10, 1987.
Supreme Decree 23277 of September 22, 1992.
Supreme Decree 23979 of March 15, 1995.
Ministerial Resolution No. 654 of June 9, 1998.
The Compilation of Norms for Banks of the Superintendence of Banks and Financial Entities.
The Report from the SIPE Payment System Project 07/2001 of July 2, 2001.
The Report from the Legal Affairs Management SANO No. 115/2001 of June 28, 2001.

CONSIDERING:
That the Commercial Code regulates the aspects inherent to the check and the Penal Code criminalizes conduct related to the use of checks and establishes applicable sanctions.

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That Law 1488 establishes that banking entities are authorized to receive deposits in checking accounts.
That Law 1864 modifies Article 3 of Law 1670, empowering the Central Bank of Bolivia (BCB) to formulate general application policies in monetary, exchange, and payment system matters, for the fulfillment of its object.
That Law 1670 authorizes the BCB to receive demand deposits in national and foreign currency and, likewise, that subsections a), b), and o) of Article 54 empower the Board of Directors of the BCB to issue the norms necessary for the fulfillment of its functions, competencies, and powers assigned by law, as responsible for the administration of payment systems among authorized financial entities, with the power to approve, modify, and interpret the BCB Regulations. That Law 765 establishes that the Comptroller General, the National Treasury, the National Collection Company, and, in general, the other fiscal offices, will print checks on their own account, without the intervention of banks, and that the issuance of checks may be made in 2 or more copies. That Supreme Decree 12011 regulates aspects related to public official checks, whose use for the payment of remuneration of public sector officials is established in Supreme Decree 21660. That Supreme Decree 23277 establishes that the decentralization of the payment of salaries to public officials through private banking is maintained and authorizes the Ministry of Finance to adopt, through the paying banks, modalities for the payment of salaries. That Supreme Decree 23979 establishes checks for the payment of lifetime pensions in favor of meritorious individuals. That Ministerial Resolution No. 654 regulates fiscal checks and establishes their non-transferability, and the obligation that they contain some characteristic that differentiates them from other checks, as well as that they have a seal that identifies the signatures.

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That the Compilation of Norms for Banks of the SBEF (Title VIII. Obligations. Chapter I. Checking Accounts), in articles 11 to 27, contains norms that regulate the use and circulation of checks, the classes of checks, the acceptance and rejection of checks, the obligations and responsibilities of the drawee bank, the formal effects of rejection, the issuance and control of certified checks, the payment of public official checks, the retention of funds, the causes for closure, the rehabilitation of checking accounts, and the records and reports to the SBEF. That according to what is established in the SIPE Report No. 07/2001 prepared by the Payment System Project, it is necessary to approve a Check Regulation. That through Report SANO No. 115/2001, the Legal Affairs Management indicates that there is no legal impediment whatsoever for the approval of the Check Regulation.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- Approve the Check Regulation in its VII Chapters and 39 articles, which as an annex forms part of this Resolution.
Article 2.- The Check Regulation will enter into force as of September 1, 2001.
Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, August 14, 2001

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Juan Antonio Morales A.
_______________ __________________ _________________ Armando Pinell S. Juan Medinaceli V. Armando Méndez M.

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ANNEX
CHECK REGULATION
CHAPTER I
GENERAL PROVISIONS

Article 1.- (Object)
The present norm has the object of regulating the check as a means of payment, establishing the necessary conditions for its issuance, drawing, presentation, payment, and rejection, also regulating special checks and the requirements for their processing by the Electronic Clearing Houses (CEC).
Article 2.- (Scope of application)
The norms contained in this Regulation are applicable to financial intermediation entities authorized by the Superintendence of Banks and Financial Entities (SBEF) to operate with checking accounts, to the CEC, to the Central Bank of Bolivia (BCB), and to natural and legal persons who use checks.
Article 3.- (Complementary norm)
This Regulation has a complementary character to the norms on the matter established in the Commercial Code.
Article 4.- (Check as a means of payment)
The check is an unconditional order of payment at sight drawn by the drawer against his funds in a checking account.

