Financial and Banking Industry
The stakes are high—nearly 70 million Americans (about one in three adults) have some type of criminal record. Financial companies must vet staff carefully to protect customers and meet strict industry regulations.
Access to sensitive data and the potential for fraud make background checks and drug testing standard practice for banks, credit unions, investment firms, and other financial institutions. In fact, certain roles (like those in federally insured banks) are required by law to undergo background checks. Even when not legally mandated, these screenings give employers peace of mind that they are hiring reliable, qualified, and trustworthy individuals.
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Regulations for Drug Testing in Finance
While not always required by law, most financial institutions, especially federal contractors, include pre-employment and random drug testing as part of their hiring practices. These policies help identify substance abuse risks and maintain a drug-free environment. Health Street provides both urine and hair drug testing to assist with enforcement.
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Specific Screening Requirements & Stats
Financial institutions operate under strict regulatory oversight, which drives unique background check regulations. Here are key considerations for compliance in financial services employment screening.
Regulations for Banking Industry Background Checks
- Laws Specific to Financial Services Background Checks: The Federal Deposit Insurance Act (FDIA) Section 19 prohibits individuals with certain criminal convictions (such as financial fraud) from working at FDIC-insured banks without FDIC approval. Similarly, the National Credit Union Administration (NCUA) has rules for credit unions that prevent hiring individuals convicted of offenses involving dishonesty or breach of trust.
- Comprehensive Background Screens: Financial screenings often go beyond criminal history, including credit checks, civil records (bankruptcies or judgments), and professional license verification. High-risk roles may require international checks to ensure global compliance.
- Fair Credit Reporting Act (FCRA) Compliance: All background checks in the financial sector must adhere to the FCRA, which mandates fair and transparent procedures for obtaining and using consumer information in employment screening.
High Statistics Supporting Financial Background Checks
- 27% of individuals have admitted to embellishing their job applications or resumes.
- Nearly 70 million people (1 in 3 adults) have some type of criminal record.
- 75% of employees admit to having stolen from their employer at least once.
- Insider theft is most common in the banking, insurance, and healthcare industries.
- According to the Federal Trade Commission (FTC), in 2021, fraud caused $5.8 billion in consumer losses, an increase of more than 70% over the previous year.
- The cost of fraud for U.S. lending and financial services firms increased between 6.7% and 9.9% compared with pre-pandemic rates.
- Financial service firms lose $4 for every $1 of fraud committed.
Background Check Services
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Frequently Asked Questions
What do financial institutions look for in background checks?
Financial institutions typically examine several key areas of a potential employee’s history. This includes identity verification and a criminal background check to flag any convictions, especially for financial crimes or fraud. Employers also commonly review the person’s credit history and financial records (like bankruptcies or large debts) to assess financial responsibility. Additionally, banks will verify past employment and education credentials, check for any required licenses or certifications, and may search civil records (such as lawsuits or foreclosures) that could be relevant to the role.
What disqualifies someone from working at a bank?
Applicants can be disqualified from working at a bank or credit union if their background reveals certain offenses. By law, anyone who has been convicted of a financial-related crime, money laundering, or any crime involving dishonesty or a breach of trust is typically barred from employment with federally insured banks.
These restrictions are outlined in federal banking regulations (FDIC and NCUA rules). Without a special waiver from the regulatory agency, a candidate with such a conviction cannot be hired in a role where they might affect the institution's affairs.
Even beyond legal disqualifiers, banks may also disqualify candidates for having poor credit histories or other red flags if those factors suggest unreliability or risk in handling money.
Do banks and financial companies drug test employees?
Most likely, yes. While there are no federal laws explicitly requiring banks to drug test, many major financial institutions have made drug screening a standard part of their hiring process. Banks see drug testing as another layer of protecting the business and customers from risk (employees under the influence could have impaired judgment).
Many banks are federal contractors subject to the Drug-Free Workplace Act, which effectively requires them to implement a drug-free workplace program (including employee drug testing) as a condition of their government contracts. So, although policies vary by company, job seekers in finance should expect pre-employment drug tests and possibly random tests during employment at larger institutions.
