What Checks Are Involved In Finance?
The finance sector is heavily regulated to protect financial markets and institutions from fraud, money laundering, and other financial crimes. In the UK, it is the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) that are the governing bodies enforcing strict guidelines for companies hiring finance professionals to ensure compliance with these regulations.
Pre-employment screening in the finance sector is critical to verify the integrity, qualifications, and background of candidates. The Senior Managers and Certification Regime (SMCR) was introduced by the Financial Conduct Authority (FCA) in 2016 to improve accountability and governance within the financial services sector.
SMCR applies to all FCA-regulated firms and aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence. Failure to adhere to these guidelines could result in significant legal and financial penalties.
Are You Compliant?
To hire in the finance sector, the following background checks are essential:
- Right to Work Check: Confirms the candidate’s legal right to work in the country.
- ID Verification Check: Confirms the authenticity of an individual’s identification documents to confirm their identity.
- Address Verification: Verifying an individual's address history helps confirm their identity. It ensures that the person is who they claim to be, reducing the risk of identity fraud.
- Criminal Record Check: Ensures candidates have no past convictions related to fraud or financial misconduct. Senior Management Functions (SMF) must have Standard DBS checks as part of their vetting before taking on a new role. All other roles are likely to only be eligible for Basic DBS checks.
- Credit/Financial Check: Assessing a candidate's financial stability helps prevent employing individuals who are ineligible for employment, or who might be susceptible to financial pressures that could lead to unethical behaviour. Bankruptcy and CCJs that could impact job performance.
- Credentials Verification: Verifies that candidates have the professional qualifications, licences and memberships that they claim hold.
- Employment History Verification: Verifies the candidate’s last 6 years of work history and essential experience to work in regulated roles. Involves using specific FCA reference templates to address crucial questions and performance.
- Directorship Search: Authenticates an individual’s current and past directorship roles in companies to assess their professional affiliations and identify any potential conflicts of interest.
- Fitness & Propriety Questionnaires: An integral part of the financial services vetting process, designed to ensure that individuals in key roles meet the high standards of integrity, honesty, competence, and financial soundness required by the FCA.
- International Sanctions: A comprehensive global PEP, Sanctions and Watchlists check. Searches candidate names against global governmental sanctions lists, as well as various international watchlists and enforcement lists, to assess potential risks related to corruption, bribery, and money laundering. Also identifies individuals considered Politically Exposed Persons (e.g., government officials, diplomats, high-ranking executives).
- Open-Source Internet / Social Media Checks: Annual checks on all staff were introduced as a recommendation by the FCA in their Good Practice Guide in 2018. These checks help identify potential risks, such as inappropriate behaviour, hateful or discriminatory remarks, illegal activities, which could impact the candidate's suitability for the role.
Why Adopt The Finance Vetting Guidelines?
Mitigate Financial Risk
Mitigating financial risk is crucial to ensure the fitness of SMCR personnel, as thorough background checks and regular assessments help identify potential risks. These evaluations include examining factors such as honesty, integrity, competence, capability, and financial soundness to maintain stability.
Ensure Regulatory Compliance
Background checks are essential for achieving SMCR compliance. They ensure that individuals in senior management and other controlled functions are indeed fit and proper for their roles. By implementing these checks, firms can uphold the standards required by regulators and mitigate potential risks.
Protect Company Reputation
Hiring qualified professionals builds trust with clients and stakeholders, which is essential for organisational integrity in the financial services sector. By conducting thorough background checks, firms can mitigate risks that threaten their reputation. This diligence ultimately attracts clients and fosters lasting relationships for long-term success.
Why Choose EBC Global?
Software Solutions that Streamline Compliance Processes
Regulatory Compliance: Our software ensures employers can comply with industry (FCA and/or PRA) requirements.
Fast Background Checks: Complete the necessary financial checks quickly, reducing your time-to-hire.
Automated Processes: Automate compliance and background screening to save time and reduce manual errors.
Customisable for Finance: Tailor our software to meet specific financial sector requirements, such as credit checks, FCA reference templates, Fitness and Propriety Forms, and qualification verifications.
Real-Time Reporting: Get immediate reports and audit trails to ensure compliance and transparency in your hiring process.
Enhanced Data Security: Protect sensitive information with state-of-the-art encryption and security measures, ensuring your data is safe and secure at all times.
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