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Instructions Written on the Backs of Checks or Promissory Notes May Authorize Transfers into Checking Accounts Not Limited to Individual Accounts
(1 April 2004)
Order Ref. Tai-Tsai-Rong-(II)-0938010454 of the Ministry of Finance
1. The following provisions shall apply to a financial institution accepting fund transfer instructions made by a checking account holder on the back of a check or of a promissory note issued by the checking account holder and designating a financial enterprise as the drawee, to transfer into his or her checking account current deposit funds or current savings deposits funds from his or her own demand deposit or savings deposit or combined deposit account or funds within a borrowing limit secured by a pledged time deposit.
(1) Checking accounts into which transfers may be authorized by such instructions are not limited to individual accounts. Account transfer instructions shall be made in writing, and the funds may be transferred only into a checking account opened by the same account holder at that financial institution. Account holders shall make such instructions on a case-by-case basis and may not make a blanket authorization for that purpose.
(2) Financial institutions shall design the blank for an account holder to make fund transfer instructions and sign/chop them on the back of a check or promissory note in a manner that clearly distinguishes it from [the blank for] endorsements of the check or promissory note, to avoid the occurrence of non-sequential endorsements or re-endorsements as referred to in the Negotiable Instruments Act.
2. The Ministry of Finance Letter Ref. Tai-Tsai-Rong-(II)-0922001878 dated 27 January 2004 shall cease to apply as of this day. |