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This article was written by​ Dr Michael Psaila and Mr Neeraj Bharwani.

Directive No 19 on the Use of Cheques and Bank Drafts (‘the Directive’) was issued by the Central Bank of Malta on 7th July 2021 with the aim of promoting safe and effective use of cheques and bank drafts (‘paper-based instruments’) drawn on Maltese banks and financial institutions. Furthermore, institutions which exercise their passporting rights to provide their services in Malta, post office giro payment institutions and the Central Bank of Malta (‘Bank’) when acting as a payment service provider, and any natural or legal person making use of such instruments will also fall within the remit of this Directive.

While certain provisions in the Directive repeat the corresponding provisions on bills of exchange and other negotiable instruments in the Commercial Code and codify certain other usages of trade, the Directive has also introduced additional requirements and limitations which are intended to curb certain practices often associated with money laundering and other forms of financial crime. Indeed, the Malta Bankers’ Association has also declared that the implementation of this Directive will shift the nation’s payment landscape to more efficient modes of payment. [1]

This effort to control the use of cheques as payment instruments for certain transactions should also be seen in the context of the recently published Use of Cash (Restriction) Regulations, which have made it a criminal offence for any person to make or receive a payment, or otherwise carry out a transaction in cash amounting to, or exceeding, €10,000 or its equivalent in any other currency, whether in one transaction or in several linked transactions, in respect of the purchase or sale of certain goods, including jewellery, immovable property, sea-craft, motor vehicles and works of art.

Among the salient changes that will be brought about by the Directive, when it enters into force on 1st January 2022, are the following:

  • (i) Paper-based instruments shall bear on their face the word “Only”, such that they may not be endorsed or negotiated, except by payment service providers;
  • (ii) “Or Order” paper-based instruments, which allow the holder to endorse the instrument in favour of third parties are to be phased out, such that the issuance of such instruments is to be discontinued from the date of entry into force of the Directive;
  • (iii) It will no longer be possible for cheques or other paper-based instruments to be issued for amounts of €20 or less;
  • (iv) Paper-based instruments payable to natural persons may only be paid in cash if the payable amount does not exceed €5,000 – instruments which exceed such amount would be deposited in the payee’s account;
  • (v) Drawee institutions are obliged to withdraw cheque issuance facilities to any person for a period of 24 months or more if during 12 calendar months, 6 instruments presented to it for settlement could not be paid out either due to lack of funds or if the cheque contains certain errors;
  • (vi) All information related to cheques must be retained by payment service providers for a period of at least 5 years;

The Central Bank has made it clear that the main focus of the Directive is to ensure that cheques become a non-transferable payment instrument from the payer to the beneficiary. This will in turn lessen the susceptibility of the same to facilitate money laundering or other fraudulent purposes, whilst simultaneously instilling a sense of certainty in the use of the instruments for both users and service providers.

[1] Central Bank of Malta, ‘New Central Bank of Malta Directive will affect cheque payments as from 2022’ (


This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Michael Psaila