Bank Background Check Requirements and Disqualifying Crimes

A bank background check goes deeper than what most employers run. Before a bank hires you, it will pull your criminal history through a fingerprint-based FBI search, review your credit report, verify your employment and education, screen your name against federal sanctions lists, and — for anyone touching securities — check your regulatory record with FINRA. Certain convictions trigger an automatic federal ban on employment at any FDIC-insured institution, and the bank itself is prohibited from hiring you unless the FDIC grants written consent.¹

The Section 19 Ban on Bank Employment

The single most consequential piece of a bank background check is the Section 19 review. Under Section 19 of the Federal Deposit Insurance Act, if you’ve been convicted of, or entered a pretrial diversion program for, any crime involving dishonesty, breach of trust, or money laundering, you cannot work at an FDIC-insured bank or credit union in any capacity — employee, officer, director, or contractor — without written FDIC consent.²

The FDIC reads “dishonesty” and “breach of trust” broadly. Covered offenses include theft, embezzlement, forgery, misappropriation of funds, tax evasion, writing bad checks, making false reports to law enforcement, using false identification, and drug possession with intent to distribute.³ The offense doesn’t have to be bank-related. A shoplifting conviction from years ago counts. A tax fraud plea counts.

For the most serious offenses — bank fraud, mail and wire fraud affecting a financial institution, embezzlement from a bank, money laundering, and related conspiracies — the FDIC cannot grant a waiver for at least ten years after conviction.¹ After that mandatory period, an application is possible, but the applicant carries the burden of showing they don’t pose a risk.

When Section 19 Does Not Apply

The bar has real exceptions. If your record falls into one of these categories, no waiver is needed.

Minor Offenses That Are Automatically Exempt

Low-level offenses can qualify as “de minimis” and fall outside the ban entirely. Every one of the following must be true:

You have no more than two covered offenses total.
Each offense was punishable by one year or less of imprisonment and a fine of $2,500 or less, and you served three days or fewer of jail time.
If you have two covered offenses, each conviction or program entry is at least three years old; if both happened when you were 21 or younger, the waiting period drops to 18 months.
The offense was not committed against an insured bank or credit union.

Specific categories that qualify include simple theft of $1,000 or less, bad checks with a total face value of $1,000 or less, and using a fake ID to buy alcohol or enter an age-restricted venue when you were under 21.⁴ “Simple theft” is narrow: burglary, robbery, identity theft, forgery, and fraud don’t qualify regardless of the dollar amount.

Expunged, Sealed, and Juvenile Records

If a court has issued an order of expungement or an order to seal your conviction, or the record was expunged by operation of law, the FDIC does not treat it as a conviction of record.⁴ Juvenile adjudications and youthful offender adjudications also sit outside Section 19 entirely. This is a real change from the pre-2020 rules, which treated many sealed records the same as active convictions.

Convictions Outside Section 19

Plenty of criminal records don’t trigger the federal ban but can still cost you the job. Banks review state and federal databases for felonies and serious misdemeanors, and a violent felony that isn’t a “dishonesty” offense can still be a deal-breaker under the institution’s internal policies.

The EEOC has directed employers who use criminal records in hiring to run an individualized assessment rather than a blanket exclusion. That assessment weighs the nature and seriousness of the offense, how much time has passed since the conviction or release, and the specific duties of the position.⁵ A decade-old assault conviction weighs differently for a back-office data analyst than for a branch manager. Banks that apply rigid all-or-nothing criminal policies risk Title VII discrimination claims.

The EEOC also draws a hard line between arrests and convictions. An arrest alone, without a conviction, should not be used as the basis for denying employment, because an arrest doesn’t establish that the conduct actually occurred.⁵

Credit and Financial History

Banks pull your credit report, and this is where applicants with clean criminal records still get tripped up. The reasoning is direct: an employee under serious financial pressure who handles other people’s money is a fraud risk. Reviewers look at recent bankruptcies, accounts in collections, high debt relative to income, civil judgments, and tax liens.

Poor credit doesn’t disqualify you from every banking role. It weighs heavier where the job involves direct access to customer accounts, cash handling, or sensitive financial data. A teller position typically demands a cleaner profile than an IT support role at the same institution.

The Fair Credit Reporting Act limits how far back a report can reach. Most negative items — civil judgments, collections, paid tax liens — can only be reported for seven years. Bankruptcies can appear for up to ten. Criminal convictions have no time limit and can show up on a background report indefinitely.⁶

Before pulling your credit, the bank must give you a clear written disclosure of its intent and obtain your written authorization. Under the FCRA, that disclosure has to be a standalone document, not something buried in a stack of hiring paperwork.⁷ Several states also restrict the use of credit reports in hiring where financial history isn’t directly relevant to the job, so state rules are worth checking.

