What is the primary control method that minimizes fraudulent checks from being processed?

The implementation of positive pay is the primary control method that minimizes fraudulent checks from being processed. Positive pay is a fraud prevention system used primarily by banks, where companies provide their banks with a list of checks they have issued, including details like check numbers and amounts. When a check is presented for payment, the bank compares it against this list. If the check details match, it is approved for payment. If there is a discrepancy—such as a check that doesn't match the list or a check that is presented for payment after it has been canceled—the bank can detect potential fraud and prevent the check from being processed.

This control method is particularly effective at reducing the risk of unauthorized or counterfeit checks being cashed, as it provides an additional verification step that banks can utilize to catch errors or fraudulent activity before funds are disbursed. This proactive approach to check processing enhances security for both the bank and its customers.

While other methods such as monthly account reviews, customer relationship management, and regular training for tellers contribute to banking operations and can play roles in fraud prevention, they do not provide the same level of specific protection against fraudulent checks that positive pay does. Monthly account reviews may catch irregularities but often occur after the fact; customer relationship management focuses