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Central Bank of Malta updates CBM Directive No. 19

The Central Bank of Malta published today an updated text of CBM Directive No. 19 on the use of cheques and bank drafts (the Directive). The Directive lays down rules for the safe and effective use of cheques and bank drafts, where the payer, payee and the regulated institutions servicing the paper-based instruments are all located in Malta. The Directive also seeks to ensure the safe and effective use of cheques and bank drafts, by reducing the legal and operational risks associated with these payment instruments.

The updated provisions enable payment service providers to make a distinction, when discontinuing the cheque issuance services, between paper-based instruments that cannot be honoured due to lack of available funds and due to insufficient information on the paper-based instrument. The updated provisions also enable a third party to deposit a paper-based instrument in the account of the named payee.

The Central Bank of Malta will also be publishing an updated set of Guidance Notes in the coming days to aid the market and the general public in understanding the Directive.

The updated provisions come into force on 1 January 2025.