New state legislation will make payments by the Treasury Department more secure, according to Treasurer Stacy Garrity.
Act 54 of 2022 authorizes Treasury to require the implementation of new electronic payment security protocols known as AVS (“Account Verification System”) which will be a significant step forward in detecting and preventing the fraudulent expenditure of public funds.
The legislation was part of the Fiscal Year 2022-23 state budget.
“This is a powerful new tool in the never-ending fight against identity thieves and other criminals,” Garrity said. “States have been targeted by fraudsters throughout the pandemic. The Pennsylvania Treasury Department works around the clock to ensure that taxpayer money is spent appropriately and doesn’t fall into the hands of criminals. I want to thank the General Assembly and the Governor for including this language in the Fiscal Code to improve payment security statewide.
“Criminals trying to steal money from hardworking taxpayers never stop – and neither will we,” she said. “This is a great step forward to increase our already robust security measures.”
“Taxpayers deserve the peace of mind to know that every possible step is being taken to ensure the money they send to Harrisburg is protected against fraud and abuse,” said Senator President Pro Tempore Jake Corman, R-Belfonte.
“This new tool will provide a critical layer of protection to support our shared goal of safeguarding taxpayer dollars,” he said.”I appreciate Treasurer Garrity’s leadership in advocating for this new system to prevent financial crimes against our Commonwealth.”
House Appropriations Chairman Stan Saylor, R-York County, added, “Unfortunately, the number of criminals seeking to defraud taxpayers has been on the rise throughout the country. As leaders, our job is to protect taxpayer dollars and ensure that they are used for appropriate purposes.”
Treasury will develop a list of approved electronic payment security vendors which are qualified, experienced, and capable of providing such services. Within 18 months of the law taking effect, every agency, board or commission for which Treasury makes payments will choose one of the vendors to use for its payments, Garrity said. Treasury will update the list of approved vendors every two years.
AVS, which is almost instantaneous, uses the bank account information and other unique identity data fields to confirm a payee’s relationship with the bank account into which a payment is to be made.
In most cases, the payment request is immediately processed once the AVS review is complete. However, if an issue is identified – such as the payee having no connection to the bank account, or the unique data not matching – the AVS service responds with coded indicators to stop the payment or to confirm more information from the payee, she said.
Upon further review, the agency originating the payment may determine the payment is likely fraudulent or simply requires a corrected bank account number. In either case, the Commonwealth has safeguarded funds from being released.
Four state agencies have already implemented, or will soon implement, AVS: the Department of Revenue, the Office of Administration, the Liquor Control Board, and the Pennsylvania Housing Finance Agency. It is also used by the U.S. Department of the Treasury for accounts payable.