In reference to some banks' inquiries regarding the disbursement of government checks issued with dual or triple names by the Ministry of Finance and government agencies. 

We inform you that it has been agreed between the Ministry of Finance and SAMA, as of the beginning of the fiscal year 1435/1436 H, not to issue checks to order beneficiaries with dual, triple or followed names with phrases that make it difficult to determine the name of the beneficiary and direct the beneficiary to review the drawer, and accordingly we hope to take into account the following: 

1. Returning government checks issued to the order of beneficiaries with dual, triple or triple names or followed by phrases that make it difficult to determine the name of the beneficiary and directing the beneficiary to review the drawer to amend them. 
2. Cashing expatriate cheques if the name of the beneficiary in the cheque is identical to his identity, provided that the bank keeps a copy of that signed by the beneficiary.

In confirmation of the previous circulars of SAMA which included a request to commit to accepting the cashing of Saudi Riyals traveler's checks issued by the Saudi traveler's Checks Company, we inform you that in support of the Saudi Riyal Traveler's Cheque, SAMA calls on all banks operating in the Kingdom and all licensed money changers to abide by the following:

1. Cashing traveler's checks in Saudi riyals (old and new) as soon as they are presented by their holders, including pilgrims, Umrah performers, visitors and citizens, without any obstacles or imposing any commissions. 
2. Compensating the owners of shops, hotels and other service companies with the value of checks accepted by the company's customers immediately in exchange for their sales or services. 

SAMA stresses the importance of compensating entities that accept traveler's checks in Saudi riyals immediately to enhance their credibility and encourage their acceptance, and SAMA hopes to inform all your branches of this circular to act accordingly, and to report what has been taken within ten days from its date.

Referring to SAMA Circular No. MAT/796 dated 23/12/1429 H which provides for the new objection paper form that the branches of SAMA and banks operating in the Kingdom should work with, and the supplementary Circular No. MAT/5824 dated 06/03/1431 H regarding the emphasize to all Banks operating in the Kingdom the necessity of using the new form for slip of dishonored cheque. 

We would like to note that SAMA has noticed that some bank branches and clearing centers do not provide all the information and data of the drawer that is required to be recorded on the objection paper before delivering it to the beneficiary, which has caused obstruction of justice when dealing with such cases. 

Based on the above, SAMA would like to emphasize  the need to direct concerned employees, when any of the cases mentioned in the objection paper occur, which prevent the cheque for being cashed, to write an objection paper to be delivered to the check holder immediately, including all the drawer's information and data of the drawer, and not to procrastinate for any reason whatsoever. Assigning the Audit Department to prepare a report on all objection papers issued by the clearing departments and branches starting from 1/1/1432 H until the end of the year, including an inventory of the objection papers issued, the number of papers that do not meet the data, information, corrective actions, and the penalties taken regarding violating employees, and providing SAMA with it no later than the end of March 2012.

In reference to bank checks issued by banks to the order of SAMA at the request of a citizen or resident in return for fees for some services or fines incurred by any of the government agencies, and since banks request the (Order: who requested the bank to issue the check) when requesting the return of the value of those checks in the event of loss or reversal of the service request to review SAMA to bring proof that they were not submitted for cashing, SAMA has studied the treatment of these checks in a manner that does not conflict with the instructions regulating them, and accordingly, we inform you that banks must address the above-mentioned issue as follows:

    To take note and act accordingly within a month from its date, and to report on what has been taken.

Reference to SAMA Circular No. BCI/9 dated 7/01/1424H, attached with the Slip of Dishonored Cheque form for the certified cheque to be used.

We would like to inform you that SAMA has re-examined the terms of the Slip of Dishonored Cheque form that was communicated to the banks through the aforementioned circular. This was done in collaboration with the Banking Operations Committee, the Commercial Papers Committee, and the Legal Department of the Ministry of Commerce and Industry. As a result, some amendments have been made.

So, we attach a copy of the new form for Slip of Dishonored Cheque, that should be applied and used by the branches of SAMA and the operating banks in the Kingdom, which should be attached when returning the cheque to the clearing house or to the customer submitting the cheque, for each cheque individually. We would also like to point out that the responsibility of verifying the legitimacy of the cheques submitted to the banks, including the verification of valid legal authorizations, inheritance papers, guardianship and custody documents, identity verification documents, account registration documents, and preservation of such documents, lies entirely with the banks before submitting the cheques to the clearinghouse. The banks also bear the responsibility for any violations that may arise thereafter.

