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Inactive Financial Institution Letters

Pre-Employment Background Screening
Guidance on Developing an Effective Pre-Employment Background Screening Process
June 1, 2005

Summary: The FDIC is providing the attached guidance on developing an effective pre-employment background screening process. This process can be an effective risk-management tool by providing management with a degree of certainty that the information provided is accurate and that the applicant does not have a criminal background.

  • Used effectively, a pre-employment background screening process may reduce turnover by verifying that the potential employee has the requisite skills, certification, license or degree for the position; deter theft and embezzlement; and prevent litigation over hiring practices.
  • Institutions should verify that contractors are subject to screening procedures similar to those used by the financial institution. Consultants should be subject to the financial institution's screening process.
  • Management should develop a risk-focused approach to determining when pre-employment background screening is considered appropriate or when the level of screening should be increased, based upon the position and responsibilities associated with the position.
  • Costs are associated with developing and implementing an effective screening process. However, absent an effective screening process, a bank may incur significant expenses from recruiting, hiring and training unqualified individuals based upon their skill sets or backgrounds. These individuals may have to be replaced due to an inability to perform assigned duties or for other improper actions.

FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Personnel/Human Resources

Related Topics:
Section 19 of the FDI Act
Information Technology
Fair Credit Reporting Act

Pre-Employment Background Screening Process

Examination Specialist Debra L. Stabile at or 202-898-3673.

Printable Format:
FIL-46-2005 - PDF 47k (PDF Help)

FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's Web site at

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Paper copies of FDIC FILs may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Room 100, Washington, DC 20434 (1-877-275-3342 or (703) 562-2200).

Last Updated 06/01/2005

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