CHAPTER II
ISSUANCE
Article 5.- (Issuance on forms and content)
Check forms may only be issued by financial intermediation entities authorized by the SBEF to operate with checking accounts.

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Every check form must be printed with the following content:

1. Name and address of the drawee entity. In application of the concept of "national account," the legal address of said entity will be printed.
2. Printed number and series. In their absence, the key or identification sign or magnetic characters.
3. Space destined to be filled by the drawer with the place and date of the drawing.
4. Unconditional order of payment at sight.
5. Space to be filled by the drawer with the indication of whether the check is to bearer or to the order of a specific person.
6. Two spaces to be filled by the drawer with the sum of money in figures and in letters for which the check is drawn.
7. Space for the drawer to stamp his autograph signature.
   Article 6.- (Characteristics of the forms)
   The CEC will determine the dimensions that the check forms they process will have, as well as the specifications of the magnetic characters for recognition and reading through electronic means, the space destined for these, the spaces destined for endorsements, and other characteristics that may be necessary for their adequate processing. These characteristics must be uniform in all CECs.
   Article 7.- (Security elements)
   The financial intermediation entities that issue checks will be responsible for including in them the security elements inherent to this type of security instrument.
   Article 8.- (Printing)
   The printing of check forms will be carried out only in entities authorized by the CECs.

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Article 9.- (Register of printers)
The CECs will maintain a register of the entities authorized for the printing of check forms.
The CECs will inform in writing the entities that issue checks of the names of the entities authorized that are registered and deregistered in their records.
Before the printing of each new series of forms, the entities that issue checks must consult the updated register of entities authorized by the CECs.

Article 10.- (Delivery of the forms)
The financial intermediation entities authorized by the SBEF to operate with checking accounts will deliver the check forms to their clients under receipt. The delivery of these forms to third parties through written instruction from the holder of the checking account entails the obligation to verify the authorized signatures and to identify the third party.
Article 11.- (Register of Enabled Checks)
The financial intermediation entities authorized to issue checks will keep a register of the check numbering enabled for drawing that they have delivered to their holders.
Article 12.- (Documents not considered checks)
In accordance with what is provided by article 601 of the Commercial Code, documents that are not issued by banks will not be considered as checks or as securities. The document that is issued in the form of a check in contravention of what is provided in that norm, cannot be transmitted through endorsement nor protested in case of non-payment.

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CHAPTER III
DRAWING
Article 13.- (Requirements of the drawing)
The drawer will fill in the blank spaces of the printed check form with the corresponding information on:

1. Place and date of the drawing.
2. Instruction of whether it is to bearer or to the order of a specific person.
3. Amount for which the check is drawn in figures and in letters.
4. Autograph signature.
   Article 14.- (Available funds)
   The drawer of a check will comply with what is established by article 602 of the Commercial Code regarding the existence of available funds.
   Article 15.- (Responsibility of the drawer)
   The responsibility for the drawing of a check will be attributable to the natural person who draws it for himself or on behalf of a legal person, within the framework of what is established in civil and penal legislations. Any agreement that exempts him from this responsibility will not be valid.
   Article 16.- (Endorsement)
   The endorsement of a check will be carried out in accordance with what is established by articles 522 to 529 and 531 to 538 of the Commercial Code. As determined in article 530 of the Commercial Code, checks cannot be endorsed as security.
   Article 17.- (Non-negotiable check)
   The non-negotiable check is that which cannot be endorsed, except once to the drawee entity, for cash collection or to any financial intermediation entity for credit to the beneficiary's account.
   The drawer may limit the negotiability of a named check by including in it the expression "non-negotiable" or "non-transferable" on the front of the check. The beneficiary of a check may also limit such negotiability by including any of the cited expressions following the endorsement.

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The following are not negotiable: the check drawn or endorsed in favor of the drawee entity, the check for credit to account, the cashier's check, the check with receipt stub, the certified check, the BCB checking account check, and the fiscal checking account check.
Article 18.- (Loss or theft)
In case of loss or theft of checks, the account holder or the beneficiary will have the obligation to notify the fact to the drawee entity by any available means of communication that allows identifying both the person making the report and the person receiving it. This notice must be ratified in writing within the maximum period of 2 business days following. For the cancellation and replacement of lost or stolen checks, the procedure established by articles 727 and following of the Commercial Code must be complied with.

