Individuals who have criminal records that include a crime involving dishonesty, breach of trust, or money laundering have long been prohibited from pursuing employment opportunities with financial institutions like banks or credit unions. But recent changes in the law have removed these barriers, giving countless job seekers a chance to work in this expansive sector of the economy.
The loosening of these restrictions was contained in Section 5705 of the 2023 National Defense Authorization Act that President Biden signed into law on December 23, 2022.
The Fair Hiring in Banking Act (FHBA), which became effective upon the president’s signature, amended the employment prohibitions that have been in place for over 70 years in Section 19 of the Federal Deposit Insurance Act. That law provided that, except with the prior written consent of the FDIC, any insured depository institution could not employ “any person who has been convicted of any criminal offense involving dishonesty or a breach of trust or money laundering, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense.” Section 205(d) of the Federal Credit Union Act contains similar hiring restrictions for those entities.
The FHBA amends those two statutory sections by making their restrictions inapplicable to job applicants who meet any of the following criteria:
- Seven years or more have passed since the offense occurred.
- It has been five or more years since their release from incarceration.
- The person was 21 or younger when they committed the offense, and it has been over 30 months since the sentencing occurred.
- There is an order of sealing, expungement, or dismissal regarding the person’s conviction.
These exceptions do not apply to individuals who have been convicted or who have entered a pretrial diversion program for “any of the enumerated offenses” subject to a “minimum 10-year prohibition” under Sections 19 and 205(d). Those offenses include:
- Receipt of commissions or gifts for procuring loans.
- Theft, embezzlement, or misapplication by a bank officer or employee.
- Filing or making false/misleading bank entries, reports, and transactions.
- Filing or making false/misleading federal credit institution entries, reports, and transactions.
- Concealment of assets from a conservator, receiver, or liquidating agent of a financial institution.
- Bank fraud.
- Obstructing examination of a financial institution.
- Laundering of monetary instruments.
- Engaging in monetary transactions in property derived from specified unlawful activity.
- Frauds and swindles.
- Fraud by wire, radio, or television.
The FHBA defines the term “criminal offense involving dishonesty” as a crime in which a person cheats, defrauds, or wrongfully takes property belonging to someone else. It does not include drug possession or misdemeanors committed more than one year before the date on which an individual files a consent application. The new law also expands the list of lower-risk crimes exempted from the hiring restrictions. The exemptions now include:
- Offenses that were punishable by three years or less in prison.
- Writing insufficient-fund checks valued at $2,000 or less.
- Lesser offenses, like using a fake ID, shoplifting, trespassing, fare evasion or driving with an expired license or tag, if at least one year has passed since the conviction.
Individuals seeking jobs with FDIC-insured institutions should no longer face automatic rejections because of their criminal history if that history falls within the abovementioned exceptions and limitations. Additionally, institutions evaluating applications cannot rely on the old law as a basis for hiring decisions but will need to evaluate candidates on an individual basis, taking into consideration any applicable state or local “fair chance” or “ban the box” laws.
If you have questions about these changes to the law, please contact Outten & Golden today.