Why Pre-Employment Screenings Are Critical for Your Financial Services Jobs 10 Oct 2018


It seems like everyone online wants your credit card number or personal information, but how many would you actually trust with it? For example, you’d never send your business’ financial information or your clients’ information to someone you didn’t know.

If you wouldn’t give this financial information to a random person online, then why would you give it to new hires you haven’t done a background check on? Just like you can never be sure who you’re talking to on the internet until you meet them, you can never be sure who you’re hiring until you run a background check on them.

Hiring the wrong person for a financial services position could cost more than you think—especially if you’re a small business that doesn’t have the savings to mitigate a loss. The wrong hire in the financial sector could also lead to theft. In fact, this 2016 Embezzlement study found that 17% of employee theft in small businesses happens in the financial sector.

In this article, you’ll learn why it’s critical to screen financial service job applicants, what background checks are needed for the industry, and how you can stay legally compliant while running background checks.

Why You Need Pre-Employment Screening for Financial Jobs

Business person stealing money

Let’s imagine that a bank hires someone to work as a teller without running a background check on them. Unknown to the bank, this person has a history of theft and fraud. This new hire then steals financial information from hundreds of the bank’s clients. The bank’s clients have lost all their money, and the bank is now responsible for all the damage this person has done.

Putting financial information in the wrong hands can destroy someone’s life. If you’ve been entrusted with sensitive information, you have a responsibility to protect the people who own that information. Or, if the job involves your business’ financial information, then you need to protect your business by ensuring that the person is honest.

Because of how important this information is, federal law requires financial institutions to ensure that the people they’re hiring for financial sector jobs haven’t been convicted of crimes involving dishonesty or breach of trust. For example, under 18 U.S.C 1033(e) of the Violent Crime Control and Law Enforcement Act of 1994, individuals who were convicted of a felony crime involving dishonesty or breach of trust cannot work in the insurance industry unless they obtain written consent from the state insurance commissioner. Interestingly, there isn’t a list of specific crimes that are considered dishonest. It’s up to the employer and their lawyer to determine if a crime falls under this category. One of the best ways to do this is to run a background check on new hires.

If you don’t comply with these laws, and your new hire does something illegal, you could be held responsible for not following the law. It could also damage your business’ reputation, especially if you specialize in finances or have access to financial information.

Which Background Checks Are Needed for the Financial Industry?

Comprehensive background checks, which include the products listed below, are recommended and may be required for financial industry positions. Here are a few common comprehensive background check reports and why they matter.

  • Identity Verification Check. Identity verification background checks ensure that your new hire is who they say they are. This check is critical to the financial industry because it makes sure that all your other background checks search for the right person.
  • Criminal Background Check. A criminal records background check looks at the federal and state criminal databases for convictions the new hire may have. This check may also include an FBI fingerprint search. This background check ensures that your new hire doesn’t have any criminal convictions that would disqualify them from working in the financial sector or would make them unsafe around your other employees or clients.
  • Education Verification. An education verification checks to see if your new hire has the education and/or degree they need for the job position. This check is important because many financial jobs require a college degree.
  • License Check. A license check makes sure that your new hire has the license they need for the job. This is important because many financial jobs require specific licensing standards to be met.
  • Employment Verification. Employment verification checks to make sure your new hire has the employment history that was on their resume. This background check shows if your new hire has the experience they need for the job and if they’re honest on their resume.
  • Credit Check. This looks at a new hire’s credit history to see if they’re financially responsible. Many companies look at a financial service job applicant’s credit history with the belief that being responsible with their own money means they will be responsible with the company’s.
  • Broker Qualifications. A broker qualifications check tells you if your new broker is registered and/or has any complaints on their file. This is important because brokers need the proper registrations to legally do their job.

How to Run a Legally Compliant Background Check

There are many steps you need to take to run a legally compliant background check. Here are a few basic best practices for background checks.

  • Find out what the laws require for your industry. Because different jobs have different laws concerning them, you need to find out what federal and state laws require for your industry. Also, because many states have passed laws regarding background checks, you need to make sure there are no federal laws that conflict with your state’s law.
  • Provide a separate document to get your job applicant’s consent. Use a separate document to obtain consent for the background check. Make sure to explain to the applicant what kind of background checks you are going to run.
  • Give the applicant a copy of the findings and allow them to dispute it. Allow the applicant time to challenge or explain findings. If you do decide not to hire based on background check results, tell the job applicant why you chose not to hire them.
  • Find a trustworthy background check partner. A reliable background check company helps you figure out what laws apply to your situation and gives you results you can count on.

At Trusted Employees, we offer background checks tailored to your industry needs. We can help you decide what background checks you need to run and what checks you want to run while explaining how to do it. Contact us today to learn more about our background check packages.