5 Steps to a Successful Background Check in Financial Services

Nick Fishman


You work hard to safeguard not only your company’s finances, but those of your clients as well. And as a company in the financial services industry, you deal with both on a daily basis. From a business perspective, it’s vital to the success of your organization that your finances are not only in order, but that you can entrust your company’s financial information with your employees. From a personal perspective, you are serving a wide range of customers—who are entrusting your company with both their personal and financial information.

For an industry that’s already heavily regulated to keep sensitive information secure, you have to wonder, is it possible to increase security? When it comes to the safety of your company as well as your customers—you can’t be too careful. And your customers’ information should be particularly safeguarded by your employees, whether you work for a bank our any other financial institution (private wealth management, brokerage services, credit union, credit card company, insurance company…the list goes on).

Alongside already existing regulations for companies in this industry, employers should also consider how employment background check regulations affect them. A new rule proposed by the Financial Industry Regulation Authority (FINRA) would strengthen these requirements for financial institutions.

The Proposed Rule Has Two Important Aspects:

1. First, it states firms would have to, “ascertain by investigation the good character, business reputation, qualifications and experience of an applicant before the member applies to register that applicant with FINRA and before making a representation to that effect on the application for registration.”

2. The rule also states that firms must, “establish and implement written procedures reasonably designed to verify accuracy and completeness of the information contained in an applicant’s Form U-4 no later than 30 calendar days after the form is filed with FINRA.”

In essence, this update and additions to this rule would require that firms not only conduct an employment background check, but that they stand by the information that they’re submitting.

5 Steps for a Successful Screening Program in Financial Services

1. Criminal Records Search

In any industry, a criminal background check should be a given. But the impact of running a criminal background check before hiring someone in financial services is invaluable. This search could uncover key issues in your applicant’s past—whether the conviction was directly related to finances or not, you don’t want to put your clients or employees in danger—whether it’s physical or financial in nature.

2. Pre-Employment Credit Report

While we don’t recommend this tool for every industry, this search could be a crucial part of your pre-employment background screening program. Conducting a credit report could indicate issues a prospective employee had in their past. And while you can’t judge someone’s professional ability by their personal finances in every case, there might be instances when you should. Personal blends with the professional at times—whether we like it or not. And the results of this report might not affect your hiring decision either way, but when it comes to hiring upper level executives, you want to know that they can responsibly manage your company’s finances.

3. Employment Verification

A potential candidate’s employment history could be a key indicator of any past misconduct or issues. Conducting this search will also allow employers to verify that someone has the skills and experience necessary to successfully perform the job.  And remember, financial institutions have a legal responsibility to report fraudulent activity perpetrated by their employees to future prospective employers .

4. Education Verification

It doesn’t matter how long it’s been since your candidate graduated—you should always verify this information. We can’t even begin to tell you the number of times we’ve discovered a candidate has been touting a degree they never earned. While the degree may or may not make the candidate qualified to do the job they applied for, it’s important to know whether or not they have the educational foundation they claim. Not to mention, a major discrepancy on your candidate’s resume may also indicate a flaw in that person’s character.

5. Professional License Verification

Particularly in financial services, some companies might require that employees have a professional license of some sort. This could include a Certified Financial Planner (CFP), Certified Public Accountant (CPA), a tax attorney, etc. If a professional license is required for the open position, you should request this verification.

Learn more on our Financial Services page.

Nick Fishman
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Nick Fishman

Nick Fishman is the co-founder of EmployeeScreenIQ, a leading, global employment background screening provider, and serves as the company’s executive vice president and chief marketing officer. He pioneered the creation of EmployeeScreen University, the #1 educational resource on employment background checks for human resources, security and risk management professionals. A recognized industry expert, Nick is a frequent author, presenter and contributor to the news media. Nick is also a licensed private investigator in the states of Ohio and Texas.
Nick Fishman
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