Can you use the existing criminal background check used when the employee was hired, whenever that was, to satify the new Reg Z Requirement for loan originators? Or must you pull a new criminal background check?

See the Commentary to 1026.36(f)(3)(i)(2).

"2. Retroactive obtaining of information not required. Section 1026.36(f)(3)(i) does not require the loan originator organization to obtain the covered information for an individual whom the loan originator organization hired as a loan originator before January 1, 2014, and screened under applicable statutory or regulatory background standards in effect at the time of hire. However, if the individual subsequently ceases to be employed as a loan originator by that loan originator organization, and later resumes employment as a loan originator by that loan originator organization (or any other loan originator organization), the loan originator organization is subject to the requirements of § 1026.36(f)(3)(i)."

So this means, if we screened the employee previously by pulling a criminal background check, regardless of whether it was for SAFE Act or not, we do not need to pull another criminal background check to satify the requirements of Reg Z for LOs, correct?

That comment gives you the ability to avoid getting another background check if the employee was hired as a loan originator before 1/1/14 and you did a background check under another legal requirement to do so in connection with that hiring.

But if you first hired the LO on or after 1/1/14, you can't get around the requirement. If the LO is also an MLO and will register as such, the MLO background check will do the trick for you. But otherwise, you'll have to comply with .36(f)(3)(i) in some other way.

I'm not sure that it was a legal requirement, but from a due diligence standpoint, a criminal background check was pulled for new employees. In that event, it seems like it would still be permissible to use the background check originally pulled for employement purposes.

I have a question regarding this that I can't seem to develop a firm stance on when reading the multitude of resources from the CFPB.

In each of the following examples, the question is: Would we need to pull a credit report under §1026.36(f)(3)?

a. Hired a teller in 5/2013 (not hired as a loan originator). In 2/2016 they post for a personal banker position. Our personal bankers are all NMLS-registered and are trained to do home equity lending (closed end and HELOCs). A criminal background check was done before hire, and will be done again when we register them in the NMLS. A credit report was pulled when we hired them but reviewed only for the very basic requirements of Section 19.

b. Same scenario as above but instead let's say their hire date was one year later, 5/2014.

Any input is appreciated. Reading the regulation, I believe we don't technically have to pull for (a.) but we do for (b.)...
however that doesn't feel right (I feel like we should have to pull for all new individuals, before acting as a LO).
Aside from any best practice or theoretical considerations, I need to know what is regulatory-required.

Thank you in advise for any thoughts on this!

...bump - anyone?