Analyses: A New Mode of Forgery: The Rise of Cloned and Washed Cheques

• Jurisdiction: South Africa
• Published date: 16 August 2019
• Citation: (2006) 18 SA Merc LJ 196
• Date: 16 August 2019
• Pages: 196-203
• Author: JT Pretorius

A New Mode of Forgery: The Rise of Cloned

and Washed Cheques

JT PRETORIUS

University of South Africa

CHARNELLE VAN DER BIJL

University of Stellenbosch

1 Introduction

The forging of cheques is not a new phenomenon. Although it is diff‌i cult

to predict the cunning ingenuity of fraudsters and thieves, one could perhaps

learn from the types of fraud that have been committed in the past. A very

common type of cheque fraud occurs with the alteration of the contents of a

particular cheque. Section 62(1) of the Bills of Exchange Act 34 of 1964 (‘the

Act’), as amended, provides that if

‘a bill or an acceptance is materially altered the liability of all parties who were parties to the

bill at the date of alteration and who did not assent to it, must be regarded as if the alteration had

not been made, but any party who has himself made, authorised or assented to the alteration,

and all subsequent indorsers are liable on the bill as altered’.

The Act also provides that ‘material alterations include any alteration of

the date, the sum payable, the time of payment and the place of payment’

(s 62(2)).

Although the law dealing with the fraudulent alteration is and can be quite

complicated, the general rule is that the risk of an unauthorised alteration or

forgery will fall on the drawee bank. It is only in cases where the alteration is

obvious or apparent that the possibility of a contribution from the collecting

bank will arise (see JT Pretorius ‘Altered Cheques and the Collecting Bank’

(1997) 9 SA Merc LJ 365; Trans-Atlantic Equipment (Pty) Ltd v Minister of

Transport 2002 (2) SA 167 (T)). Sometimes the alterations are so expertly

done, that one cannot even detect the alteration with a magnifying glass (see

Momentum Life Assurers Ltd v First National Futures (Pty) Ltd 1995 CLD

458 (W)). With modern technology it is therefore quite possible that the

alteration on the cheque would be ‘perfect’, so that it would not be ‘obvious’

or even ‘apparent’ from the document itself. Likewise, where an employee,

for example, steals a company’s cheque and forges the authorised signatory’s

signature on it, the loss will usually fall on the drawee bank (see Pretorius op

cit at 366; Holzman v Standard Bank Ltd 1985 (1) SA 360 (W)).

However, in recent years, with the advance in computer technology, the

forging of cheques has become a major concern not only for customers but

also for banks. With modern computer technology a new mode of forging of

cheques has become possible in that the information on the face of the cheque

is fraudulently encoded or ‘cloned’ in magnetic ink onto another document

196

(2006) 18 SA Merc LJ 196

© Juta and Company (Pty) Ltd