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Employer’s Financial Services Background Check Guide

Employers that deal with cash, valuables, and personal data understand the importance of trustworthy employees. And no one knows that more than banks and credit unions. The financial industry is expected to grow seven percent within the next decade. That means hiring managers must know how to separate the ideal and trustworthy employee from everyone else. One of the best resources for that task is a financial background check.

Here’s what you need to know. 

The Importance Of Background Checks For Financial Services

Financial institutions deal in trust. Members and customers trust the institution to protect their funds, and the institution, in turn, trusts employees to protect the institution by following risk-mitigation procedures like dual control for the vault, protecting private info, and balancing cash drawers. The wrong person in that position may try to exploit that trust. That’s one reason financial background checks are essential to the hiring process.

What are the Most Common Types of Background Checks for Financial Institutions?

Here are the most common financial background checks.

Arrest Record: Financial institutions search arrest records for financial crimes like theft and fraud. 

Education Verification: Financial industry workers often hold advanced degrees or licenses, such as an NMLS, that allow them to give financial advice, open accounts, etc. Financial institutions should always verify these qualifications before hiring. To put it simply, a financial rep represents the entire institution. That means the institution may be legally liable if an unqualified person makes a mistake that costs an account holder fees, lost investments, etc. 

Credit Report: Credit reports let employers understand how a candidate has managed their finances and debts. And it gives them an insight into how a candidate may behave around large sums of money. For example, a candidate with higher than average debt may be more likely to commit fraud, given the opportunity. Also, financial representatives are expected to give credit advice. That means they’ll need to show they can manage their credit first.

What To Look For In A Background Check For Financial Services

Financial background checks, like casinos and other cash-handling businesses, search for fraud, theft, mismanaged credit, and financial crimes. Other factors in a background check, like driving offenses or intoxication, can be red flags too, but may not be the deciding factor if an employer makes an offer. Trust is everything when dealing with private information, security protocols, and high cash values. 

Financial Services Background Checks: FCRA & FDIC Compliance

Financial institutions abide by countless federal and state laws. Among the most important are FCRA and FDIC compliance regs. Here’s how they impact the hiring process.

FCRA: Also known as the Fair Credit Reporting Act, FCRA regulates how an employer gets permission for background checks, how it’s used, and what information is reported. Employers must directly ask permission before obtaining a background check. Plus, the permission request has to be on a standalone page instead of being listed near other unrelated signatures. Employers must also allow candidates to dispute any information reported and pause the hiring process until said dispute is completed. 

FDIC: Also known as Federal Deposit Insurance Corporation, FDIC is used to insure people’s money in the bank. As such, it mandates who banks can hire. Because of FDIC, candidates with a history of fraud or financial crimes are ineligible to be hired. It’s worth noting that FDIC is exclusive to banks. The National Credit Union Administration, or NCUA, insures Credit Unions. 

What Disqualifies Someone From Working At A Bank?

Banks cannot hire individuals with a proven history of fraud, identity theft, a history of violent offenses, and money crimes in any role. Another major factor is credit. No magic credit number guarantees a candidate will be hired, although the higher, the better. Also, banks have complex opening and closing procedures that often involve “dual control” or at least two employees to unlock the front door, vault, etc. As such, being punctual is essential to any bank role. 

Another less regulated factor that disqualifies a candidate is a lack of customer service experience. Branch workers deal with countless customers daily, some of whom are riled up due to account fees, low balances, etc. Branch employees are expected to assist the customer to the best of their ability, often requiring a particular aptitude for customer service. Additionally, a person must have prior bank experience to become a licensed banker, as it’s not an entry-level role. 

How Far Back Do Banks Do Background Checks?

Financial background checks go back seven years, as do most background checks. An important exception is a Chapter 7 bankruptcy which can stay on a credit report for a decade after it’s filed. Another exception is a criminal record. Financial institutions are expressly forbidden from hiring anyone whose ever been convicted of fraud, theft, etc.  


Financial background checks are essential for compliance and the team’s overall strength. A financial team member must be reliable because of factors like dual control, audits, and customer service. That’s where KarmaCheck comes in. Our reliable and proven background check service makes it much easier to find the ideal candidate and weed out the bad ones. Explore your options by contacting us today. 


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