Bounced Cheque Law & Penalties in Saudi Arabia

Bounced cheque law: the actual penalties

Issuing a cheque without sufficient funds is a criminal matter under the Saudi Commercial Papers Law, specifically Article 118, and it carries several distinct legal tracks worth understanding before dealing with a bounced cheque.

The criminal penalty (public right)

Anyone who in bad faith draws a cheque without existing, withdrawable funds, or with funds less than the cheque's value, faces imprisonment of up to 3 years and/or a fine of up to SAR 50,000. If the offense is repeated within 3 years of a judgment, the penalty increases to up to 5 years imprisonment and a fine of up to SAR 100,000.

The private right: recovering the cheque's value

Separate from the criminal track, the cheque holder can claim the full value directly through the execution court, since a cheque is treated as an executive instrument once the bank confirms rejection due to insufficient funds. This route is usually faster for actually recovering the money than the criminal track.

Is every bounced cheque a crime?

No. Recent amendments distinguish between an ordinary commercial dispute (like a disagreement over contract performance) and cases showing clear intent to avoid payment. Cases treated as regulatory violations include: withdrawing funds after handing over the cheque, instructing the bank not to honor it without legitimate cause, or drawing from a suspended account.

Practical steps when you receive a bounced cheque

• Present the cheque to the bank within the statutory period (typically within 6 months of issuance) to get an official rejection statement
• Go to the nearest police station to file a report
• Go directly to the execution court to recover the amount, alongside any criminal track you choose to pursue
• Keep a copy of the cheque and the bank's rejection statement as key evidence

Additional administrative penalties

Beyond imprisonment and fines, administrative penalties may include banning the convicted person from issuing new cheques for a set period, listing them with the Saudi Central Bank in ways that restrict opening new bank accounts, and in some cases publishing their name in official gazettes.

This information is general, and the specifics of your case (such as whether a genuine commercial dispute exists) directly affect the right path. For an accurate assessment in Jeddah, reach out to us on WhatsApp.

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