MGIC - Banking and Money Transfer

Banking and Money Transfer

Purpose

The purpose of this policy is to establish clear guidelines for the opening, management, and use of Maryland Global Initiatives Corporation (MGIC) bank accounts and money transfer services. It ensures compliance with legal and organizational requirements, promotes financial integrity, and safeguards MGIC funds during international transactions. This policy also defines roles, responsibilities, and controls to mitigate risks associated with banking and electronic transfers for MGIC business operations.

Background

MGIC offers payment services to Requesting Units of the University of Maryland, Baltimore (UMB) and other University System of Maryland (USM) institutions (referred to throughout these policies as “Affiliate Entities”). Specifically, MGIC can be used to pay vendors, collaborators and partners with bank accounts outside the United States, on the unit’s behalf, when the purpose and benefits of using MGIC in this way align with sound risk management and with UMB’s and Affiliate Entities’ (hereafter UMB/Affiliate) strategic global engagement goals.

MGIC holds business accounts with U.S. banks and international money transfer services, and it also has the ability to open foreign bank accounts as a legal business entity when required for UMB’s international activities. Through MGIC’s U.S.-based accounts, transactions can be performed in every foreign currency (subject to banking institution restrictions), multiple intermediary banks can be used to route wire transfers to complex destinations, and payment processing timeframes and procedures promote effective institutional partnerships and services.

MGIC maintains a cash float that is used to pre-finance expenses for a Requesting Unit and is replenished through State Treasury or another university funding source. (See Invoicing and Replenishment policy).

The MGIC mechanism is administered by the International Operations (IO) division of UMB’s Administration & Finance Department. The IO finance team manages all MGIC banking and money transfer activities in the U.S.

Policy Statement

Opening and Closing Bank Accounts:

1. The authority to open and close a bank account rests solely with the MGIC Board of Directors, as may be delegated to the MGIC President. The selection of banks in any country, including the U.S., is the sole right and responsibility of the MGIC Board. The Board names the UMB-based bank signatories and the MGIC President approves in-country bank signatories. Any subsequent change to a bank account, such as adding or removing signatories, requires authorization in the same manner.
2. It is strictly prohibited for an employee to open a bank account in the name of MGIC, a branch or affiliate office of MGIC, or UMB – or to make subsequent changes to or close a bank account – without the express, written permission of the MGIC President. No one may establish a relationship with a bank on behalf of MGIC that has not been specifically designated by the MGIC Board of Directors.
3. All accounts used to transact MGIC business must be established in the name of MGIC unless otherwise approved by the MGIC Board of Directors.
4. Upon the authorized closure of an MGIC bank account, any unspent funds will be transferred in accordance with applicable laws and regulations and MGIC bylaws.

Money Transfer Services:

1. MGIC may establish corporate or business accounts with professional money transfer services. The IO division may open and close a money transfer service account that is linked to an authorized MGIC bank account for electronic deposits and withdrawals.
2. Personal money transfer account services (i.e. accounts registered to an individual employee rather than a corporate/business account) will not be utilized by MGIC.
3. Funds must be moved from the MGIC bank account to a money transfer service on an as-needed basis for each transaction, following MGIC’s regular payment approval procedures. In cases where the money service provider requires establishing a trust or escrow account that holds MGIC funds, IO must perform a monthly reconciliation of that account as part of the monthly financial report.
4. Mobile Money Transfer (MMT) services – typically offered by a local mobile network operator or financial institution with a network of registered agents – are discouraged as a form of electronic transfer for MGIC business, due to the increased risk of fraud, diversion, and misdirection of payments.
   • MMT may only be used under the following restricted conditions:
     1. The MMT provider offers secure, auditable software or platform solution that allows MGIC to initiate and manage transfers directly, with appropriate internal controls; or
     2. MGIC engages a vetted consultant through its standard procurement processes to execute the transfers locally on MGIC’s behalf, and appropriate oversight and reporting mechanisms are in place with the Requesting Unit.
   • All proposed uses of MMT must be approved in advance by the MGIC President, based on an evaluation of risks, costs, available controls, and operational necessity for the Requesting Unit and the MGIC entity.
   • When using MMT, MGIC must establish clear procedures and robust internal controls, including but not limited to:
     1. Controlled user access and permission levels within the MMT platform
     2. Segregation of duties for initiating, approving, and reconciling transfers
     3. Verification and safeguarding of recipient mobile numbers
   • Personnel must exercise heightened vigilance to avoid MMT processing errors and must comply with all requirements of the UMB Data Protection Policy to safeguard personal data of payees.

