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A cheque is a payment instrument that allows deposit account holders to transfer funds that are immediately available. 

All cheques supplied by Portuguese banks to their customers are standardised, with similar appearance, mandatory format and text, allowing automated treatment by institutions and correct completion by issuers.


Evolution of cheque transactions

Restrictions on the use of cheques

To avoid the unlawful use of cheques, Banco de Portugal manages a database with information on natural and legal persons to whom banks may not supply cheques – the List of Cheque Defaulters (LCD).

Banco de Portugal:

  • Updates the LCD based on information sent by credit institutions;
  • Disseminates the LCD on a daily basis across the banking system;
  • Disseminates across the banking system court judgments submitted to it in case of conviction for the crime of writing unfunded cheques;
  • Releases trend information on the number of entities included on the LCD in the past five years.


Number of entities included on the LCD

Unlawful use of cheques

Persons acting on their own behalf or representing other persons are considered to have unlawfully used a cheque when, within the 30-day legal time limit: 

  • They fail to prove to their bank that they have settled the cheque returned due to:

                   - Lack of/insufficient funds;

                   - Closed account;

                   - Irregular drawing;

                   - Blocked or suspended account, if the cheque has been issued after said blocking/suspension.

  • They fail to settle with their bank a cheque issued unfunded, even if the bank has paid this cheque to the beneficiary, in compliance with the obligation to pay cheques of €150 or less in cases of lack of or insufficient funds in the drawn account.

It is not a case of unlawful use of cheques when cheques are returned:

  • Having been presented for payment after the legal time limit;
  • Having been written to the cheque issuer himself/herself, except if they are endorsed.
Consequences of the unlawful use of cheques

Banks are required by law to terminate the cheque convention with individuals that have unlawfully used cheques and to report this to Banco de Portugal, which is also required by law to include the names of these persons on the LCD.

The decision to terminate the convention to the cheque issuer extends to all co-holders of the account on which the unsettled cheque was issued. 

If non-issuing co-holders consider that the acts underlying the decision to terminate the cheque convention were unknown to them, they must prove so to the bank. If this is proven within a 10-business-day time limit counting from the notification of termination, the credit institution must annul that decision, and the name of that customer will not be included on the LCD. 

If they prove that they had no knowledge of said acts after their name has been included on the LCD, they must request that their bank asks Banco de Portugal to delete the communication and annul their inclusion on the list.

No bank shall provide cheque books to customers whose names are included on the LCD (for a period of two years) or who have been judicially prohibited from writing cheques (over the period established by the court, from six months to six years).

After learning of the inclusion of their name on the LCD, customers should return all unused cheque books to their banks, and if there are post-dated cheques (cheques issued with a later date than its delivery to the drawer), they should inform the drawee bank of the number, date and amount of cheques they post-dated, so that it does not report their use to Banco de Portugal. 

The fact that they have been included on the LCD or that there are court decisions in their name does not prevent cheque issuers from debiting or crediting their deposit accounts. There are various ways that an entity whose name is on the LCD may choose to transfer funds from a deposit account, for example, withdrawals (in the branch or at ATMs), transfer orders, direct debits or loose cheques (crossed or not). 

Issuing unfunded cheques, i.e. when there are no funds available in the respective account, is a crime punishable by imprisonment.

Duties of credit institutions

After a cheque return (or in case of insufficient funds, after payment of a cheque of an amount of €150 or less) credit institutions are required to send the customer a notification to settle it, through registered letter sent to the last address given by the issuing holder, stating:

  • The number of the cheque to be settled, its amount and the account number and branch office where it has been drawn;
  • The last day of the deadline for settlement and the respective location, although it may occur in any of the institution’s branches;
  • The types of settlement permitted;
  • The consequences of failure to settle the cheque.


After the 30-day legal time limit for settlement, banks are also required to send a notification of termination of the cheque convention, through registered letter sent to the last address given by the account holder, stating:

  • The underlying reasons; 
  • The obligation to return all unused cheque books;
  • The duty to refrain from issuing cheques on that or any other bank;
  • The possibility of crediting/debiting deposit accounts through other means;
  • The possibility of non-issuing co-holders to prove that they did not know about the acts underlying the decision to terminate the cheque convention, by providing the relevant means of proof;
  • The duty of the co-holders’ bank to annul the termination should the co-holders provide the above-mentioned means of proof. If this occurs within 10 working days after receipt of the notification for termination, the decision to terminate the cheque convention shall not be communicated to Banco de Portugal.


Use of the LCD in credit risk assessment

Banco de Portugal also provides the other credit institutions with information on cheque defaulters so that they can assess the risk of credit granted to natural and legal persons.

Consultation of information

Information recorded on the LCD can be accessed by the persons in question themselves or those with powers to represent them. It may be accessed over the Internet, requested in writing or obtained in any public information desk of Banco de Portugal. Banco de Portugal only provides clarification by telephone on rules in force and conditions to obtain information, and does not provide any information on registered data or ongoing processes.

Submission of removal requests

Entities whose names are on the LCD may submit a removal request to Banco de Portugal, provided that they have already proven to the banks involved that the situations that caused their inclusion on the LCD have been resolved and that they have returned all unused cheque books.

Requesters may also choose to send their request through their banks, which must inform them of the costs charged for that service.

Banco de Portugal’s decision is made after confirmation of the settlement of the situations and taking into account the grounds of the request. The decision is disseminated in computerised form across the banking system, free of charge to the requesters.

As of the date when a person’s name is no longer on the list, any bank may supply him/her with cheque books. However, no bank is obliged to do so, since there is no legal provision requiring banks to supply cheque books to their customers.