Revealed: How UAE Banks Plan To Improve Cheque Security

Banks operating in the UAE will increasingly make use of QR codes to improve cheque security, the UAE Banks Federation (UBF) has announced.

The announcement was made at a workshop for UBF members which identified proposed improvements to the current cheque verification process, specifically how changes could be made to limit incidences of fraud.

Counterfeit cheques currently expose banks, businesses and customers to financial, reputational and legal risks.

Sophisticated printing technologies have pushed incidences of fraud to increase, and UBF member banks said they are keen to work together to combat this risk.

During the workshop, UBF speakers said that, going forward, member banks would increasingly seek to make use of QR codes, introducing enhanced encryption technology to discourage fraud.

The new approach will see individual cheques allocated a random number that can then be read electronically during an automated validation process. The number is unique to the specific cheque and will ensure that only legitimate cheques will be honoured by banks.

Commenting on the decision, AbdulAziz Al Ghurair, chairman of the UBF, said: “We are committed to enhancing the security of the UAE financial system and today’s announcement is further evidence of our collective desire to tackle the issue of cheque fraud.

“By introducing technology that allows us to detect problems in real time, we are confident that we can lessen the impact of fraud on our customers. In addition, these changes will improve operational efficiency, reduce costs and lay the foundations for further innovation that will benefit the banking sector.”

The new automated approach is expected to use a cryptographic protocol, a one-way identifier called a HASH which uses an algorithm to combine a random number with magnetic ink character recognition (MICR) data.

When the cheque is presented, the QR code will be read from the cheque leaf along with MICR details and passed to the ChequeChain system for validation against the unique HASH. If the value matches the HASH then the ChequeChain system will authorise the cheque.