4.5 SR 01-03-2022 - Laserfiche WebLink

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City of Elk River, Minnesota Electronic Transfers and Payments Policy Purpose The purpose of this policy is to establish procedures to prevent fraudulent payments or transfers to employees, vendors, and contractors. Scope This policy applies to all city departments and employees that have control over city disbursement transactions and governs the actions of all city employees. Background Cities are becoming more transparent with information on the internet and electronic banking is becoming widely accepted. Effective internal control policies and procedures need to be adopted to protect city funds from fraudulently being disbursed. Fraudsters are using social engineering tactics, such as impersonation and manipulation, to deceive employees with legitimate-looking correspondence or phone calls to obtain personal information such as bank accounts or address changes that will re-direct payments intended for an employee or vendor. Often a fraudster will follow city news to learn of newly contracted vendors, and use the information and proper timing to contact the city as the vendor impostor and request the first down payment. Cities should avoid listing dollar/percentage down payment details in City Council public meeting information. Commonly used software allows fraudsters to copy or create legitimate looking vendor invoices that include slight changes to the name and address. Tools to lower risk Common tools to lower the risk of fraudulent disbursement of public funds include:  Automated Clearing House (ACH) Positive Pay — is an online banking fraud mitigation service that allows cities to manage ACH debits and credits posted to your business account via filters and blocks.  Vendor/Supplier Portal — is a portal where vendors enter in critical information (name, address, bank account, tax ID number).  Employee Portal — is a portal where employees enter in requested changes to critical information (address, bank account information). Processes to prevent fraud Employee portals and city intranets should utilize dual authentication when available. Following are processes to prevent the fraudulent disbursement of public funds: Accounts payable 1. Vendor payment approvals a. Require at least two approvals within the city for all disbursements of funds.