Financial & Insurance Services Employment Screening Solutions

We provide comprehensive, accurate, and timely employment screening solutions that enable our financial services and insurance customers to meet their risk mitigation obligations and facilitate trusted and secure workforces.

Why Should You Screen Potential Financial & Insurance Services Employees & Candidates?

Pre-employment screening is an important risk mitigation tool for Australian companies and government entities across all sectors. This is highlighted in Australian Standard AS 4811-2022 Workforce Screening which outlines the importance of strategic pre-employment screening practices during the recruitment process to ensures integrity, identity, credentials, and trustworthiness.

In the financial services and insurance sector however, there are particular vulnerabilities to compliance risk and potential fraud due to financial and personal data access, as well as money laundering risk. This makes a thorough screening process even more pivotal as a means to prevent fraud and ensure any potential employees meet rigorous standards of integrity.

In Australia, financial services entities are overseen and regulated by a number of Government and Industry bodies as well as independent statutory authorities including the Australian Securities & Investment Commission (ASIC), the Australian Prudential Regulation Authority (APRA), the Australian Financial Security Authority (AFSA) and the Australian Banking Association (ABA).

Compliance Risk Mitigation

A good primer for some of key issues faced by financial services entities in relation to compliance risk is the Insight paper released in February 2022 by APRA, ‘How to manage compliance risk and stay out of the headlines’. This paper examines the fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry which then led to APRA’s own reviews of the four major banks. The report states:

“When APRA-regulated entities are managing compliance risk well, fewer and less severe regulatory breaches arise, meaning less time is required for remediation, and business runs smoothly. But if organisations don’t have systems in place to properly manage compliance risk, the outcomes can be disastrous. Recent high-profile compliance failures show that failing to manage compliance risk can cause severe financial and reputational damage.”

One of the outcomes of this work by APRA was a three-point recommendation for financial services moving forward, which observes the need to:

Have a clearly defined approach to managing compliance risk,
Have established processes to support compliance risk management practices, and
Specify clear accountability for managing compliance risk.

A thorough pre-employment screening protocol is a key component of an entity’s risk management strategy as a means to safeguard consumers and meet regulatory obligations. The importance of strategic employment screening has been reiterated by ASIC and the ABA among others, as well as the NSW Independent Commission Against Corruption in its findings from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The ABA’s Reference Checking and Information Sharing Protocol was created to promote better reference checking in the financial services sector, specifically during the recruitment of financial advisors. The protocol is intended to “promote better information sharing about the performance history of Financial Advisers focusing on compliance, risk management and advice quality”.

The protocol also notes that “There is an established public and community interest in enhancing consumer protection by ensuring that consumers receive financial advice only from professional, competent and ethical Financial Advisers”. The implementation of a thorough pre-employment screening process can assist in the confirmation of these suitability criteria.

The ASIC Reference Checking and Information Sharing Protocol likewise emphasises the importance of relevant background checks during the recruitment process, stating that:

“Licensees are subject to general conduct obligations which include taking steps to ensure that their representatives comply with financial services laws or credit legislation. ASIC expects that these steps will include undertaking appropriate background checks beyond reference checking before authorising new representatives.”

Money Laundering Prevention

One of the driving forces behind compliance regulation, is the risk of money laundering activity within financial services and insurance entities.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) oversees a framework of Anti-Money Laundering (AML) legislation which mandates that all reporting entities (financial services and insurance bodies are included in this) “must have an Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) program specifying how you comply with AML/CTF legislation”. It also mandates the implementation of Know Your Customer (KYC) systems intended to combat the same issues as AML programs.

Anti-Money Laundering programs must have a component covering Employee Due Diligence that documents the procedures in place “to identify and minimise your business or organisation’s exposure to the risk of money laundering and terrorism financing (ML/TF)”.

Organisational Benefits of a Thorough Employment Screening Framework

The Australian Standard HB 322 — 2007 Reference Checking in the Financial Services Industry outlines some of the wider benefits to financial services and insurance entities of implementing improved reference checking, beyond the baseline of regulatory compliance. These benefits include:

Limiting costs associated with— terminating and replacing unsuitable staff; investigating misconduct; and legal consequences of such misconduct.
Giving competitive advantage.
Reducing potential turnover of staff.
Increasing productivity.
Deterring dishonest individuals from applying.
Building and reinforces consumer confidence.
Increasing morale.
Complying with legislative and other regulatory requirements.
Protecting the Organization’s assets.

