Fingerprinting Questions & Answers

In an earlier issue of Bankers' Hotline we referred to the use of fingerprinting in financial institutions. After receiving several calls requesting more information, we interviewed Howie Hodges, who was at that time Division Manager of Security and Risk Management for the American Banker's Association. (Howie has since been promoted to Director of Banking Professions.) Following is part of that interview:

BH-Why do you place so much importance on fingerprinting employees?

HODGES-I believe that fingerprinting as a form of pre-employment screening will be the most important part of that process because it is the only officially recognized form of investigation of a person's background.

In 1987 the polygraph was prohibited as a use of pre-employment screening. A limited exception was granted to financial institutions and agencies to use the polygraph as an investigative tool in some certain circumstances, but not as a pre-screening device.

Profile tests, including paper and pencil tests, are being attacked in Congress by both the Office of Technology and Assessment and the ACLU charging that some tests are culturally or sexually biased, with too wide a range of probabilities factored into the final assessment to be objective. It appears as though those tests will be falling the way of the polygraph shortly.

BH-Do you feel that fingerprinting will be mandatory for employees of financial institutions?

HODGES-Yes, I do. I believe the driving force behind this will be Congress overreacting to the Savings & Loan crisis. They've gone from allowing the regulatory bodies to police the financial industry, to setting up regulatory provisions themselves.

Charles Keating is not the only one that ran a bank into the ground, or misled investors and depositors. But he's the most brash one, the most defiant one, and had a Hollywood air to him that drew a lot of attention to himself from the media.

Congress will be going back home for elections and they're finding it's not the outside threat that people are wondering about-its the inside threat-people capable of getting into positions where they have the potential to reap this type of havoc on the institution and have catastrophic effects on the shareholder as well as the community. They're going to be asking their elected officials what they are doing about it-how they are going to stop it.

Mandatory fingerprinting has already been mentioned in Congress as a viable means of eliminating the possibility of hiring a criminal and allowing him entry to the financial institutions.

BH-Suppose a card that is sent to be checked comes back with a "hit". What action must a financial institution take?

HODGES-It is, of course, against the law to hire a convicted felon. However, if the institution wants to hire that person, they can still do so. It must write to its regulatory agency to be granted an exception.

BH-Why would you want to do that?

HODGES-Well, for example, say a boy 18 years old was convicted of fraud in 1963. The individual is now 45 years old, has had a good track record, worked for several companies, but now wants to work for a financial institution. The institution can write to FDIC (or whatever regulatory agency is applicable) and explain the circumstance of the previous act, state that they believe this person was rehabilitated and would add a vital service to the institution. After review, if the regulatory agency was in agreement, they would grant an exception. Exceptions have been granted in the past.

BH-Can a financial institution go directly to the FBI for fingerprint checks?

HODGES-No, they can't. The Federal Bureau of Investigation and the American Bankers Association made an agreement back in 1982 to process fingerprints for the financial industry only if ABA handled the mail, tracked payments, and processed the cards. The FBI simply did not have the manpower to do it. We supplied the staff to handle it as a service to the industry.

BH-What about electronic scanning?

HODGES-That is the wave of the future, and will be done soon. It's called Live-Scan Technology. The ABA will be ready for Live-Scan. To put it very simplistically, when you go into a supermarket, there is a little glass plate with an optical scanner that scans bar codes. That same type of technology is available to actually pick up and check prints on FBI >
The ABA will be linked to the FBI computer and will be able to send a Live-Scan card for the financial institution with a greatly reduced turn-around time.

BH-You mentioned the availability of the multiple arrest/no conviction/no disposition records now being provided to financial institutions from the FBI records. Is there any problem with that?

HODGES-There is a definite caveat. You can't take action on the basis of an arrest with no conviction like you can with a conviction and a disposition. It will certainly alert you to the fact that there could be a problem, but the person should have the ability to clarify the record.

Editor's Note:
For more information contact:
Security and Risk Managemtent Division,American Bankers AssosiationTelephone: (202) 663-5296

Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 10, 9/90