CHAPTER IV
PRESENTATION AND PAYMENT
Article 19.- (General principle)
The payment of the check will be governed by the general principle established in article 606 of the Commercial Code.
Article 20.- (Term for presentation)
The term for the presentation of the check will be that established by article 607 of the Commercial Code.
Article 21.- (Presentation for credit to account)
If the check is deposited for credit to an account opened in a financial intermediation entity different from the drawee entity, the date of presentation in the CECs will be considered as the date of presentation to the drawee entity for payment.

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Article 22.- (Revalidation of Checks)
Unless otherwise established in article 34 of this Regulation, a check not presented for payment within the legal term may be revalidated by the drawer on the same check. The revalidation will allow extending the validity period of the check for the same term of validity established for its presentation. The revalidation of the check will be carried out on the reverse and must contain the expression "revalidated," the date, and the signature of the drawer.
Article 23.- (Requirements that must be met for payment)
For the payment of a check, in addition to the requirements established by article 600 of the Commercial Code, the following requirements must be observed:

1. Validity of the check.

2. That the literal amount is equal to that in figures. In case of divergence, what is established by article 496 of the Commercial Code will apply.

3. That the autograph signature of the drawer is equal to that registered in the drawee entity.

4. Continuity of named endorsements, if any.

5. Endorsement of the check in favor of the drawee entity.

6. Identification of the final beneficiary.
   Article 24.- (Partial payment)
   If the available funds of the drawer are not sufficient to cover the total amount of the check, the drawee entity will offer the holder a partial payment for the amount of the available resources. The holder may accept or not the partial payment. If the holder accepts the partial payment of the check, he will sign a receipt for the amount collected. The drawee entity, on the reverse of the check, through the phrase "check partially paid for the sum of ------ due to insufficient funds" and authorized signature, will record the partial payment made. This record will have the effects of protest for the unpaid amount. This check will be returned to the holder for the legal effects corresponding and cannot be presented again for collection of the unpaid amount.

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Article 25.- (Death or incapacity of the drawer)
The cases of death or incapacity of the drawer will be governed by what is established in articles 614 and 620 subsection 5) of the Commercial Code.

CHAPTER V
REJECTION
Article 26.- (Causes for rejection)
The drawee entity will reject the payment of a check for the causes established in article 620 of the Commercial Code. In these cases, it will record the refusal of payment on the reverse of the check, which must contain the following texts, according to the case:

1. "Rejected for lack of funds," when the checking account on which the check is drawn does not have available funds. This cause for rejection will also be applicable when drawn on a checking account closed, in virtue of the fact that this condition determines that the funds, if any, are not available.
2. "Rejected for insufficient funds," when the checking account on which the check is drawn, having funds, is not sufficient and the partial payment is rejected by the beneficiary.
3. "Rejected for not meeting requirements of articles 600 - 601 of the Commercial Code," when the lack of compliance with one or several of the requirements and formalities described in any of these articles is evident.
4. "Rejected for alteration and doubt of authenticity," when the check is crossed out, erased, interlined, or notably altered in any of its statements or if any circumstance makes its authenticity doubtful, such as the non-correspondence visible and notable of the signature registered in the drawee entity.
5. "Rejected by written notification of non-payment." The drawee entity will grant the holder of the check a simple copy of the notification sent by the drawer or the beneficiary at the time of rejection. The holder may request in writing from the drawee entity an authenticated copy of said notification.

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6. "Rejected by date of drawing subsequent to death or incapacity of the drawer." The drawee entity will present the beneficiary with the supporting documentation or a copy thereof at the time of rejection, and the latter may request in writing a copy of the supporting documentation from the financial intermediation entity.
7. "Rejected by bankruptcy, creditor agreement, or cessation of payment of the drawer." The drawee entity will be responsible for documenting this cause. The holder or beneficiary may request in writing a copy of the notification received by the drawee entity.
In all these cases, the rejection must bear the date and time of presentation, with the signatures authorized for the effect and the seal of the drawee entity.
Article 27.- (Refusal of payment without just cause)
The refusal of payment carried out by the drawee entity without just cause and for causes that are different from those defined in subsections 1 to 7 of article 26 of this Regulation, will make it responsible for the damages and losses caused to the holder.

