Comprehensive background checks for professors and other high-touch or high-visibility...
Read MoreComprehensive background checks for professors and other high-touch or high-visibility...
Read MoreThe FDIC has published a final rule designed to revise and codify the Statement of Policy that appears in Section 19 of the Federal Deposit Insurance Act. This move helps ex-offenders find work and creates significantly more hiring options for banks.
Simply put, these new guidelines remove certain hiring restrictions for minor offenders seeking employment in the banking industry.
The move also relieves banks of regulatory burdens. Financial institutions wishing to hire an ex-offender no longer have to secure written consent under specific circumstances.
So, what exactly do these new regulations mean for hiring in the banking industry? And what prompted this change?
So much of banking is about minimizing risk. Section 19 of the FDI Act is no different.
Since 1950, this rule has banned any person “convicted of any criminal offense involving dishonesty, breach of trust, or money laundering” from participating “in the conduct of the affairs of any insured depository institution.”
In the past, some exclusions could be made, but only with the written consent of the FDIC.
So what changed? Why did the FDIC choose to loosen restrictions now?
The language of Section 19 has been all-encompassing. The ban includes even minor, youthful indiscretions many employers wouldn’t think twice about.
These tight restrictions have long been a point of contention for civil rights organizations, civic organizations, and even banks themselves.
Even JPMorgan Chase has called for Section 19 reform, citing the societal and economic benefits of hiring ex-offenders. Just last fall, CEO Jamie Dimon announced a program designed to give former convicts more opportunities within their organization.
For many, the bottom line was that Section 19 was simply too strict as it was written. A revision could create an easier and more open hiring process for employers and help ex-offenders find work.
So, how have the rules changed in the revised Section 19 of the FDI Act?
Under the new rule:
In the simplest terms, the new publication of Section 19 means banks have more freedom in their hiring. They also have fewer hoops to jump through when they find a great candidate with a complicated history.
This is also a good reminder that pre-employment background checks are both necessary and complicated.
It’s important to know your candidate’s history, but it’s also important to make sure the applicant has access to their criminal report. Not only is this part of your adverse action obligation, but it also gives an excellent prospect the opportunity to explain.
If you could use a hand streamlining your background screening process, PeopleG2 can help. We provide tech-forward tools to make sure your candidates are in the loop. We also offer comprehensive compliance support to make sure your process is still legal.
Drop us a line and let us know how we can help.
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