ABA Banking Journal - August 2008 - (Page 48)
Compliance Clinic Avoiding being “the banker who knew too much” Responsible business demands knowing your job applicant and knowing your employee. But how you got the knowing, and what you do with it, ah, there’s the rub orking late one night, banker Jim Dandy decided to check out an applicant he’d just offered a job to that afternoon. The candidate had accepted, and Dandy thought a quick peek at the internet wouldn’t hurt. Typing in her name, he discovered the young hiree had her own Facebook page. He found a picture of her smoking a cigarette at a sports rally. Seemingly incidental, except that he had told her during the interview process that the bank did not employ smokers, and she had said she didn’t. OK, maybe it’s an old photo. Nope, Dandy recognizes the rally. It was held W By Steve Cocheo, executive editor for a local school team, and he knows when it was held. And that just happens to have been during the course of the interview process. This means the hiree was a smoker at the time she was interviewed. Furthermore, one of the references that she willingly provided also said that she was not a smoker. Dandy decides to read further on the Facebook page. It gets worse. He learns that his hiree had been an employee advocate of sorts at a previous job, and that things got sticky enough that her last employer had filed a police report. Funny, thinks Dandy. The employer had verified dates of employment and such, but hadn’t given even a hint about labor activism. Tina had stated during the interview that she had just completed an undergraduate degree in economics and decided it was time to move on. Now what? How deep to dig? Bankers face challenges beyond those of many other types of employers. Besides all the concerns about “fit” and qualifications that any employer has, bankers have legal obligations to avoid hiring people with certain categories of crime in their past, and a whole body of regulation covers that. (See the box below.) As part of that obligation, bankers like the hypothetical Jim Dandy have a “duty of reasonable inquiry” under FDIC’s policy statement implementing Sect. 19 of Screening bank candidates to comply with federal law ection 19 of the FDIC Act bars, absent FDIC approval, depository institutions’ hiring of anyone convicted of any criminal offense involving dishonesty, breach of trust, involvement in drug trafficking, or money laundering. Likewise, anyone who has entered into a pretrial diversion or similar program in connection with a prosecution under such charges can’t work for a bank. Overall, such individuals can not only not be employees, but can’t be “institution-affiliated parties” of any stripe. Section 19 requirements were expanded in 1991 and FDIC published risk-based guidance in 1998. To address further expansions, to clearly include bank and thrift holding companies in the ban, the Federal Reserve and the Office of Thrift Supervision are working on relevant rules, according to Tim Divis, regional counsel for FDIC, who S spoke at ABA’s Regulatory Compliance Conference. Insured institutions and their holding companies must establish a screening process; use written employment applications requiring disclosures by applicants; and have a process in place for making case-by-case determinations. Divis noted that the prohibition on associating with or hiring banned individuals as institution-affiliated parties hinges on a number of factors. Certain affiliates and subsidiaries might not be covered, depending on the specifics. In addition, he noted that certain events did not trigger the ban, including arrests not leading to conviction; pending cases; and cases reversed on appeal. Pardoned individuals must apply to FDIC for a waiver. Other considerations also apply. 48 AUGUST 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com
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