Financial Services Background Checks: A Complete Guide for Employers
Due to heightened security needs and complex financial regulations, financial institutions must carefully choose who is qualified to handle company and customers’ confidential information and financial resources. Knowing the identity and background of who you are hiring is imperative.
To ensure you hire trustworthy employees, you should always run a financial services background check on all applicants and check the candidates against key sanctions and watch lists. Doing so will protect sensitive data and ensure compliance by limiting the risk of theft or other financial crimes against your company.
This is especially true for employees who will be working in a bank.
If you are looking to hire a new employee, read this complete guide on background checks for financial institutions.
In this guide, you will learn how to conduct a background check, how to determine if an individual can and should be hired, and how to stay compliant during the background screening process.
What do Banks Look for in a Background Check?
As a financial institution, when you conduct a bank employment background check on a potential employee, there are multiple reports you should run and consider prior to hiring someone.
A background check can verify an applicant’s identity, education, and employment history. It can include searches for criminal and civil records at the Federal, State and local levels. It can also search national databases to check an individual’s broader criminal history and determine if they are on the sex offender or terrorist watchlists.
This information is valuable for every employer, but some of it is required for banks and financial institutions to know prior to hiring.
Bank Background Check Requirements: What Disqualifies You From Working at a Bank?
Generally, if an applicant’s background check report shows any financial-related crimes, they are automatically disqualified from working at a bank or financial institution.
Most banks in the United States are insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC regulates who banks can hire. These regulations are laid out in Section 19 of the Federal Deposit Insurance Act.
According to Section 19, banks cannot hire an individual who has been convicted of a criminal offense that involved “dishonesty or breach of trust or money laundering.”
Even more, if an individual has entered a diversion program in connection with a prosecution of a crime in the above category, they cannot be hired.
By utilizing a financial background check for employment, employers can determine if an applicant meets the FDIC bank background check requirements.
How to Run a Financial Background Check
While background checks are beneficial for all companies, it is imperative that banks and financial institutions obtain the most accurate information on every potential employee.
By partnering with a third-party background screening company such as iprospectcheck, you will be able to receive all the information you need quickly.
If you are interested in gathering background check information yourself, it is possible. However, it will not only take time and resources to gather all the information you need–thoroughly checking court records, county criminal records, and nationwide databases–but there are some records that are not easily accessible by the public.
Partnering with an experienced background check company will save you time and money and ensure you stay compliant throughout the entire pre-employment screening process.
At iprospectcheck, we understand the strict accountability and complex regulations the financial industry must follow to maintain compliance with the Patriot Act, Sarbanes-Oxley Act, and Federal Deposit Insurance Corporation requirements, along with the United States Financial Crimes Enforcement Network “Know Your Customer” due diligence requirements.
How to Stay Compliant When Conducting a Financial Background Check
When you choose to partner with a third-party background check company, they can help you take the proper steps to stay compliant with the Fair Credit Reporting Act (FCRA), as well as state and local regulations when running background checks.
After you receive the background check report, as an employer, you will decide whether you will proceed with the hiring process. If you decide to no longer hire the applicant due to information found on their background check report, you must take the required Adverse Action steps. These include:
- Providing the applicant with a pre-adverse action letter, stating why you no longer intend to move forward with them in the hiring process.
- Waiting a “Reasonable amount of time” (approximately five business days), thus giving the applicant a chance to revise or correct any false information found on their background check.
- Making a final decision regarding an applicant’s employment.
- Providing the applicant with an official adverse action letter if you decide to not hire the applicant for the job.
- Including with each of the notifications a copy of the background report and a copy of the document “Summary of your rights under the FCRA”.
Due to the valuable nature of a financial services background check, it is highly recommended that you partner with a third-party background check company, such as iprospectcheck, to ensure you receive the information you need to make a smart hiring decision while staying compliant.
How Far Back Does a Bank Background Check Go?
The Fair Credit Reporting Act regulates how far back a background check can go. The background screening industry guideline is seven years. A report cannot include any records of arrest which did not result in a conviction that are over seven years old.
However, convictions, no matter how old, can be reported under the FCRA guidelines without time restrictions.
One exception to this rule is the “Salary Cap” exemption. The FCRA restrictions do not apply where the annual salary of the applicant for employment may be expected to exceed $75,000 per year.
iprospectcheck is Your Trusted Financial Services Background Check Provider of Choice
As a financial institution looking to hire new employees, it is imperative that you conduct a financial services background check on every new applicant.
By partnering with iprospectcheck, you receive all-inclusive background check services with an emphasis on security to provide you with the most accurate, up-to-date information.
Schedule a free, no-obligation consultation today to learn more about how our services can help you make the right hire every time. Contact us today!
DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your counsel if you have legal questions related to your specific practices and compliance with applicable laws.