2020Criminal Records
Criminal Background Check

Written By ESR News Blog Editor Thomas Ahearn

On July 24, 2020, the Federal Deposit Insurance Corporation (FDIC) issued a final rule revising and codifying Section 19 of the Federal Deposit Insurance Act (FDI Act) to allow greater employment opportunities for ex-offenders with certain minor criminal records in the banking industry, according to an FDIC press release.

Section 19 of the FDI Act prohibits any person from participating in banking who has been convicted of a crime involving dishonesty, breach of trust, or money laundering, or who entered a pretrial diversion or similar program in connection with the prosecution for such an offense, without first obtaining written consent from the FDIC.

“While not major in scope, the changes in the final rule will have a major impact on individuals who no longer need to obtain written consent from the FDIC in order to work for a bank,” FDIC Chairman Jelena McWilliams said in a statement about the final rule of Section 19 of the FDI Act. Specifically, the statement said the final rule:

  • Excludes all offenses that have been expunged or sealed – rather than only certain types of expungements – from the scope of Section 19;
  • Allows a person with two, rather than one, minor “de minimis” crimes on a criminal record to qualify for the de minimis exception;
  • Eliminates the five-year waiting period following a first de minimis conviction and establishes a three-year waiting period following a second de minimis conviction (or 18 months for individuals whose misconduct occurred when they were 21 or younger);
  • Increases the de minimis threshold for small-dollar, simple thefts from $500 to $1,000; and
  • Expands the de minimis exception for crimes involving the use of fake identification to circumvent age-based restrictions from only alcohol-related crimes to any such crimes related to purchases, activities, or premises entry.

The FDIC expects the revisions in the final rule will reduce applications required under Section 19 by 30 percent. The changes will reduce regulatory burden on financial institutions and individuals. The final rule will be effective 30 days after publication in the Federal Register and the existing Statement of Policy (SOP) will be rescinded.

The FDIC is an independent agency created by Congress to maintain stability and public confidence in the nation’s financial system. The FDIC insures deposits and examines and supervises financial institutions for safety, soundness, and consumer protection, among other things. To learn more about the FDIC, visit www.fdic.gov.

Employment Screening Resources® (ESR) – a leading global background check provider – offers financial industry background checks that help banks and financial institutions protect assets, limit liability, mitigate risk, and meet regulatory compliance requirements. To learn more about ESR, visit www.esrcheck.com.

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