Therefore, we hope to adopt and implement it on your official documents starting from 01/01/1430H. and notify SAMA (Banking Inspection Department) with a copy of the actions taken.

SAMA received a copy of the letter of His Excellency the Acting Undersecretary of the Ministry of Finance for Revenue Affairs No. 68388 dated 23/8/1429 H regarding the observation that customers issue bank checks representing revenues or fines to the state in the names or jobs of officials of government sectors, and this is contrary to the requirements of paragraph No. (6) of Chapter Two of the instructions for collecting and depositing revenues, which stipulated that bank checks shall be ordered by the Ministry of Finance to handle the head of the entity or his deputy. 

Therefore, SAMA hopes that bank checks representing revenues or fines for the state will not be issued in the names or positions of government sector officials, as they should be issued to the Ministry of Finance to handle the head of the entity or his deputy. 

To inform and notify all your branches to act accordingly.

Given that SAMA has noticed the multiplicity of complaints related to the grievance of customers (beneficiaries) against the refusal of banks (drawee) to cash personal checks due to the presence of instructions from customers (drawers) to stop the payment of these checks on the pretext of loss (missing) of those checks in exploitation of the relevant articles of the Commercial Papers Law, including Article No. (105) of the Commercial Papers Law, which states that "The drawee shall pay the check, even after the expiry of the period prescribed for presentment thereof. The drawer may not object to payment of the check prior to the expiry of the period prescribed for presentment thereof except if it is lost or its holder becomes bankrupt or incompetent" and that there is a need to issue instructions to limit this phenomenon. 

Therefore, SAMA addressed the Ministry of Commerce and Industry under letter No. 1727 /MZ/M A T dated 20/11/1426 H regarding this matter and SAMA received the letter of His Excellency the Minister of Commerce and Industry No. 2561/11 dated 4/7/1427 H to the effect that His Excellency shares SAMA's opinion regarding this phenomenon and the exploitation of the text of Article No. (105) of the Commercial Papers Law, and that His Excellency agrees with SAMA in issuing instructions that limit the violations mentioned in those complaints.

Based on SAMA's keenness to enhance confidence in dealing with cheques as a tool to fulfill financial obligations in commercial transactions, to prevent manipulation of regulations and exploitation by fraudsters and bad faith, and to avoid the regulatory liability and penalties that may fall under the penalty of both the drawer and the bank (drawee) stipulated in Articles No. (108, 118 and 119) of the Commercial Papers Law.

We inform you that the cases in which the cheque is considered lost referred to as lost in the text of Article (105) of the Commercial Papers Law are the following cases:

1) If the personal cheque is lost from the drawer before he delivers it to the beneficiary.

2) If the banker cheque is lost from the person issuing it before it is delivered to the beneficiary.

3) If the cheque, whether personal or banker, is lost from the beneficiary before cashing it from the bank.

In order to achieve the positive application of the above-mentioned article, the bank shall, in the event that the customer who draws the cheque submits to him to report the loss of a cheque that he had previously written to one of the beneficiaries, the bank shall ask him to issue an objection paper in payment of the lost cheque that includes the cheque number, date, amount, name of the beneficiary and the circumstances surrounding its loss, and an acknowledgment that once the bank finds that the cheque is in the possession of the first beneficiary and not an appearance of others, and presents it to the bank for disbursement on the date of its submission, and the bank ensures that it is complete. The formal conditions of the cheque, the validity of the drawer's signature, and the availability of the value of the cheque in the account of the customer (drawer), the value of the cheque will be paid to the beneficiary directly without reference to the drawer, and that the objection paper shall include a reminder of the drawer of what is stated in the text of Article No. 118 of the Commercial Papers Law, and a sample of an objection paper shall be attached in the payment of the check.

To review and act accordingly and apply the objection paper form in the payment of the lost cheque by the drawer, noting that SAMA will study and address similar complaints received and take the necessary corrective measures in this regard.

SAMA has noticed that the checks issued by banks to their clients do not include the place of issuance, nor do they reference the address next to the name of the drawer.

