The FDIC updated an Act to help people who have minor criminal records find employment opportunities in the banking industry.
The Federal Deposit Insurance Corporation (FDIC) was established to “maintain stability and public confidence in the nation's financial system.” They insure deposits, examine the safety and soundness of financial institutions and protect consumers. Learn more.
Members of the FDIC reviewed the Federal Deposit Insurance Act (FDAI), which established laws and regulations for the banking industry. They made key updates to Section 19.
Revisions To The Federal Deposit Insurance Act
Section 19 of the FDAI covers penalties for “unauthorized participation by convicted individuals.” It states that without prior consent from a corporation, individuals who have convictions involving dishonesty, a breach of trust, money laundering or who agreed to enter pre-trial diversion or similar programs related to such offenses are prohibited from:
• Becoming or continuing as an "institution-affiliated party with respect to any insured depository institution.”
• Owning or controlling any insured depository institution.
• Participating in the conduct of “the affairs of any insured depository institution.”
Section 19 also created prohibition lengths and other relevant details.
Updates In The Final Ruling
On July 24, 2020, the FDIC issued a Press Release that covered their FDAI updates. They noted these changes should “reduce applications required under Section 19 by 30%” and “reduce regulatory burden on financial institutions and individuals.”
According to a Fact Sheet provided by the FDIC, the new rules will:
• Reduce barriers for people who “paid their debt to society and reformed their conduct and who may wish to gain employment with a financial institution, while at the same time protecting the integrity of the banking system.”
• Enhance transparency and accountability while reducing the regulatory burden currently placed on financial institutions and individuals.
• Allow people who have expunged offenses that are covered by Section 19 to submit applications for banking jobs.
These updates are intended to provide job seekers with opportunities in the financial industry and give corporations additional options when hiring. They go into effect 30 days after the publication date in the Federal Register.
What Employers In The Banking Industry Should Know
If your organization is involved in the banking industry, you should be aware of this ruling and prepared for compliance. Individuals who previously were not eligible for employment might be authorized to submit applications once the ruling becomes active.
Employers may wish to review their hiring policies and make updates based on this ruling. As always, Backgrounds Online does not provide legal advice. This article is for educational purposes and we suggest consulting with counsel to ensure you are compliant with relevant laws.
When hiring for the banking or any other industry, one essential component is running comprehensive background checks. These reports help employers determine if an applicant is qualified, considered safe or if they pose a risk to other staff, the public or a company’s reputation.
When you’re bringing on employees, contractors or volunteers, please contact us for expert background screening assistance. Our team is available to assist you Monday through Friday from 5am to 6pm PT.