CHAPTER VI
SPECIAL CHECKS
Article 28.- (Crossed check)
The crossed check may only be collected by banking entities. The crossing of a check is equivalent to an authorization of collection granted by the drawer or holder in favor of an indeterminate bank, if general, or of the expressly designated bank, if special. The general crossing may be transformed into special crossing and not vice versa. The crossing of a check will not affect its negotiability.
Article 29.- (Check for credit to account)
The drawer, the beneficiary, or the holder of a check may prevent it from being paid in cash by inserting the mention "for credit to account" or "only for deposit" or another equivalent. The drawee entity may only settle the check through an accounting entry. The settlement thus made will be equivalent to payment.

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Article 30.- (Cashier's check)
The check issued and drawn by banks against their own accounts will be called "cashier's check" or "management check" and will carry the preprinted inscription "non-transferable." This check will be named and may be deposited for credit to account in a bank different from the issuer.
Article 31.- (Certified check)
I. The certified check is that in which the drawee entity certifies the existence of available funds within the limits of the amount for which it has been drawn. The drawee entity, at the time of certifying a check, will keep apart from the account this amount for payment to the beneficiary.
II. The certification of a check will be valid for the term established for its presentation. At the end of that term, if the certified check has not been collected, the drawee entity must restore the availability of the funds in the drawer's account in the previously set aside sum, eliminating, at the same time, its inclusion in the register of certified checks of the CECs described in article 32, subsection IV of this Regulation.
Article 32.- (Certification of checks)
I. For the certification of a check, the drawee entity must verify that the signature of the drawer is equal to that recorded in its records.
II. The certification of a check will be given by the stamping of a seal with the legends "certified," "approved," "seen," or another equivalent, and of a security seal for the certified amount. The certification must be signed by authorized representatives of the financial intermediation entity and accompanied by seals that identify them.

III. Certified checks will not be negotiable. Certification cannot be extended to bearer checks.
IV. Every certified check will be entered by the drawee entity, at the time of certifying it, into the electronic register that the CECs will organize and administer for this specific effect. Upon presentation, these checks must be consulted in this register to ensure their legitimate certification.

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V. The drawer must be aware of the cost of certification, which must be fixed and charged in Bolivianos.

Article 33.- (Irrevocability of the certified check)
The irrevocability of a certified check will be governed by what is established in article 631 of the Commercial Code.
Article 34.- (Revalidation of certified checks)
The revalidation of the validity period of a certified check will necessarily be carried out by the drawer, for which the drawee entity must perform a new certification, applying what is established in articles 31 paragraph I and 32 paragraph IV of this Regulation. This revalidation may be carried out only once.
Article 35.- (BCB checking account check)
The BCB checking account check will be issued by the BCB for exclusive use of the General Treasury of the Nation and financial entities that have "checking and reserve account" in the Issuing Entity. These checks will be named and non-transferable. The BCB checking account checks issued for use by financial entities will not be compensable in the CECs.
Article 36.- (Fiscal checking account check)
The fiscal checking account check is that drawn by entities of the public sector against the fiscal checking accounts that they maintain in correspondent banks. It will be named and will carry the preprinted inscription "fiscal checking account check - non-transferable."

These checks may be endorsed for credit to the beneficiary's account opened in any financial entity, and be processed through the CECs.
The fiscal checking account check will have magnetic characters for electronic processing that allow its differentiation in the CECs, in addition to other characteristics that differentiate it from other types of checks.

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The drawing of this check will require the signature and identification seal of at least two authorized persons.
Article 37.- (Other checks)
Any other check that is not contemplated in the Commercial Code or in this regulation will not be compensable in the CECs.

CHAPTER VII
INFORMATION AND RECORDS
Article 38.- (Information)
At the time of delivering a checkbook for the first time, financial intermediation entities must provide their clients with a copy of this Regulation.
Article 39.- (Register of checks reported for loss or theft)
The entities that issue checks will keep a register of the written notices sent by their clients for loss or theft of checks.
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