Since the place of issuance of a check is one of the mandatory details stipulated in Article 91 of the Commercial Papers Law, and since Article 92 of the same law states that a check devoid of the mandatory details mentioned in the previous article is not considered a check except in two cases, one of which is if the check lacks the place of issuance, it is deemed to have been issued at the location specified next to the drawer.

Therefore, in the absence of the place of issuance, a check may lose its value as a commercial instrument, leading to potential damages. SAMA hopes that this will be considered when issuing new checkbooks for your clients, ensuring that the name of the city where the bank client resides is added alongside their name on the check.

Based on the proposal submitted by SAMA branch in Riyadh to change the current Objection slip on cheque form, which is outdated and no longer serves its purpose, a task force was formed from the SAMA and some local banks. This team concluded that a new unified form should be prepared for use by both the banks and SAMA branches, taking into account the technological and procedural developments in banking.

We have attached a copy of the new Objection slip on cheque form, which should now be used by SAMA branches and banks operating in the Kingdom. It must be included when returning a cheque to the clearinghouse or to the client who submitted the cheque, for each cheque individually. We hope that it will be approved for implementation in your documents one month from its date. We would also like to emphasize that the responsibility for verifying the legality of cheques presented to banks—including the validity of powers of attorney, inheritance certificates, guardianship documents, and identity verification documents for the relevant account—lies entirely with the banks prior to submitting the cheques to the clearinghouse. Additionally, the banks are responsible for any violations that may arise thereafter.

Referring to the banks' inquiry on this subject, we inform you that the check drawn by one of the assigning bodies to the order of the contracting contractor and in which the phrase "handling such and such a bank" is mentioned after the contractor's name shall be subject to the provisions of a  specially crossed check with a special underline and shall have the same effects, and such a check may be circulated by endorsement whenever it is a check to the order, and in accordance with the directives of the Ministry of Finance and National Economy in its letter No. 611/2/ H dated 3/4/1492 H, the mention of the word "handling" or "by" in the check means that the authorized person to receive the check's amount is the name that appears after one of the two words. 

SAMA sees no justification for reversing the "handling" formula, which may appear in cheques that represent ceded receivables to banks, because that formula is sufficient to preserve the rights of banks, and because custom has been settled on it, and it is a custom that does not violate the law. 

To take note, adopt and act accordingly.

SAMA received the letter of His Excellency the President of the General Audit Bureau No. 1/1 /O dated 1/1/1417 H attached to the letter of His Excellency the Minister of Finance and National Economy No. 12/12535 dated 27/10/1416 H regarding the approval of His Excellency to SAMA to baptize banks that pay the salaries of state employees by accepting E-signatures on payroll checks for entities that wish to apply this method, provided that they are stamped by the financial affairs in those government departments.

Whereas the NAO requested to be provided with a statement of the names of the entities for which SAMA has approved the automatic copies of payroll cheque signatures and future approvals.

Therefore, we hope that your specialists will provide us with the names of the entities that implement automatic printing of signatures on checks, and this is urgent for importance.

SAMA has received the letter of HE the Minister of Finance & National Economy No. 12/12535 dated 27-10-1416, to the effect that HE has approved the acceptance of electronic signature on salary checks issued by government agencies that desire to use this method, provided checks are stamped by the competent Financial Affairs Department and under its own responsibility, until the committee which is studying the electronic deposit of salaries is through with its research on the subject and is out with a definite decision to be communicated to all concerned parties.

Please inform your people in charge that electronic signatures on salary checks by government agencies that wish to use this method are acceptable, once stamped by the competent financial department under its own responsibility.

Further to SAMA circular No. 6497/BCL/254, dated 21/5/1416 H., regarding its non-objection to the printing of magnetized checks related to the consolidated account of each bank, if the bank so desires, provided SAMA’s prior consent on the check sample must be obtained before printing, and provided further that the use of such checks must be limited to your withdrawals from and payments to Saudi Central Bank and other government departments and agencies.

We attach herewith a sample of the check to be used for the above-mentioned purposes. We wish to inform you that the approval of the sample by Saudi Central Bank must be obtained before printing.

For your info and acting accordingly.

SAMA was informed that some local bank branches are cashing the salaries of some government employees through checks that carry the seal of the government agency but not signed by hand.