Recommended Essential Screening Checks for the Financial Services Industry

A financial regulatory check is generally only conducted on candidates involved in an organisation’s management and financial aspects. Positions in this category include senior executives, directors, financial officers and investment bankers. In this highly regulated industry — especially in banking — background checks are mandatory.

Accurate Background’s financial regulatory checks include:

Bankruptcy Check

The Bankruptcy Register Search is an online service that allows access to personal insolvency information about individuals directly from the National Personal Insolvency Index (NPII).

The NPII provides information about individuals who have been subject to proceedings under the Bankruptcy Act 1966 from August 1928.*

*(It does not include any information on company liquidations or administrations.)

APRA Checks

The Disqualified Register Check involves identifying whether or not a candidate has been disqualified from holding prudentially significant roles within APRA-regulated industries.

The APRA Enforceable Undertaking Register lists all enforceable undertakings APRA has accepted from individuals or entities since 1 January 2005.

ASIC Checks

The Disqualified Register Check can also be carried our for ASOC-regulated Industries.

An ASIC Enforceable Undertaking Register check reveals if a candidate has ever been subject to undertakings accepted by ASIC and enforceable in court.

National Police Check

Police checks are recommended for Financial and Insurance Industry organisations. While they’re not mandatory for all positions they are one of the most commonly implemented checks out of the recommended list.

Qualifications Check

Candidates may need formal qualifications, licensing, registration, or professional memberships depending on their role and organisation. In these cases, it may be necessary to check the validity of their qualifications.

AFS Licensees Register check

Under the Financial Services Reform Act, any business or person that offers or advises you about financial products must hold an Australian Financial Services (AFS) licence.

You can conduct an AFS Licensee Register check through ASIC to ensure that the applicant is an authorised AFS licence holder.

If they’re not a holder of an AFS, the register will also indicate whether or not that application is authorised as a representative by an AFS licensee.

Sanctions Watchlist Checks

An Anti-Money Laundering (AML) and Know Your Customer (KYC) checks help identify candidates and customers who may have been politically exposed to money laundering.

Businesses in the financial sector are generally obligated in terms of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 to conduct a money laundering check.

Directorship Check

A directorship check or business interest check helps identify if the candidate is interested in other businesses that might cause a conflict of interest in the role they are applying for.

This check is generally reserved for directors, managers and other decision-making roles.

Conducting Employment Screening During The Recruitment Process

According to the Australian Standard HB 322 — 2007 Reference Checking in the Financial Services Industry reference checking for the purposes of verifying high standards of professionalism, integrity and competence of individuals working in these sectors is “optimized when it is supported by policies and systems, and there are designated staff responsible for implementing it. This process can sit alongside policies or procedures”. These include:

Recruitment and selection.
Employment screening including verifying identity, training, qualifications.
Probationary periods.

Rights and equal employment.
Discrimination.
Performance management.
Code of conduct.
Occupational health and safety.
Risk management and security.
Ongoing due diligence relating to service level agreements with outsource providers.
New staff from takeovers or other acquisitions.

Minimise Compliance Risk with Accurate Background

Contact our specialists today.

Accurate Background is a specialist employment screening agency with deep industry experience and capacity for high volume, fast turn-around checks. We practice what we preach when it comes to compliance risk mitigation as all of our own staff have undergone thorough pre-employment screening, and we operate under carefully monitored security controls that meet and in some areas exceed the Australian Criminal Intelligence Commission (ACIC) requirements.

Accurate Background’s Australian office premises is housed within a Defence Industry Security Program (DISP) accredited environment. We work within a centralised ISO 27001 certified environment which addresses all Australian Cyber Security Centre’s (ACSC) Essential Eight (E8) mitigation strategies as well as ISO 27001 controls.

Our focus is quality and expertise. We pride ourselves not only on the speed and accuracy of our screening, but on maintaining the highest standards of care for all our customers.

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