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President Biden signed a law that will make it easier for financial institutions to hire individuals who have certain types of criminal records.

Existing Law For Financial Institutions

A bill known as H.R. 7776, or the "James M. Inhofe National Defense Authorization Act for Fiscal Year 2023" was signed into law by President Joseph Biden. It is designed to empower people with lower-level criminal records to obtain positions at financial institutions. In turn, this is also expected to give those organizations larger candidate pools.

H.R. 7776 amends existing law by reducing hiring restrictions which are in effect for financial institutions that are insured by the National Credit Union Administration ("NCUA"). A law known as the Federal Deposit Insurance Act states that a person who was “convicted of any criminal offense involving dishonesty, breach of trust, or money laundering” is prohibited from “from directly or indirectly owning, controlling, or otherwise participating in the affairs of an FDIC-insured depository institution.”

Another law known as the Federal Credit Union Act stipulates that “a person convicted of any covered conviction” is prohibited from “directly or indirectly participating in the affairs of an NCUA-insured credit union.”

What H.R. 7776 Will Do

Once the new law goes into effect, people who have certain convictions that are covered by existing laws will have an easier time obtaining positions at financial institutions. It says that individuals may be considered for employment if:

• It has been seven years or more since the individual committed the offense; or the individual was incarcerated with respect to the offense, and it has been five years or more since the individual was released from incarceration.
• The offense was committed when the individual was 21 years of age or younger, if more than 30 months have passed since the date of sentencing.
• The conviction was a de minimis offense was punishable by a term of three years or less confined in a correctional facility.

Requirements For Financial Institutions

If an affected organization considers hiring a person who has convictions that are allowed by H.R. 7776, they must conduct "individualized assessments" of criminal records and review evidence of rehabilitation. This involves:

• Considering at least the nature of the crime, the time elapsed and the nature of the job.
• Providing an opportunity for an individualized assessment of criminal records that are found during a background screening and determining if they are relevant to the position and consistent with business needs.

Learn more about the law.

Why Background Checks Matter

H.R. 7776 is expected to empower people with certain types of criminal records to gain more employment opportunities. However, it notes that background checks remain essential. These reports show employers if a candidate has serious criminal records that might indicate they pose an undue risk to the business, its customers or the public.

If your organization needs employment background checks, please contact us. Our experienced team can help you customize screening packages that suit you particular needs, applicable laws and industry requirements. We are available to assist you Monday through Friday from 5am to 6pm PT.