Since this action is in violation of our circular No. 12655/BC/633 dated 21-10-1415 H. which states in the 4th paragraph that 'commercial banks ought not to accept any check that carries a single signature or seal and is not signed by hand', Saudi Central Bank would like you to comply with this circular and notify all your branches to act accordingly.

Re SAMA circular sent to you on 27/3/1416 H, regarding the consolidation of your current accounts with SAMA in one single account with the head office; and whereas paragraphs (5) and (6) of said circular provided that your cash withdrawals and deposits of collected government revenues should be handled through checks drawn on the consolidated account.

We wish to inform you that SAMA has no objection that you print magnetized checks for your consolidated account, if you so desire, provided prior approval by SAMA is obtained and the use of such checks is limited to your withdrawals from and payments to SAMA and government agencies.

Please be informed and act accordingly.

Re statistical reports on clearing sent by SAMA branches to the head office, it was noted that a large number of banker checks are recorded and coded as personal checks, thus effecting the accuracy of such reports.

You are required to remind those in charge of such reports that banker checks must carry the figure (08) in the operation code space which represents:

1. Checks drawn by local banks on Saudi Central bank branches
2. Checks withdrawn by/at Saudi Central bank's Head Office by/on Saudi Central bank branches.
3. Checks drawn by a Saudi Central bank branch on another Saudi Central bank branch
4. Checks drawn by local banks on their branches.

We hereby attach a list of banking operating codes allowed to be coded in said space in accordance with the relevant method, hoping you comply therewith.

Further to our circular No. BC/183 dated 20-7-1405H, regarding the use of checks in paying civil servants salaries through local banks and article (6) thereof which describes such checks as 'non-endorsable except to banks', and

Whereas the majority of beneficiaries of checks issued by the General Presidency of Girls Education are women and their cashing methods are different from those of men.

HE the Minister of Finance & National Economy has agreed, in his letter No. 13/1889 dated 11-3-1411 H to HE the President of the General Presidency (with a copy to Saudi Central Bank) that salary checks of women and Presidency Female Staff may be endorsable as an exception to the rule.

Hence a female beneficiary of such check may cash the check at the drawee bank by presenting her ID, such as passport, or deposit the check for account at the bank. She may also endorse the check on its back to another person who may either cash it at the drawee bank or deposit it thereat in his A/c. It is preferable that the endorsement be as follows: 'To the order of, name of beneficiary and signature, subject to article (6) above-mentioned circular to the effect that checks must be cashed within one month from the date of issuance.

SAMA wishes to confirm its previous circulars regarding not accepting expatriates' drafts or issuing checks to them unless their Iqamas are valid and sufficient information on them is taken. You are also required to notify the closest criminal investigation office or police department, via the most expedient means, about any request to transfer money abroad if it looks abnormal or suspicious, before the transfer is made, so that necessary action is taken in this regard.

Please stress on your branches in the Kingdom to comply with these instructions and acknowledge receipt.

SAMA has received the letter of HE the Minister of Finance & National Economy No. 3/5153, dated 2/6/1406H, based on the letter of HE the Minister of Commerce No. 426/11, dated 26/2/1406H, requesting HE to instruct banks operating in the Kingdom of the following:

1. Reasons for rejecting the cashing of a check should be stated clearly instead of just saying, "contact the drawer". The term in the rejection slip must be amended to read "contact the drawer as no balance is available" or "contact the drawer as no sufficient balance is available", as the case may be.
2. Checks of individual establishments which have an account with the bank must include the name of the establishment owner together with the name of the establishment.

Enclosed is a copy of the rejection slip that should be attached to the rejected check when returned to the clearing house or to the client who presented the check, to act accordingly as of this date. Please acknowledge receipt and inform all your branches to comply with these instructions.

In our desire to serve and develop Saudi economy and to encourage the Saudi Traveler Checks Co, being a national Company established with the approval of Saudi Central Bank and under its supervision for the purpose of issuing Saudi traveler checks, and in view of the fact that the checks issued thereby render large services and facilities to citizens, residents, travelers and pilgrims, Saudi Central bank, therefore, urges you to participate in encouraging the use of traveler checks in SR by observing the following:

Please communicate same to all your branches to act accordingly.

The Ministry of Finance & National Economy has requested in its letter No. 8850/190 dated 19/5/1405 H to be contacted in case of the loss of checks drawn by the Ministry.

