Non-automated Payment Order Origination

While in-house terminals are the primary sources for payment order origination, less complex institutions still rely heavily on memos, letters, telephone, fax, or standing instructions. (Note: standing instructions are normally maintained in the automated funds transfer system as recurring transfers and should be subject to the same input/verification controls as wires when first entered into the system). It is imperative that an institution using these payment order methods has a viable security program, which includes:

  • Maintaining signature lists for use with internally and externally generated memos, letters, or fax instructions. As noted in UCC4A Section 201, signature verification alone is not defined as a security procedure; however, institutions may use it with other security devices such as call backs or codes.
  • Call back to authorized individuals for both internally and externally generated telephone instructions.
  • Procedures covering standing instructions protecting against unauthorized change, periodic review to validate accuracy, and ensuring execution under the agreed terms.

 

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