Law Amending the Issuance of Checks
The Law Amending the Issuance of Checks aims to strengthen the reliability of cheques and reduce bounced cheques by introducing stricter controls and clearer enforcement mechanisms for their issuance and transfer.
Article 1: In Article 6 of the Law on the Issuance of Checks enacted on 16/04/1977, with subsequent amendments and additions, the phrases “and the period of validity” and “the maximum period of validity of a check from the date of issuance of the checkbook is three years, and checks whose stated date falls after the validity period are not subject to this law” are deleted.
Article 2: In Note (1) of Article 21 bis of the Law, the phrase “regarding checks issued after two years from the effective date of this law” is amended to “regarding check forms from checkbooks issued after the end of Esfand 1399.” The sentence “checks whose date of issuance precedes the aforementioned time shall be governed by the law in force at the time of issuance” is amended to read as follows: “checks issued from checkbooks whose date of issuance precedes the time stated in this note shall be governed by the law in force at the time the checkbook was issued, and banks shall pay such checks without the need to register them in the Sayad system. On all check forms from checkbooks issued after the above-mentioned date, the following statement must be printed: ‘Issuance and endorsement of a check without registration in the Sayad system shall be invalid.’”
Article 3: A new article, designated as Article 24, is added to the Law as set out below, and the existing Article 24 is renumbered as Article 25.
Practical Points for Issuers and Recipients of Checks
Article 24
A guaranteed check shall be subject to the following provisions:
- The issuance and delivery of guaranteed checks by banks to customers shall be conducted exclusively through the Integrated Electronic Check Issuance System (Sayad). This process requires completion of the relevant application form by the applicant at the bank branch in the presence of a bank officer, inclusion of the identity details and account number of the recipient on the guaranteed check in accordance with instructions issued by the Central Bank of the Islamic Republic of Iran, and registration of the reason for requesting the guaranteed check in the Sayad system. The system assigns a unique identifier to each check, and the Central Bank is obligated to provide the recipient with the possibility to inquire into the guaranteed check information.
- Payment of the amount of a guaranteed check by the bank shall be made exclusively to, and into the account of, the recipient whose details are stated on the guaranteed check. Endorsement for the transfer of a guaranteed check shall have no legal validity.
- Cancellation of a guaranteed check, at the request of the applicant or their attorney or legal representative, upon presentation of the original check for deposit of the funds into the applicant’s account, without the need for endorsement by the recipient, shall be possible only up to one month after its issuance by the issuing bank. Payment of a guaranteed check to the recipient upon presentation of the original check after the period specified in this clause shall be conditional upon completion of the relevant anti-money laundering forms by the applicant or the recipient and the bank branch’s report to the anti-money laundering unit of the issuing bank.
- In the event of loss of a guaranteed check, where both the applicant and the recipient refer to the issuing bank and complete and sign the form declaring the loss of the guaranteed check and a non claim undertaking, and request a duplicate, the bank is obligated, in addition to verifying the identities of the applicant and the recipient, to verify their identity information through the banking electronic identity verification system. After cancellation of the lost check, the bank shall issue a duplicate guaranteed check in accordance with the information recorded in the Sayad system.
In the event of forgery of a guaranteed check or use of a forged guaranteed check, the offender, in addition to the statutory criminal penalties, shall, by court order, be deprived of obtaining guaranteed checks for a period of two to six years.
This law, consisting of three articles, was approved in the public session of the Islamic Consultative Assembly on Sunday, 29/01/1400, and was confirmed by the Guardian Council on 18/02/1400.
Frequently Asked Questions About the Law Amending the Issuance of Checks
The amended law removes the limitation on the validity period of checks and revises Note (1) of Article 21 bis so that checks issued from checkbooks provided after the end of Esfand 1399 are governed by the new law. It also adds a new Article 24 to the law and renumbers the previous Article 24 as Article 25.
A guaranteed check is issued exclusively by banks through the Integrated Electronic Check Issuance System (Sayad). Its issuance requires completing an application form at the bank branch and including the recipient’s identity details and account number on the check. Each guaranteed check is assigned a unique identifier, and the recipient can inquire about the check’s information through the system.
Payment of a guaranteed check is made solely to the recipient whose details are stated on the check and only into their designated account. Endorsement for the purpose of transferring a guaranteed check is legally invalid. These rules are intended to prevent misuse and unauthorized transfer.
In the event of loss, the applicant and the recipient must refer to the issuing bank, complete the loss declaration form and a non-claim undertaking, and request a duplicate. After identity verification and cancellation of the lost check, the bank issues a duplicate in accordance with the information recorded in the Sayad system. Cancellation of a guaranteed check is possible only by the issuing bank and in accordance with statutory procedures.
Any person who forges a guaranteed check or uses a forged guaranteed check, in addition to statutory criminal penalties, shall be deprived by court order of obtaining guaranteed checks for a period of two to six years. This law was enacted to enhance the security and credibility of bank-issued checks. What changes have been introduced by the Law Amending the Issuance of Checks?
What is a guaranteed check, and how is it issued?
How are the payment and endorsement of a guaranteed check handled?
What procedures apply in the event of loss or cancellation of a guaranteed check?
What is the penalty for forging or using a forged guaranteed check?
The explanation about the Sayad system was helpful. If someone forgets to register a check properly, can that mistake be corrected later?
In many situations, the issue can be resolved by completing the required registration, but the exact solution depends on the stage of the transaction and the specific circumstances.
Has this change actually reduced disputes involving checks?
The amendments were designed to improve transparency and reduce fraud. While no system eliminates every dispute, the new requirements have strengthened accountability.
Are businesses adapting well to the new process, or is there still a learning curve?
Most businesses have adapted over time, although some still encounter procedural issues. Understanding the legal requirements is essential for avoiding unnecessary problems.
The part about dishonored checks caught my attention. Besides being unable to issue new checks, are there other legal consequences people should be aware of?
Yes. Depending on the facts, a dishonored check may lead to civil claims or other legal consequences. Each case should be evaluated individually.
What happens if a check is transferred outside the Sayad system by mistake?
Under the current legal framework, transfers should be recorded through the Sayad system. Failing to do so may create legal complications regarding ownership and enforcement.
Do you think these amendments have made commercial transactions safer overall?
Yes. The reforms were intended to increase security, improve traceability, and reduce the misuse of checks in commercial transactions.
Does that also make it easier to resolve disputes if they arise?
In many cases, yes. Accurate electronic records can provide valuable evidence when questions arise about the validity or transfer of a check.
Do you think businesses should review their internal payment procedures because of these changes?
Absolutely. Updating internal procedures helps businesses remain compliant and reduces the risk of avoidable legal issues.
Have you seen clients become more careful about issuing checks since these rules were introduced?
Yes. The additional legal requirements have encouraged many individuals and businesses to pay closer attention to how checks are issued and managed.
The comparison between the old and new system made the changes much easier to understand. For someone using checks only occasionally, what is the most important rule to remember?
The most important point is to ensure that every check is properly issued and registered in accordance with the legal requirements before it is transferred or presented for payment.