Consequently, we call on you to send directly to the Ministry of Finance and National Economy your claims in connection with the circular related to the non-cashing of lost ministerial checks. The Ministry of Finance & National Economy shall in return, notify the Directorate General of Banking Control at Saudi Central Bank’s head office to circulate same, taking into consideration our clear instructions in our circular No. 9013/BC/114 dated 12/6/1402 H regarding lost checks.

SAMA is receiving letters from some banks operating in the Kingdom and SAMA branches regarding the loss of checks. It is noticed that some of these letters do not contain all the data that may assist SAMA to circulate the loss of checks to all banks and SAMA branches.

We hope to receive your claims connected with the loss of checks containing the following data: check number, date and amount, the names of the drawer, drawee and beneficiary.

It has been noticed that ball-point pens produced by Papermit Company under the brand name 'Replay', along with possibly forged copies thereof, are available in the Kingdom. One of the features of such pens is that their ink can be easily erased with a simple rubber eraser.

Hence, we call on all banks to warn their clients against the use of such pens in writing checks so that the check may not be amended and forged after its issuance. The bank should post the warning at its premises. We further suggest that the word 'warning' be printed on the internal cover page of the check book.

Saudi Central Bank has noticed the delay of some banks in answering its circulars regarding lost checks for several months. This delay causes several problems for beneficiaries and hurts their commercial dealings. For this reason, Saudi Central Bank started studying this subject to facilitate previous procedures and shift responsibility to the drawer and drawee of the lost check. To apply this approach, Saudi Central Bank hopes that you follow the following procedures:

I. Re Government Checks:

1.  Checks issued by the Ministry of Finance & National Economy in SR or foreign currencies
2.  Checks of the Retirement Salaries Authority in SR
3.  Checks of Government departments and agencies and public institutions in SR drawn on their accounts with Saudi Central Bank branches.
4.  Internal credit drafts drawn on Saudi Central Bank branches
5. Checks drawn by Saudi Central Bank head office or Saudi Central Bank branches in SR and checks drawn by Saudi Central Bank branches on the head office or on other branches.
6.  Checks drawn by Saudi Central Bank head office and branches in SR on commercial banks.

7.  Checks drawn by Saudi Central Bank head office and Riyadh branch in foreign currencies on their correspondents abroad.

   With regard to all these checks drawer should notify drawee of the loss of the check requesting suspension of payment. Drawee has to suspend cashing the check immediately unless it had been already cashed. Meanwhile. Saudi Central Bank’s Banking Control will notify all branches and general managements of local banks to act accordingly.

   To avoid the disruption of the interests of the lost check

   owner, drawer has to issue another check, one month after the date of Saudi Central BankA’s circular regarding the lost check, after taking necessary commitments from the beneficiary or drawer or the party that lost the check or the party that requested the issuance of a new check, as the case may be, to return the lost check if and when found or to refund its value if it had been cashed in any manner.

   Regarding checks drawn by Saudi Central Bank head office or Riyadh branch on foreign correspondents in foreign currencies, Saudi Central Bank's branch in Riyadh or the Draft Department at the head office shall order the foreign drawee correspondent by telex to suspend cashing the check, after making sure that, according to its records and the statements received from the correspondent up to the date of suspending cashing, the check has not yet been cashed. It should then inform Banking Control to notify all Saudi Central Bank branches and local banks general managements by circular of the lost check. The Draft Department and the Riyadh branch shall issue a new check after one month from the date of notifying the drawee.

II. Banker Checks:

1.  Checks drawn by local banks on Saudi Central Bank head office and branches.
2.  Checks drawn by local banks on their branches or on other local banks.
3.  Checks drawn by local banks in foreign currencies on their correspondents abroad.
4.  Checks drawn by foreign correspondents on local banks in foreign currencies

5.  Checks drawn by foreign correspondents in different currencies on Saudi Central Bank's head office and Riyadh branch.

   For all these checks drawer must notify drawee, inside or outside the Kingdom, to stop cashing the lost check, circulate same to all bank branches inside the Kingdom and notify Saudi Central Bank (Banking Control), with regard to item (1) II to notify its branches accordingly.

