UCPB SAVINGS BANK, INC.

AMENDED GUIDELINES ON ACCEPTANCE OF SECOND-ENDORSED

CHECKS

I. OVERVIEW

As a general rule, the Bank shall only accept checks which are payable to depositors
for deposit to their respective accounts. Occasionally, some depositors present
checks payable to other payees which they would like to deposit to their accounts.
In such cases, our associates must be aware that acceptance of such checks involves
risks pertaining particularly to the validity of endorsements.

A Second-endorsed Check shall be defined as a check endorsed by a payee to be

deposited to an account other than the payee’s account.

These guidelines shall also apply to borrowing accounts with regular Domestic Bills
Purchased Lines wherein second-endorsed checks are allowed as eligible items for
purchase.

II. DEFINITIONS

1. Second-endorsed Non-Crossed Check – refers to a check without any

two parallel lines on the upper left corner of the face of the check being
deposited to an account other than the payee.

2. Second-endorsed Ordinary Crossed Check – refers to a second-endorsed

check
 with two parallel lines on the upper left corner on the face of the
check
 without the stamp “For Payee’s Account Only” or “For Deposit to
Payee’s Account Only”.

3. Second-endorsed Check with Restriction – refers to a second-endorsed

check
 with two parallel lines on the upper left corner on the face of the
check
 with the stamp “For Payee’s Account Only” or “For Deposit to Payee’s
Account Only’.

III. GUIDELINES

A. BSP GENERAL GUIDELINE

Banks should limit the acceptance of second-endorsed checks from properly

identified clients and only after establishing the nature of the business of said
clients justifies, or at least, makes practical the deposit of second-endorsed
checks. In case of isolated transactions involving deposit of second-endorsed
checks by clients who are not engaged in trade of business, the identity of the

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 first endorser should be established and the record of the identification shall
also be kept for five (5) years. It is also understood that banks shall, at all
times, follow the Know-Your-Customer (KYC) rules whenever they handle or
transact second-endorsed checks. (Source: BSP Circular 02-07/16)

B. ELIGIBILITY REQUIREMENTS

Approval of Deviation
A. Second-endorsed Non-crossed Check, and
B. Second-endorsed Ordinary Crossed Check
1. Acceptance should be limited to checks President
payable to individual payees only
including
sole proprietorship business.
2. Approval of the acceptance of second- None
endorsed check shall be based on the
face value per check as follows:
Up to P30,000 – Branch Head
Up to P50,000 – Mktg. Area Head
Up to P100,000 – Mktg. Division Head
Above P100,000 – President
3. Endorsement of payee and depositor President
shall
be required. The account number of the
depositor must be indicated at the back
of
the check.
4. A Letter of Request and Undertaking President
(LRU) shall be executed by the depositor
in
two (2) copies (signing of the depositor
should be witnessed by the BH and MA).
5. The depositor’s six (6) months CASA ADB Marketing Area Head
should be at least P100,000
note : CASA shall refer to all accounts of
the depositor under his name including
joint accounts. For Corporations, account
of the company shall only be considered.
6. The depositor should be a client of the Marketing Area Head
branch for a minimum of one (1) year.
7. Acceptance of second-endorsed checks None
shall be subject to the approved
accreditation by the Marketing Area Head
subject to the negative list.
Negative List as follows:
a. Unregistered lending investor
b. Business engaged in unlicensed
gambling and other illegal
activities
c. Underlying transaction is not
within the normal course of

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the Acceptance
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Endorsed Checks
 business of the depositor
d. Checks payable to government
agencies , instrumentalities or
institutions shall not be accepted
as second-endorsed
e. Client/Depositor reported by the
Bank to AMLA under the
Suspicious Transaction Report (STR)
C. Second-endorsed Crossed Check with Restriction
(Checks with stamp “For Payee’s Account Only” or “For
Deposit to Payee’s Account Only”)
1. Acceptance should be limited to checks President
payable to individual payees only including
sole proprietorship business
2. Allow acceptance of crossed checks with President
stamp “For Payee’s Account Only” or “For
Deposit to Payee’s Account Only” subject to
the following:
a. Government Issued Checks
b. Non-Government Issued Checks, None
provided:
b.1. Payee is an existing depositor
of
the Bank, or
b.2. Payee is properly identified by
presentation of acceptable IDs
note : For acceptable IDs refer to
policy on opening of accounts
3. Approval of the acceptance of second- None
endorsed check shall be based on the face
value per check as follows:
a. Government Issued Checks
Up to P30,000 - Branch Head
Up to P50,000 - Mktg. Area
Head
Up to P100,000 - Mktg. Division
Head
Above P100,00 - President
b. Non-Government Issued Checks,
provided:
Up to P30,000 - Branch
Head
Up to P50,000 - Mktg. Area
Head
Up to P100,000 - Mktg.
Division Head
Above P100,000 – President
4. Endorsement of payee and depositor shall President
be required. The account number of the
depositor must be indicated at the back of
the check.
5. A Letter of Request and Undertaking President
(LRU) shall be executed by the depositor in

