Dual Controls Reduce Risk Of Corporate Fraud
If your business wants to slam the door on payments fraud, it’s time to introduce dual approval procedures and to take them seriously.
Dual controls split the duties of initiating and approving transactions like ACH and wire payments into two steps: People who can initiate payments, and those who can OK them. This blocks a single person – whether it’s a fraudster who has gained access to your accounts or an employee with bad intentions – from having full control of both payment initiation and approval.
Dual controls can protect your business:
- When fraudsters have compromised user credentials.
- From a growing number of payment scams.
- Against internal fraud by individual employees.
- And from processing errors such as typos in payment or account numbers.
By separating payment initiation and approval duties you’ll be requiring checks and balances on the process, and each step is important.
Those approved to initiate payments need to ensure that the request is valid and to verify information if there are any discrepancies. Employees responsible for approving payments need to exercise the same cautions before allowing any money to be sent. Dividing those duties ensures that no single person controls the entire process.
It’s important that you work closely with your financial institution to help determine protections that will be best for your business and how to implement dual controls.
As you set up the dual-control safeguards, make sure you discuss:
- What kind of controls you’ll be using.
- Who is responsible for what steps in the process?
- Daily limits for wire and ACH payments.
- Daily limits by users.
- Using templates to streamline workflow.
- Who can initiate or change employee entitlements.
- Payment initiation and approval workflows and how irregularities are reported and resolved.
By using dual controls, you’ll significantly reduce the possibility of fraud by requiring that at least two or more people are involved in transaction processing.