City Treasurer recommends First National Bank's positive pay for fraud protection

During the recent Board of Mayor and Aldermen meeting in McMinnville, Tennessee, a significant discussion centered around the city's banking practices and measures to combat check fraud. The meeting highlighted the importance of regularly reviewing banking relationships and ensuring that financial institutions meet the city's security needs.

City officials emphasized the necessity of evaluating interest rates offered by local banks every four years. This practice ensures that the city is receiving competitive rates while also confirming that banks are members of the state of Tennessee's collateral pool. A key point raised was the requirement for banks to pledge 105 percent of the city's funds as collateral, which adds a layer of security for municipal finances.

First National Bank emerged as the primary banking partner for the city, primarily due to its provision of "positive pay" services. This security feature is crucial in light of increasing incidents of check fraud affecting municipalities. Positive pay allows the city to upload a file of issued checks to the bank, which then verifies that the details of each check match before processing. This system would have prevented a fraudulent check incident that occurred last year, where discrepancies in the amount, recipient, and date would have led to the check being rejected.

The discussion underscored the city's commitment to safeguarding its financial operations against fraud, highlighting the value of maintaining a banking relationship that prioritizes security. As the city continues to navigate financial challenges, the decision to stick with First National Bank reflects a proactive approach to protecting taxpayer funds and ensuring the integrity of municipal transactions.

Moving forward, the city plans to maintain its banking practices while remaining vigilant against potential fraud, ensuring that financial security remains a top priority in its operations.