I have to say that when we started the Executive Briefing (not just for Executives, if you're interested) we discussed background investigations. I remembered the HR double edged sword;

You can't tell another bank this person was a good employee. If they steal from them, we may be held liable.

You can't tell another bank this person stole from you. The ex-employee may sue you for defamation of character

I wasn't remembering an exclusion from the USA PATRIOT Act. In case you weren't, I've linked to the briefing below. "Are you hiring a crook?" is the real life example.

http://www.bankersonline.com/executive/executive013008.html