Fingerprints and the FBI Check

Bank screening usually starts with fingerprints. The FDIC requires fingerprint-based FBI background checks for applicants subject to Section 19 review and for several other regulatory filings. The FBI considers fingerprints the most reliable method for surfacing criminal history across jurisdictions.⁸ The fingerprint check is separate from a name-based database search, and it’s harder to slip past: records filed under aliases or prior names still come back linked to the prints.

Extra Scrutiny for Securities and Investment Roles

Roles that involve selling securities or giving investment advice trigger an additional layer of screening through FINRA. FINRA Rule 3110(e) requires member firms to investigate the character, business reputation, qualifications, and experience of every applicant before filing a registration application.⁹

The firm must review your most recent Form U5, which is the termination notice a previous employer filed when you left. If that U5 shows a termination for cause or notes customer complaints, those disclosures become part of your permanent record in the Central Registration Depository (CRD) and are visible to prospective employers.⁹ The firm also has to verify the accuracy of your Form U4 — the registration application — against public records.

The CRD is comprehensive. For current registrants and anyone registered within the past ten years, it holds registration history, a decade of employment history, licensing information, and a disclosure section covering customer disputes, disciplinary events, and certain criminal and financial matters.¹⁰ Much of it is publicly viewable through FINRA BrokerCheck.

Certain entries trigger a statutory disqualification, which bars you from associating with any FINRA member firm. The criteria are set by the Securities Exchange Act and include felony convictions and certain financial-related misdemeanor convictions. A firm can apply to FINRA for permission to associate with a statutorily disqualified individual, but the process is involved and approval isn’t guaranteed.¹¹

Sanctions and Watchlist Screening

Banks screen applicants against the Treasury Department’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons list. U.S. businesses are prohibited from doing business with anyone on the SDN list, and that prohibition extends to employment.

This check isn’t about criminal history. It looks for individuals connected to terrorism, narcotics trafficking, weapons proliferation, or foreign governments under U.S. sanctions. False positives from common names do happen, and the bank has to resolve any match before proceeding.

Employment and Education Verification

Banks verify your resume. Prior employers are contacted to confirm titles, dates, and circumstances of departure. Education credentials are checked against institutional records. Discrepancies get flagged.

Honest mistakes about employment dates or titles can usually be cleared up, and banks will often reach out to clarify before treating a discrepancy as disqualifying. Deliberate misrepresentation is different. Claiming a degree you didn’t earn or a job title you never held tends to end the process, because in banking hiring, that kind of dishonesty is precisely what the screening is designed to catch.

Your Rights If the Bank Rejects You

If a bank decides not to hire you based on information from a background check or credit report, the FCRA sets a required sequence of notices before the rejection is final.

Before taking adverse action, the employer must give you a copy of the consumer report that influenced the decision and a written description of your FCRA rights.¹² This is the pre-adverse action stage, meant to give you a chance to review the report and dispute anything inaccurate before the decision is locked in. The statute doesn’t set an exact waiting period; most employers allow around five business days.

If the bank still decides to reject you after that window, it must send a final adverse action notice. That notice must include the name, address, and phone number of the consumer reporting agency that supplied the report, along with a statement that the agency didn’t make the hiring decision and can’t explain why it was made.¹²

If the report contains errors, you have the right to dispute the information directly with the consumer reporting agency, which must investigate and correct inaccuracies. Errors on background reports are not rare. A false criminal hit or a credit account that belongs to someone else can end an otherwise strong application. Pulling your own credit report and running a self-background check before you apply gives you time to fix problems before the bank sees them.

1
Office of the Law Revision Counsel. 12 USC 1829 – Penalty for Unauthorized Participation by Convicted Individual
2
eCFR. 12 CFR 303.220 – What Is Section 19 of the Federal Deposit Insurance Act
3
Federal Deposit Insurance Corporation. Your Guide to Section 19
4
Federal Register. Incorporation of Existing Statement of Policy Regarding Requests for Participation in the Affairs of an Insured Depository Institution
5
Equal Employment Opportunity Commission. Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions
6
Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports
7
Federal Trade Commission. Background Checks on Prospective Employees – Keep Required Disclosures Simple
8
Federal Deposit Insurance Corporation. Background Investigations – Applications Procedures Manual
9
FINRA. FINRA Rule 3110 – Supervision
10
FINRA. About BrokerCheck
11
FINRA. Regulatory Notice 15-05 – SEC Approves Consolidated FINRA Rule Regarding Background Checks on Registration Applicants
12
Office of the Law Revision Counsel. 15 USC 1681b – Permissible Purposes of Consumer Reports