Do financial services background checks include credit checks?
It's very common for financial industry background checks to include a review of an applicant's credit report and financial history. Employers in banking and finance want to gauge a candidate's financial responsibility and see if there are any serious issues like recent bankruptcies, unpaid debts, or patterns of financial mismanagement. Roles that involve handling money or sensitive financial information typically warrant a credit check as part of the screening.
This is in addition to the standard criminal and identity checks. A poor credit history won't automatically disqualify someone in all cases, but it can raise concerns for roles of trust. As with any background check element, employers must get the candidate's consent to pull their credit report and comply with FCRA guidelines when using that information.
Are background checks required to work in the financial industry?
Background checks are required by law for certain jobs in the financial industry. For example, federal regulations mandate background checks for positions at FDIC-insured banks and NCUA-insured credit unions to ensure candidates haven't been convicted of disqualifying crimes. Similarly, if you're registering as a financial advisor or broker with FINRA, a background check is part of the licensing process.
Outside of these specific cases, background checks might not be legally required for every financial job, but virtually all financial employers choose to conduct them. Given the high stakes of protecting client assets, sensitive data, and the institution's reputation, companies across banking and finance perform thorough pre-employment background screening as a best practice. It helps them comply with industry regulations and hire trustworthy staff.
Why Health Street for Financial Industry Screening
Choosing the right screening partner can make all the difference. Health Street stands out as the best choice for financial industry background checks and drug testing due to its deep expertise and comprehensive services:
- Expert Support: Our U.S.-based team provides personalized assistance, guiding you through screening challenges with ease.
- Data Security First: We uphold strict security standards to protect sensitive information and ensure confidentiality.
- Flexible for Any Business: Whether hiring one or thousands, our scalable solutions adapt to your company's needs.
- Seamless Applicant Experience with GLASS: Our proprietary GLASS portal is built and maintained in-house, with regular updates based on client feedback. We continuously enhance features, fulfill custom requests, and optimize the user experience to make screenings as smooth as possible.
- Clear, Upfront Pricing: No hidden fees—just straightforward, transparent pricing for all services.
Citations
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Compliance Department. (2017, May 3). Background screening in the financial services industry. BigReport. https://www.bigreport.com/resource-center/background-screening/background-screening-in-the-financial-services-industry/
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Federal Deposit Insurance Corporation. (2018, July 19). Statement of policy for Section 19 of the FDI Act. https://www.fdic.gov/news/financial-institution-letters/2018/fil18042a.pdf
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Federal Trade Commission. (2022, February 22). New data shows FTC received 2.8 million fraud reports from consumers in 2021. https://www.ftc.gov/news-events/news/press-releases/2022/02/new-data-shows-ftc-received-28-million-fraud-reports-consumers-2021-0
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Federal Trade Commission. (n.d.). Fair Credit Reporting Act. https://www.ftc.gov/legal-library/browse/statutes/fair-credit-reporting-act
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GHP News. (2021, July 27). How addiction has affected the banking industry. https://www.ghp-news.com/how-addiction-has-affected-the-banking-industry/
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Gjerde, J. (n.d.). Background checks to become a financial adviser. Chron. https://work.chron.com/background-checks-become-financial-adviser-26403.html
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LexisNexis Risk Solutions. (2022, January 6). Fraud costs and volumes remain significantly higher than pre-pandemic for financial services and lending firms, according to new LexisNexis Risk Solutions report. https://risk.lexisnexis.com/about-us/press-room/press-release/20220106-annual-true-cost-of-fraud-study
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Shortlister Editorial Team. (2025). 40+ background check statistics in 2025. MyShortlister. https://www.myshortlister.com/insights/background-check-statistics
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Substance Abuse and Mental Health Services Administration. (2024, July 31). Federal contractors and grantees. https://www.samhsa.gov/substance-use/drug-free-workplace/employer-resources/contractors-grantees
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Substance Abuse and Mental Health Services Administration. (2024, July 31). Federal laws and regulations. https://www.samhsa.gov/substance-use/drug-free-workplace/employer-resources/federal-laws