Financial institutions have to be very selective about who is qualified to handle financial resources and sensitive company and customer information because of the complicated financial regulations and increased security requirements.
You should always conduct a financial services background check on all applicants and compare them to important sanctions and watch lists in order to make sure you hire reliable staff.
By doing this, you can reduce the chance of theft or other financial crimes against your business, protect sensitive data, and ensure compliance.
Read this comprehensive guide on background checks for financial institutions, such as banks and credit unions, before hiring a new staff member.
This guide will teach you how to perform a background check, evaluate whether someone can and should be hired, and comply with the requirements of the background screening procedure.
• Background checks in the financial services industry are essential for preserving regulatory compliance and safeguarding sensitive customer and financial institution data. • Compared to employment screenings in other industries, financial background checks are usually far more thorough because financial services employees have access to sensitive information. Financial services companies run the risk of suffering significant losses due to internal theft, embezzlement, fraud, and negligent hiring liability when they make poor hiring decisions. • When making hiring decisions, employers in the sector need to be aware of the laws and regulations that are relevant to them.
Background checks are a common practice for employers and other organizations to verify an individual’s identity, employment history, and other relevant information. While these checks can be helpful in screening potential employees or tenants, there are limits to what information can be legally requested
So, is it legal for a background check to request access to all of your bank account and brokerage details?
The answer is no. In most cases it is illegal for a background check to request access to your bank accounts or brokerage information. This is because this information is considered private and confidential and it is not relevant to most employment or rental decisions.
Here are some specific reasons why background checks cannot legally request bank account and brokerage information:
- Fair Credit Reporting Act (FCRA): The FCRA is a federal law that regulates the use of consumer reports, including background checks. The FCRA prohibits the inclusion of certain types of information in consumer reports, including bank account information and brokerage statements.
- Right to Financial Privacy Act (RFPA): The RFPA is another federal law that protects the privacy of financial records. The RFPA prohibits financial institutions from disclosing customer information to third parties without the customer’s consent.
- State laws: Many states have their own laws that protect the privacy of financial information. These laws may prohibit background checks from requesting access to bank accounts or brokerage information.
However there are some exceptions to these rules. For example a background check may be able to request access to your bank account information if you are applying for a job that involves handling large sums of money. Additionally, a background check may be able to request access to your brokerage information if you are applying for a job that involves investing or trading securities.
If you are asked to provide your bank account or brokerage information as part of a background check, you should carefully review the request and consider the following factors:
- The purpose of the background check: Why is the background check being conducted? Is it relevant to the job or rental you are applying for?
- The type of information being requested: Is the background check requesting access to your bank account balances, transaction history, or other sensitive information?
- Your comfort level: Are you comfortable sharing this information with the background check company?
If you are not comfortable sharing your bank account or brokerage information, you can refuse to provide it. The background check company cannot force you to provide this information. However, refusing to provide this information may affect your chances of being hired or approved for a rental.
Here are some additional tips for protecting your privacy during a background check:
- Review the background check request carefully. Make sure you understand what information is being requested and why.
- Only provide the information that is specifically requested. Do not provide any additional information that is not required.
- Ask questions. If you have any questions about the background check, ask the background check company or the organization that is requesting the check.
- Consider using a privacy service. There are a number of privacy services that can help you protect your financial information from being disclosed in a background check.
By following these tips, you can help protect your privacy and ensure that your financial information is not disclosed without your consent.
Here are some additional resources that you may find helpful:
- Federal Trade Commission (FTC): https://www.consumer.ftc.gov/features/feature-0014-credit-and-consumer-reports
- Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/topics/privacy-identity/
- Identity Theft Resource Center: https://www.idtheftcenter.org/
Office of the Comptroller of Currency (OCC) Enforcement List
The U.S. Office of the Comptroller of the Currency (OCC) is an independent bureau housed within the U.S. Department of the Treasury that regulates and supervises U.S. banks, federal savings loan associations, and federal branches of foreign banks.
The OCC takes enforcement actions against banks, financial institutions, and their employees, including directors and officers.
An OCC check involves searching the bureau’s enforcement action list to check for bans from working in the financial service industry.
Bank Background Check Requirements: What Disqualifies You From Working at a Bank?
Generally speaking, an applicant is automatically denied employment at a bank or other financial institution if their background check report reveals any financial-related crimes.
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.”
Furthermore, a person cannot be hired if they have participated in a diversion program in conjunction with the prosecution of a crime falling under the aforementioned category.
Employers can ascertain whether an applicant satisfies the FDIC bank background check requirements by using a financial background check for employment.
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FAQ
Can my employer see my bank account?
Do background checks see private accounts?
Who can see my bank account information?
Do background checks include financial?
What is a financial background check?
A financial background check is the process of gathering information about an employment candidate’s history and experience before hiring them for a role within the financial services industry. These checks are a common requirement when hiring for roles in a bank, investment firm, or other financial institution.
Does a bank look for a conviction on a background check?
Banks will use criminal history checks to look for convictions that apply to Section 19. While crimes like identity theft, embezzlement, or fraud are top-line red flags for financial institutions, they are not the only convictions that a bank is looking for on a background check.
Do financial institutions need a background check?
The FDIC requires financial institutions to conduct detailed background checks when hiring. These requirements are designed to protect customers from financial fraud and abuse, as well as protect the institution from potential legal liabilities and reputational damage. The FDIC has extensive guidelines for conducting background checks.
What do employers look for in a financial background check?
When reviewing the results of a background check for financial services, employers are usually looking to identify certain trends, qualifications, or even warning signs in a candidate’s history.