Section 19 of the Federal Deposit Insurance Act has been in existence since 1950, but the Federal Deposit Insurance Corporation provided codifications for the section in 2020. The updated regime sets ground rules for the employment of certain categories of persons working for banks and other financial institutions. Unless an FDIC-insured establishment obtains the prior written consent of the agency, its employment of individuals is circumscribed in a number of ways:
- It is prohibited from hiring or continuing to employ any person who has been convicted of any criminal offense involving dishonesty, breach of trust, or money laundering, or who has entered into a pretrial diversion or similar program in connection with such an offense.
- Such persons are likewise banned from owning or controlling, directly or indirectly, any insured depository institution, and from otherwise participating, directly or indirectly, in the conduct of the affairs of covered institutions.
- Institutions can avail themselves of a list the FDIC maintains that names persons who are prohibited from participating in the affairs of any insured depository institution.
- The ground rules explain that so-called de minimis offenses require no submission of applications for hiring approval, and they increase the threshold for “simple theft” from $500 to $1,000.
- The agency added to the list of covered offenses those involving use of fake IDs to purchase alcohol.
- Importantly, expunged and sealed records can no longer be cited by employers.
Affected employers should seek advice from their legal counsel and coordinate appropriately with any background screening providers. To learn the basics of how to avoid miscues, stay tuned for our next post. You can also read more about individual assessments here and view our webinar.
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FACTOID: When you think of the FDIC, think of the run on the bank in the movie It’s a Wonderful Life. The FDIC was created in 1933 to insure financial institutions precisely to forestall the kind of panic seen during the Great Depression.