Restricted Use:

1. MGIC accounts set up in accordance with this Policy must contain only MGIC funds and must not be used for other deposits. Personal use of MGIC bank accounts is strictly prohibited.
2. Funds are segregated in the general ledger via the UMB chart of accounts.

Account Signatories:

1. The MGIC President shall be a named signatory on all MGIC bank accounts unless delegated to another Director or Officer of the MGIC Board of Directors. In addition to the President or delegate, the MGIC Vice President – Policy & Administration shall be a named signatory and the Primary Administrator on all MGIC bank accounts managed by the IO division.
2. Only UMB or MGIC employees may be delegated as signatories to an MGIC bank account or money transfer service. Consultants, temporary employees, and employees of any other entity are prohibited from holding delegated signatory or approval authority or transacting business from an MGIC account, unless a very exceptional circumstance has been approved by the MGIC President.
3. Only UMB or MGIC employees may be designated to have online access to MGIC bank and money transfer accounts, other than in the capacity of account signatory. Online access levels must be aligned with the employee’s specific job responsibility, e.g. accounting and financial reporting, payment approver, authorized signatory, corporate representative.
4. All electronic fund transfers and checks from an MGIC bank account require two authorized signatories to be valid for payment. An authorized signatory may delegate Online Approvers from UMB or MGIC when needed to transact business through an online banking platform or vendor payment portal.
5. All transfers from an MGIC money transfer service require at least one designated Online Approver. This is because commercial money transfer services do not typically offer dual-control functionality in their online platforms, unlike most banking institutions. The MGIC Vice President – Policy & Administration shall maintain approval authority at the payment voucher stage and shall delegate a separate Online Approver to execute the transaction in the money transfer service platform, to ensure segregation of duties. Transactions and balances in the MGIC money transfer service account shall be included in the monthly MGIC financial report for full transparency and accountability.

Disbursement From MGIC Bank and Money Transfer Accounts:

1. Bank account information of individuals and entities paid by MGIC must be communicated via a formal, pre-printed, commercial invoice on recipient letterhead, or when not a commercial transaction, through an MGIC Payee Bank Information Verification Form. The recipient is responsible for providing accurate bank account information to MGIC.
2. Mobile phone numbers for MMT transfers must be provided via an MGIC or UMB/Affiliate participant register or other appropriate documentation.
3. If a commercial vendor requires MMT payment for goods or services, the vendor must provide documentation demonstrating that the owner of the mobile money account is an official representative of the commercial business under contract to UMB/Affiliate or MGIC.
4. The IO division has the authority to independently verify the information received on a Payee Bank Information Verification Form, commercial invoice, or mobile phone registry, directly with the recipient or through the Requesting Unit, when inconsistencies or suspicions arise.
5. Under no circumstances may external recipients have MGIC payments sent to an MGIC or UMB/Affiliate employee on their behalf, through any form of payment.
6. The only permitted disbursements from the MGIC bank are those which support program activity or MGIC administrative expenses, are in accordance with MGIC policy, and comply with applicable sponsor prohibitions and restrictions as specified by the Unit requesting MGIC financial services.

