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Background Screenings & Monitoring for Financial Institutions

In the financial sector, employers know the importance of completing background checks and conducting due diligence on their potential employees. But these employers don’t only have to do the initial financial background screening; they also need to re-screen and monitor their employees once hired.

Obviously, trusting your employees is an honest and honorable part of the relationship, but a financial services background check helps achieve a peace of mind. If you hire a bad employee, it can lead to loss of productivity, co-worker dissatisfaction and workplace safety issues, which in turn can affect your bottom line. On average the cost of replacing an employee can be somewhere between 15 to 20% of the annual salary.

This article would help you understand why it is important to conduct a financial background check of your new employees.

Background Screening for Financial Services

Due to the complex financial regulations and heightened security needs, financial institutions have to carefully select candidates that have the qualifications to handle the company’s confidential information and financial resources. This is the main reason why you need to know the background of the person you are hiring. To make sure you are hiring trustworthy people, you would need employee background check services.

For every candidate that applies for a job, ensure that you do a proper financial background screening for each and everyone of them.

You also need to check each of the candidates against watch lists and key sanctions. Once you do this, you will be protecting the sensitive data in your company and also ensure compliance by limiting the risk of any future financial crimes, like theft. In fact, this is a very important process that needs to take place for employees in certain sectors, such as a bank.

What disqualifies a candidate from working in a bank?

Normally, when the background of the applicant shows that they have conducted a financial-related crime before, they get automatically disqualified from working at a bank or any financial institution. In fact, every country is insured by a corporation who regulates people that the bank can hire. There is a list of instructions placed by these corporations in each country that need to be followed by the bank.

Some of them include that banks are not allowed to hire a person who has been convicted of a criminal offence that involves a, “breach of trust, dishonesty or money laundering”. Additionally, in case a person has entered a diversion program in connection with a prosecution of the crime they conducted, they can’t be hired by the bank at all. By getting a financial services background check, employers can figure out if the applicant meets the bank background check requirements.

Pre-Employment Background Checks for the Finance Industry

Even though background verification has become a common practice for almost all industries, for financial institutions and banks, it is important to conduct the process on all levels of employees. Due to the sensitive personal and company information at stake, financial background screening of applicants is very important. This sensitive information usually includes the corporate protocol, passwords for fund transfers, and financial records of customers.

Here is why it is important to get an employee financial background check in the finance industry:

  • To make sure that the customer’s information stays protected: A bank has a lot of cash, sensitive documents, and accounts of all sorts. With increasing cyber threats and security breaches, it is important to ensure that customer information is safe and protected. A financial services background check would help avoid these security issues
  • To ensure impeccable customer experience: People rely heavily on banking facilities, which is why you need to make sure that your employees are genuinely the right people for the job. A financial background screening would help you understand if they are the right people for your company or not
  • To follow the best practices for money transfer licenses: For transfering money, it is important to follow the process and regulations in the proper way. So, when a financial institution undergoes the tedious process of money transfer and its approval, the new hire has to be equipped with the right knowledge. If not, it can lead to legal consequences down the road.
Basically, a financial background check of an employee is important to keep the security and reputation of the banking facility intact.

Let us take an example to understand this need better 

Let’s imagine that a bank hires a person to work as a teller in the bank named Rita. After conducting the interview and communicating with the applicant, the bank manager did not find it important to do a financial background check of the employee. He felt that Rita is a trustworthy person and from how she presented herself, he was convinced that she is the perfect choice for the job. In short, the bank did not know that this person had a history of fraud and theft.

With this, Rita gets hired and joins her job in the bank. After two months, Rita secretly began to steal the financial information of many clients. She played it slow making sure that the bank didn’t find out about it. And when the time was ripe, she took all the money from these client’s accounts and vanished. Now, these clients who have had their money stolen come to the bank and ask the bank to pay their money back. And why shouldn’t they? They trusted the bank with their sensitive information, and it was the bank’s duty to protect these people’s information. But the bank took things leniently with their new hires and did not bother to get the financial background screening done.  

In short, the bank is now responsible for all the damage that this one person has done. This means that the bank will have to find a way to pay back these people, and getting this much money could be a huge issue. So, there isn’t a way out here. That is why it is important to have a financial background screening done for each employee hired in the company. And not just that, you will need to keep screening them every now and then to ensure they have not gone rouge. 

Background Checks Needed for Financial Industry

With all that said, here is a list of comprehensive background checks that should take place:

  • Identity Verification Check – Doing this would help you know the person you are about to hire. An identity check would help you understand if the person is real and if the information that the person is sharing is true. It is very important as with this check, you will be able to get all the other background checks done. For instance, if you have the wrong name of the person, you will not be able to find out out if they have any criminal background or verify their educational background. That is why you need to check if the person is who they say they are. 
  • Criminal Background Check – This check would help you get all the details of the convictions that the new hire has under the government criminal databases. It also includes an FBI fingerprint search. It would ensure that your new hire does not have any criminal convictions.
  • Employment Verification – This is to ensure that your new hire has the employment history mentioned on their resume. It would help you know if the person is honest on their resume or not about the jobs they did.
  • Education Verification – This helps you see if the person you are hiring has the degree and/or education needed for the job. It is important as they need to know how to do the work.
  • License Verification – A license check lets you know that the person you are hiring has the license needed for the job or not. This is important as some financial jobs require specific licensing standards to be met.
  • Credit Check – This is also important as it helps you see if the person is financially responsible. To be clear, the credit check would let you know if the person has a good credit score and pays all their dues on time. This would mean that the person is responsible when it comes to money, which is very important when working in finance.

Workforce Monitoring and Rescreening

Re-screening is a process of doing a financial background screening on current employees in the company at periodic intervals. And monitoring is ongoing and proactive checks for potential issues when the screening is done. In fact, you need to get over the misconception that a background screening is a one-off process. You can also have a current employee who is engaging in illegal activity unnoticed, which can impact both the company and the brand.

Reasons for monitoring and rescreening

Here are some of the reasons why it is important to get employee background check services even after you have hired your employees:

  • When change in employment status: It is very important for employers to have a policy when a staff member wants to change their employment status. The change can be a transfer to another department, a leave of absence, or even the change in responsibilities. 
  • When an employee is getting a promotion: With a promotion, the employee would be taking on more responsibilities. This makes it much more important to do a financial background screening again, as it would help you know if this person is what you are looking for or not.
  • As part of employee investigation: When an employee’s behaviour changes, you know that there is something wrong. Even if nothing looks wrong on the surface, it is always better to investigate what is happening.
  • After acquisitions or merger: If you have just acquired a company and its staff, you need to know what risks there are. Don’t automatically trust everyone in the company and get the background of each employee checked thoroughly.
In short, to protect yourself from potential compliance issues, it is important for companies to get a financial services background check for every employee they hire and keep doing it at regular intervals.

Partner with a third-party background screening provider

Startuprbooks offers employee background check services. We have an extensive and experienced team of background checkers. Our team uses the latest technology and infrastructure to get the details for you on request. So, if you are looking for such services, we got your back. Contact us today to know more!