Royal Decree Number 37 dated 11/10/1383 amended by Royal Decree Number M/45 dated 12/9/1409 A.H/ A.C (the Commercial Papers Law) regulates the cheque issuance and circulation matters in the Kingdom of Saudi Arabia (the KSA). In the KSA, the bouncing of a cheque is a criminal offence. When a cheque gets bounced, the cheque bearer lodges complaint against the issuer in the relevant police station of the bank’s area. After a thorough examination of the case, the case is referred to either criminal or civil court for further adjudication. After examining evidence, the criminal court gives an option to the issuer to pay money or go to jail. If the offender fails to follow the court’s order, the court will impose criminal penalties for writing a bad cheque. The offender can challenge the allegation to the court with his/her attorney.
If any person is found guilty of issuing a cheque with insufficient or no coverage, or after issuing a cheque, withdraws some or all of the amount in such a manner as to prevent payment of the cheque or orders the drawee non-payment of a cheque, intentionally writes a bad cheque (by signing incorrectly or falsely) to prevent payment to the payee, in that case, such person shall be liable to be sentenced to up to three years in prison and shall be fined up to SR 50,000 or both. If that person repeats the same act within three years from the date of issue of judgment against him in bounced cheque case, he/she will be sentenced up to five years and/or fined up to SR 100,000 under Article 118 of the Commercial Papers Law.
If any drawer intentionally issues a cheque knowing the insufficient amount in his account shall be levied with a fine up to SR 100,000, and the cheque bearer shall be compensated for the damages he incurred under Article 119 of the Commercial Papers Law.
As per Article 120 of the Commercial Papers Law, if a person issues an undated cheque or a cheque with a false date of issuance, draws a cheque outside a bank, honours an undated cheque, or accepts such a cheque as compensation shall be punished with a fine of SR 10,000.
The court can order publication of judgment against the convicted person and his name and all relevant details in a newspaper under Article 121 of the Commercial Papers Law.