   Drawee of the lost check, in connection with (4) and (5) II above, shall notify drawer of the lost check, upon receiving the news, that it has ordered the cashing of the check to be stopped after making sure that this has been actually done.

   In order to avoid the disruption of the beneficiary

   interests, drawer of the lost check must issue another check one month after the date of notifying drawee, and take necessary commitments from the beneficiary or any other party, as the case may be, to return the check if and when found or to refund its value if it had been cashed in any manner.

III . Individual and Corporate Checks Drawn on Local Banks:

1. Checks drawn by individuals or corporations in local or foreign currencies on local banks:

   Beneficiary must contact drawer to notify drawee to order the holding up of cashing the lost check. After receiving a written confirmation from drawee, within one month at the latest from the date of being notified of the loss of the check, to the effect that the holding of the check has been notified to all its branches in the Kingdom, drawer must issue another check and take necessary commitments from beneficiary that the check will be returned if and when found or its value will be refunded if it had been cashed in any manner.

IV. Saudi Central Bank branches and all banks operating in the Kingdom shall keep a special register of lost checks, with a separate section for each type of checks, wherein the number, date and amount of the check and the name of the beneficiary shall be recorded for review before authorizing payment.

We urge compliance with the foregoing, noting that this circular applies to all Saudi Central Bank circulars previously issued in this respect. We further hope that banks will, in turn, circulate their instructions to all their branches by telex or cable. We also hope that Saudi Central Bank branches and banks will implement what is required from each one of them and acknowledge receipt.

It was lately noticed that banks have started to draw on their accounts with SAMA branches by checks to the order of their individual and corporate clients. This is a violation to the concepts of dealing between banks and SAMA, in addition to wasting a good deal of SAMA's time on very minor operations outside its activities.

SAMA, therefore, requests the banks to observe the following rules:

1.The withdrawals of banks that have current accounts with SAMA branches should be limited to:

(a) Feeding their cash balances when necessary with amounts not less than SR 5,000,000.

(b) Settling their obligations toward their branches or other local banks provided such checks shall be drawn directly on SAMA's relevant branches to be settled outside the clearing house.

(c) Settling their obligations toward government agencies.

(d) Transferring funds in favor of the bank branches in other regions of the Kingdom.

(e) Payment of clearing balances as per article 23 of the Clearing House Law communicated to you via circular No. 667/32/96, dated 28/1/1387 H.

(f) If a bank cashes a check drawn at a SAMA branch in a city other than that of the bank, it has to send the check for collection to the bank branch where the SAMA branch on which the check is drawn, is located. Such check will not be accepted by the clearing house in any city other than that in which the SAMA branch, on which the check is drawn, is located.

2. No check may be drawn on SAMA by a bank branch that has no current account with SAMA branches.

3. Banks that have branches in the Kingdom must draw their checks on such branches, pursuant to article (96) of the Commercial Papers Law, subject to item (1) above.

4. Banks that have no branches in the Kingdom may exceptionally draw checks on SAMA branches only to pay their obligations.

5. Drawing of checks by the head office of the bank on accounts with SAMA's head office in Riyadh should be limited to covering foreign currency purchases, pursuant to previous SAMA instructions sent to you by cable.

Please be informed and instruct your branches in the Kingdom to act accordingly.

Reference to SAMA Circulars No. BC/204 dated 16/4/1398 H, No. BC/35 dated 26/1/1399 H and No. BC/52 dated 19/3/1400 H, regarding the careful examination of checks before cashing and the need of taking all personal information about bank clients to be available to the authorities if and when needed, and the safe keeping of the bank stamps and documents.

SAMA has received the letter of HE the Minister of Finance & National Economy No. 306/S/400 dated 13/5/1400 H requesting that banks be instructed not to print the name of any person on the check before examining his ID to avoid any form of cheating and embezzlement.

Hence, SAMA requests you to comply with these instructions, to advice your branches accordingly and acknowledge receipt.

SAMA has noticed that some banks delay their answer to SAMA letters and circulars regarding lost checks and attachment of individual balances. Since this delay is causing damage to the interest of the concerned parties, the public interest requires the banks to adopt the necessary measures that guarantee their commitment to send their answers, and that of their branches, to SAMA within 2 weeks from receiving such circulars.

All banks are requested to adopt speedy arrangements in this regard to serve the public interest.