On the 7th of July 2021, the Central Bank of Malta issued Directive No. 19 on the use of cheques and bank drafts, the provisions of which shall become effective as of the 1st of January 2022. The Directive’s aims are parallel to Malta’s action plan to curb money laundering and financial crime and shall incentivise a shift towards less paper-based modes of payment.
The main points and changes brought about by the Directive are the following:
- Each cheque issued must include the date of issue, the sum to be paid in words and numbers as well as the details of the payee and the signature of the person issuing the cheque.
- All cheques shall have a validity of 6 months from the date of issue.
- Instruments with the words ‘Or Order’, which allow for the paper-based instrument to be endorsed by third parties shall be phased out and will be discontinued from the date of coming into force of the Directive.
- Cheques may only be issued for amounts exceeding €20.
- When cheques are issued in favour of natural persons, banks and payment service providers may only pay up to €5000 in cash. Should the indicated amount on the cheque exceed €5000, then this shall only be transferred directly to the payee’s account. In the case of companies, all cheque amounts shall always be transferred directly to the payee’s account.
- It is emphasised that the bank or payment service provider may decline to cash cheques that are issued by same payer to the same payee over a short period of time if these cheques form part of the same obligation.
- If the payee does not hold an account with the bank or payment service provider, then the latter institutions will only pay an amount up till €5000 in cash.
- Banks have the power to suspend cheque facilities to a drawer if, in the span of 12 months, 6 cheques presented were unable to be fulfilled either due to lack of funds or because the cheque did not contain all the information mentioned in the Directive. This suspension shall be for a minimum of 24 months from the effective date of suspension. Penalties will also apply in this case.
Should any further information be required, please do not hesitate to contact 3a Malta on email@example.com.