The Office of The Vice Governor

No.: 9013/BC/114

Date: 12/6/1402 H

(6/4/1982 A.D.)

Circular to All Banks Operating in The Kingdom And SAMA Branches

The Manager

Greetings,

Subject: Lost Checks

SAMA 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, SAMA started studying this subject to facilitate previous procedures and shift responsibility to the drawer and drawee of the lost check. To apply this approach, SAMA 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 SAMA branches.
4.  Internal credit drafts drawn on SAMA branches
5. Checks drawn by SAMA head office or SAMA branches in SR and checks drawn by SAMA branches on the head office or on other branches.
6.  Checks drawn by SAMA head office and branches in SR on commercial banks.

7.  Checks drawn by SAMA 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. SAMA’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 SAMA’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 SAMA head office or Riyadh branch on foreign correspondents in foreign currencies, SAMA'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 SAMA 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 SAMA 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 SAMA'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 SAMA (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. SAMA 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 SAMA 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 SAMA branches and banks will implement what is required from each one of them and acknowledge receipt.

Regards,

Vice Governor

Hamed Al-Sayari