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Employee Background Checks

Are there any regulations which require employee background checks and bonding? If so, what are the requirements? If there are no requirements, are there any "best practices" for smaller community banks?

Answer by Barry Thompson:
You should check your state law for any specific regulations and your bonding company for their requirements. In general a financial institution is an entity that is trusted by the public for honesty and integrity. Even Notre Dame Football learned the necessity of having a background check on someone well known. No financial institution would want to be on the front page of the newspaper for hiring a confidence man or known criminal. More importantly who wants to give the keys to the vault to someone who could be easily tempted?

Always perform background checks on new hires and if they are from outside your local area perform a national check. One financial institution searched only their local area when hiring a person from a different state and you can guess where the criminal record was located.


Answer by Mary Beth Guard:
The Interagency Guidelines for Safeguarding Customer Information provide, in pertinent part:
Each bank shall:
1. Design its information security program to control the identified risks, commensurate with the sensitivity of the information as well as the complexity and scope of the bank's activities. Each bank must consider whether the following security measures are appropriate for the bank and, if so, adopt those measures the bank concludes are appropriate:
* * *
e. Dual control procedures, segregation of duties, and employee background checks for employees with responsibilities for or access to customer information;


Answer by Dana Turner:
For a comprehensive Internet seminar about establishing a Background Investigation Program, check out BOL's "Conducting Background Investigations". The workbook materials and audiotape (no CD) are available in our Banker Store.

First published on 8/02/04

First published on 08/02/2004

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