Implementing ALTA Best Practices for Settlement Fund Security
ALTA Best Practices certification is voluntary, but try telling that to a lender who requires it before they'll add you to their approved vendor list. The framework exists because lenders bear regulatory responsibility for the third-party vendors they use, and they want evidence that your office has
ALTA Best Practices is an industry framework. A lender or underwriter may ask for evidence of conformance, but the office should confirm the applicable version, assessment scope and contractual expectations rather than assume one certificate meets every requirement.
Understand the seven pillars
The framework covers licensing; escrow trust accounts; privacy and information security; settlement procedures; title-policy production; insurance; and consumer complaints. Trust accounting, information security and insurance are particularly relevant to funds, but they do not replace the other applicable areas.
Separate daily checks from monthly reconciliation
ALTA distinguishes daily two-way reconciliation from monthly three-way reconciliation. The original claim that the framework requires a daily three-way reconciliation was incorrect.
A three-way reconciliation compares the adjusted bank balance, book balance and file-ledger trial balance. Balanced totals still do not prove that each payment was properly authorized. Investigate discrepancies and retain management review evidence.
Control payment access and changes
Document who can initiate, review and authorize transactions. Review segregation of duties and bank controls against the applicable framework and the office's arrangements. Check that the actual permissions match the written procedure.
For outgoing payments, use a documented process to confirm the instruction independently of the message requesting payment. Keep the contact source and result. Review bank services such as positive pay and ACH debit controls for suitability, configuration and ongoing operation.
Protect non-public information
Maintain a written information-security program suited to the applicable requirements. Identify sensitive data, authorized access, secure transmission, storage and incident response. Give staff practical procedures for handling banking details and identity records.
A software feature is evidence of capability, not evidence that a control is configured or consistently followed. Test the workflow with appropriate non-sensitive examples and retain the result.
Understand insurance scope
ALTA's guidance discusses E&O insurance and fidelity or surety bonds as required by state law, with coverage appropriate to the company's size and risk. Cyber coverage is also addressed. Read the current framework and actual policies; do not assume that one policy includes employee theft, social engineering and every wire-fraud loss.
Prepare assessment evidence
Collect current procedures, reconciliation and review records, access-control evidence, insurance documentation and examples of completed work. Ask the recipient which assessment or attestation it accepts. ALTA does not itself certify individual companies through a universal approval process.
When a procedure is not followed, document the circumstances and corrective action. An internal exception cannot make a legal violation or framework deficiency compliant merely because a manager signed it.
Keep the office decision visible
A pre-disbursement review can identify sources, changes, unresolved questions and the reviewer. It supports the office's control process. It is not, by itself, proof of ALTA conformance, insurance coverage or permission to release funds.
Sources
One page in the file before money moves.
Your office decides. Veto records what was reviewed, what stayed open, and who reviewed it.