UCPB Savings Bank, Inc. 3 Amended Guidelines on

the Acceptance
of Second-
Endorsed Checks
 two (2) copies (signing of the depositor
should be witnessed by the BH and MA).
6. The depositor’s six (6) months CASA ADB Marketing Area Head
should be at least P100,000
note: CASA shall refer to all accounts of the
depositor under his name including joint
accounts. For Corporations, account of the
company shall only be considered.
7. The depositor should be a client of the Marketing Area Head
branch for a minimum of one (1) year
8. Acceptance of second-endorsed checks shall None
be subject to the approved accreditation by
the Marketing Area Head subject to the
negative list.
Negative List as follows:
a. Unregistered lending investor
b. Business engaged in unlicensed
gambling and other illegal activities
c. Underlying transaction is not within
the normal course of business of the
depositor
d. Checks payable to government
agencies, instrumentalities or
institutions shall not be accepted as
second-endorsed
e. Client/Depositor reported by the
Bank to AMLA under the Suspicious
Transaction Report (STR)

• Check is traded within the normal course of business between our depositor
and the payee.

• Non-eligible second-endorsed checks for acceptance shall include checks

payable but not limited to the following:
 Partnerships
 Corporations
 Societies
 Firms
 Associations
 Organizations
 Other juridical entities
 Government Agencies, Instrumentalities or Institutions
 Checks denominated in foreign currency

• Acceptance of second-endorsed checks must be approved by the Branch Head

who shall signify his/her approval by signing on the DS and LRU.

B. ACCEPTANCE OF SECOND-ENDORSED CHECKS

• The Branch Head shall ensure that all eligibility requirements are fully met
and complied with prior to the approval of the acceptance of second-endorsed
check/s.

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the Acceptance
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 In the acceptance of second-endorsed checks, the Branch Head shall ensure
that the Bank is not being used as intermediary for money laundering or other
illegal activities.

• An updated monthly Monitoring and Approval Sheet (MAS) shall be

maintained.

• A separate DS covering second-endorsed check/s shall be accomplished by

the depositor. The DS shall be signed / approved by the BH and reviewed
and signed by the SCO. DS without the signatures of the BH and SCO shall
not be processed.
• Acceptance of second-endorsed checks shall not be subject to service
charge.
• Any loss incurred by the Bank due to non-compliance with the foregoing
guidelines shall be for the account of the erring associate.

C. RECORD KEEPING

• For reference and audit purposes, the branch shall maintain a complete,
updated and orderly compilation of the DS (separate from the regular DS)
together with the LRU, MAS, and photocopy of the check/s which shall be
retained ten (10) years from the reference month under the joint custody of
the SCO and SSA.
• The MA shall be responsible for:
 photocopying duly approved and validated DS, and second-endorsed
check/s (front and back portions).
 collation of photocopied DS and second-endorsed check/s.
• At the end of the day, all documents shall be turned over by the MA to the
SCO. These shall be kept inside the records vault under the joint custody of
the SCO and SSA.
• These documents shall form part of the SCO and SSA’s accountabilities for
turn over in the event of transfer / change in assignment, resignation,
retirement or termination.
• Such records must be sufficient to permit reconstruction of individual
transactions so as to provide, if necessary, evidence for prosecution of any
criminal activity.

III. PROCEDURES

See Annex 7.

Annexes:

LRU-Individual Annex 1
LRU-Corporation Annex 2
Accreditation Report format Annex 3
Deviation Report format Annex 4
Monthly Monitoring Report Annex 5
format

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Monitoring and Approval Sheet Annex 6
Flowchart Annex 7

UCPB Savings Bank, Inc. 6 Amended Guidelines on

the Acceptance
of Second-
Endorsed Checks