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Resolution 1546RESOLUTION NO. 1546 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, ADOPTING THE ELECTRONIC FUNDS TRANSFER (EFT) POLICY AS ATTACHED HERETO. WHEREAS, the City of Edmonds is committed to the highest standards of responsible financial management;and WHEREAS, the City Council Finance Committee reviewed the Electronic Funds Transfer Policy at the March 12, 2024 and at the April 9, 2024 Finance Committee meeting; and WHEREAS, best practice shows that finance related policies should be formally adopted by Resolution; now therefore, THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. ADOPT THE CITY OF EDMONDS ELECTRONIC FUNDS TRANSFER (EFT) POLICY. The city council hereby adopts the following attached document: City of Edmonds Electronic Funds Transfer (EFT) Policy to read as set forth in Attachment A hereto, which is attached hereto and incorporated herein by this reference as if set forth in full. RESOLVED this 23RD day of April 2024. CITY OF EDMONDS ATTEST: C~ASSEY FILED WITH THE CITY CLERK: PASSED BY THE CITY COUNCIL: RESOLUTION NO. April 1 7, 2024 April 23, 2024 1545 Attachment A 1.0 PURPOSE: The City of Edmonds recognizes the use of various electronic payment methods as a safe and efficient method to process certain disbursements. The City of Edmonds is committed to establishing controls and procedures for the utilization of electronic funds transfer (EFT). This EFT Policy outlines the necessary internal controls and incorporates best practices to ensure secure, efficient and compliant electronic funds transfers within the City of Edmonds. This policy will be reviewed biennially as part of Finance Department policy review in conjunction with the biennial budget process. 2.0 FUNDS AFFECTED: All City funds. 3.0 REFERENCES • RCW 82.32.085 : Electronic funds transfer -Generally. (wa .gov} • RCW 39 .58 .750 : Receipt. disbursement. or transfer of public funds by wire or other electronic communication means authorized. (wa.govl • BARS Manual 3.8 .11 Electronic Funds Transfer (EFT) -Disbursement • GFOA Best Practices Electronic Payments 4.0 DEFINITIONS • Automated Clearing House (ACH): movement of funds in a batch process, which is best for high volume, low dollar transactions such as payroll, expense reimbursement, and routine vendor payments, as the cost per transaction is low relative to other forms of electronic payment. • Electronic Funds Transfer {EFT): The electronic exchange means any transfer of funds, which is initiated through an electronic terminal, telephonic instrument, or computer so as to order, instruct, or authorize a financial institution to debit or credit a checking or other deposit account. Wire transfers and ACH payments are examples of EFT's. This form of disbursement is authorized by RCW 39.58.750. • Wire Transfer: immediate movement of funds between bank accounts with guaranteed settlement, which is most suitable for high dollar transactions because the cost per transaction is high relative to other forms of electronic payment. 5.0 ELECTRONIC FUNDS TRANSFER POLICY The Administrative Services Department is the only department authorized to initiate EFT's. This policy applies to all employees and authorized individuals involved in initiating, approving, or managing electronic funds transfers on behalf of the City. All EFT payments are subject to applicable Purchasing Policies and all other policies and procedures in relation to the purchase of goods and services. The following concepts are adhered to when developing procedures. • Payroll ACH Payments: Payroll ACHs are initiated by the Accounting Specialist that is responsible for processing and uploading payroll ACH files to the bank's secure site. After the file is uploaded, a secondary approval from either an Accountant Specialist, Accountant or the Director of Administrative Services is required to complete the transaction. • Accounts Payable Template EFT's: Director preapproved templates are used for payments less than or equal to $10,000 for routine vendor EFT's. These payments are initiated with all the same procedures and controls that govern disbursements by any other mechanism. Template EFTs are restricted to an Accountant or the Director and necessitate only one approval at the time of transfer. Any amounts over $10,000 require a second approval. • Accounts Payable One-time EFT: One-time vendor EFTs are initiated with all the same procedures and controls that govern disbursement by any other mechanism. Only Accountants and the Director of Administrative Services are authorized to initiate a one-time EFT, with two separate approvals required. • ACH Vendor Payments: The procedure to initiate an ACH payment is subject to the same procedures and controls that govern disbursement by any other mechanism including a check payment. ACH payments will not be made without proper authorization of affected parties. Currently, with limited exceptions, vendors are paid through a check process. 6.0 INTERNAL CONTROLS The following internal controls have been adopted to ensure all available safety precautions are utilized . • Authorization and Access Control: o Access to initiate or approve EFTs shall be restricted to authorized personnel only. o Authorized users initiating or approving bank transactions shall have separate User IDs and bank tokens. o Authorization levels shall be clearly defined based on job roles and responsibilities. o Access to EFT systems and applications must be regularly reviewed and updated according to personnel changes within the organization. o All EFT transactions must be conducted over secure, encrypted channels to protect sensitive financial information. • Transfer Verification and Approval: o All EFT transactions must be verified and approved by authorized personnel before processing. o Dual authorization shall be required for significant or high-value transactions, involving multiple personnel. o Approval processes must be clearly documented and followed for each type and amount of EFT. • Segregation of Duties: o Responsibilities for initiating, approving, and reconciling EFTs shall be divided among multiple individuals to prevent any single point of failure or fraud. o Individuals responsible for initiating EFTs should not be responsible for reconciling bank statements or account balances. o Multi-factor authentication (MFA) must be tools used for access to EFT systems to enhance security. • Record Keeping and Audit Trails: o Complete and accurate records of all EFT transactions, including approvals, must be maintained and retained in compliance with regulatory requirements. o Audit trails of all EFT activities, including date, time, user, transaction details, and approvals, shall be generated and preserved for auditing purposes. • Training and Awareness: o Regular training and awareness programs on EFT policies, procedure, and best practices shall be provided to employees involved in EFT transactions. o Training should cover security protocols, compliance requirements, and proper handling of EFT-related responsibilities. • Incident Reporting and Response: o Any suspected or actual EFT fraud or security breaches must be reported immediately to designated personnel for investigation and appropriate action. • Compliance with Laws and Regulations: o All EFT activities shall comply with applicable laws and regulations, and industry standards, including but not limited to the Payment Card Industry Data Security Standard (PCI DSS), the Electronic Fund Transfer Act (EFTA), and the Bank Secrecy Act (BSA). • Compliance and Enforcement: o Violation of this policy may result in disciplinary action, up to and including termination. Compliance with this policy is mandatory for all employees and authorized individuals involved in EFT transactions.