To what extent does the Saudi legal system provide criminal protection of checks? And what are the legal penalties for issuing a check without sufficient funds?
In a fast-paced commercial environment based on trust and commitment, the check is considered a non-negotiable instrument of settlement, enjoying special legal protection under the Saudi Commercial Papers Law. The Saudi legal system does not treat the check as an ordinary financial tool, but rather as a “commercial paper with a criminal character” that requires sufficient funds at the time of issuance. Any attempt to issue it without sufficient balance or with bad faith is criminalized. Accordingly, the system imposes severe criminal penalties on those who issue checks without funds or misuse them, ranging from fines and imprisonment to banning from engaging in certain activities.
This article comprehensively reviews the scope of criminal protection of checks, the enforcement of penalties, the Saudi system’s stance on bounced checks, and the implications of these measures for both the issuer and the holder, along with references to the latest regulations and amendments.
Criminal Protection of Checks in the Saudi Legal System
Checks receive special treatment under Saudi law. While other commercial papers are typically addressed as civil rights or contractual obligations, the Saudi legislator granted the check additional criminal penalties for its protection. According to the Saudi Commercial Papers Law, issuing a check requires that the drawer have sufficient funds with the drawee at the time of issuance. If the drawer knowingly issues a check without sufficient coverage, the act constitutes a criminal offense. Provisions under Articles (118–121) govern such acts, outlining presentation procedures and enforcement measures.
These provisions were reinforced by Royal Decree No. M/45 of 1409 AH (1989), which introduced penalties of up to 3 years in prison and fines of up to SAR 50,000 for bad-faith actions related to checks.
Saudi law considers check-related crimes—such as issuing a check without funds or forging a signature—as intentional crimes requiring criminal intent. Thus, the legislator did not settle for civil compensation alone but included criminal sanctions to protect public trust in checks as settlement instruments. The state intervenes to protect public interest and deter check fraud, thereby reinforcing financial stability and trust in the Kingdom’s commercial dealings.
Check-Related Offenses and Their Penalties
The most prominent check-related crimes in Saudi Arabia involve insufficient funds or bad faith. The following summarizes key offenses and their elements and penalties:
1. Issuing a Check Without Sufficient Funds:
The law requires the drawer to have sufficient funds with the drawee when issuing the check. Issuing a check with insufficient funds knowingly constitutes a criminal offense. Elements: drawing and signing a check while knowing that the account lacks sufficient coverage. Penalty: Article 118 imposes imprisonment of up to 3 years and/or a fine of up to SAR 50,000. Repeat offenders within 3 years face up to 5 years in prison and a SAR 100,000 fine.
2. Partial Withdrawal of Funds After Issuing the Check:
If the drawer withdraws part or all of the balance after issuing the check, reducing the available funds below the check amount.
It is treated as an intentional act to render the check uncovered. Penalty: Treated similarly under Article 118.
3. Order to Stop Payment Without Justification:
If a check is valid and funded but the drawer instructs the bank not to pay without lawful cause, the act reflects bad faith. Penalty: Article 119 imposes a fine of up to SAR 100,000 and possible civil compensation.
4. Endorsement or Delivery in Bad Faith:
This applies to any person who endorses or transfers a check while knowing it lacks funds.
As well as any holder who receives such a check in bad faith. Penalty: Covered under Article 118—up to 3 years in prison and SAR 50,000 fine.
5. Formal or Administrative Offenses:
These include issuing a check without a date or with an incorrect date, or drawing a check on a non-bank institution. Penalty: Article 120 imposes a fine not exceeding SAR 10,000. Article 121 adds the possibility of publishing the names of convicted individuals as a deterrent.
6. Forgery of Checks:
Although the Commercial Papers Law does not explicitly address check forgery, the Penal Law on Forgery criminalizes altering any financial document, including checks. Acts such as forging the amount or signature are punishable by up to 3 years’ imprisonment and SAR 300,000 fine.
Recent Legal Amendments
The most significant amendments to the Saudi check regulations came under Royal Decree No. (M/45) dated 12/9/1409 AH (1989). These amendments revised Articles 118, 119, and 120 and introduced Article 121 on name publication. While the core provisions remain unchanged, occasional updates to technical regulations and prosecution guidelines occur. The amendments aim to deter repeat violations and align penalties with check values and recurrence.
Conclusion about Criminal Protection of Checks
The check remains a legally guaranteed monetary instrument in the Kingdom. Fraudulent acts involving checks incur criminal penalties beyond mere civil remedies. Understanding your legal rights and obligations when issuing or receiving checks is essential.
At Al-Mashora Law Firm, we believe that every financial right deserves strong legal protection. Whether you’re a creditor or debtor facing disputes over checks, our legal experts are equipped to help you resolve the issue efficiently. Contact us today for specialized consultation and full legal support in protecting your rights and financial interests.