Receipt of Funds:

1. The MGIC bank account balance is replenished primarily through electronic payments from the State of Maryland or other funding sources (see Invoicing and Replenishment policy). Electronic (ACH) payments are automatically deposited into the MGIC bank account following the approval of MGIC Invoices by the Requesting Unit and processing by State Treasury or other source. IO will provide the correct MGIC Supplier Number registered with the State of Maryland on each MGIC Invoice, to ensure proper routing of ACH deposits.
2. All paper checks received by the IO division must be recorded, locked securely, and deposited into the MGIC bank account within 1-2 business days.
3. Refunds or repayments from vendors or other payees into the MGIC bank account, as well as balances against funding advances provided to MGIC by UMB/Affiliate Entities, will be credited to the Requesting Unit associated with the original MGIC payment. The IO division may apply a credit against a future MGIC payment made on the Requesting Unit’s behalf, or it may return the funds to the State Treasury or other funding source to allocate to the relevant budget code, as agreed between IO and the Requesting Unit.

Bank/Money Transfer Fees and Transaction Charges:

1. Fees levied by MGIC’s financial institutions, including wire fees and foreign exchange fees, will be charged to the Requesting Unit for whom the transaction is made.
2. Return fees for wires that were undeliverable or mis-delivered due to banking information mistakes of the payee or the Requesting Unit, will be charged to the Requesting Unit. Return fees or penalties associated with a payment processing error by the IO division will be covered by IO.
3. IO will track and allocate fees to Requesting Units according to the financial institution’s fee policy for different categories of payment, and will include the fee on the MGIC invoice for replenishment or the liquidation of an advance to MGIC for the expense.

MGIC Bank Account Balance Management

1. IO finance staff will monitor the bank account balances and prepare a cash flow statement as part of the monthly financial report. (See Financial Reporting policy)
2. Anticipated disbursements will be tracked and sequenced to avoid shortages while maintaining responsive customer service. Should an unusually large disbursement be forecasted, IO will request an advance payment from the Requesting Unit to be reconciled after disbursement is made to the Unit’s payee. (See Invoicing and Replenishment policy)

Scope

This policy applies to all UMB and MGIC personnel who use or administer business operations and services through MGIC.

Responsibilities

1. MGIC Board of Directors: Approve the opening and closing of bank accounts. Approve bank account signatories.
2. MGIC President: Serve as bank account signatory. Approve the use of Mobile Money Transfer services and valid policy exceptions.
3. AVP-IO (in capacity of MGIC VP – Policy & Administration): Serve as bank account signatory and primary account administrator for IO-managed accounts. Authorize and manage user access to MGIC online banking platforms and online approver functions for UMB and MGIC employees. Initiate payments through MGIC dual-approver-enabled bank accounts and manage temporary delegations of authority. Approve MGIC USA monthly financial reports. (See Financial Reporting Policy)
4. MGIC Treasurer: Receive a copy of MGIC USA monthly financial report. Complete Foreign Bank Account Reports (FBARs) when required by U.S. law.
5. IO Finance staff: Comply fully with all aspects of this policy. Develop, implement, and follow appropriate standard operating procedures to ensure policy compliance, function efficiently, minimize risk to MGIC users and stakeholders, and maintain appropriate segregation of duties and standards of ethical conduct.
6. Other IO division staff: Serve as delegated secondary online approver of bank transactions and online approver for money transfer accounts without dual-approver functionality, to maintain segregation of duties and fill staff coverage gaps.
7. Requesting Units: Follow MGIC policies and procedures. Request Policy Exceptions for legitimate reasons only, and refrain from policy deviations unless and until an exception is approved by MGIC.

Procedures

See MGIC Standard Operating Procedures.

Documentation Requirements

• MGIC Payee Bank Information Verification Form
• Documents for MMT and bank disbursements as described above
• MGIC Invoice and supporting documentation as detailed in operating procedures
• MGIC monthly financial reports
• Policy Exception forms

References

• MGIC Policy on Invoicing and Replenishment
• MGIC Policy on Financial Reporting
• MGIC Policy on Data Protection