Policy

Wider Criminal Background Checks for Bank Executives Unveiled by CSBS

State financial regulators now have access to a quicker and more efficient system conducting criminal background checks on a wider field of bank executives.

The Conference of State Bank Supervisors announced Tuesday its subsidiary, the Nationwide Multistate Licensing System, may now be used to electronically process criminal background checks “for many more individuals” at financial institutions.

“Processing Federal Bureau of Investigation background checks required by state law through NMLS is now expanded to any covered individual, such as a branch manager or officer at a mortgage firm or money transmitter company,” the CSBS wrote in a Sept. 13 statement. "This feature will speed approval processes as fingerprints are automatically processed with results reported back to state regulators within approximately 24 hours.”

Prior to the new enhancements that went live this week, NMLS had been authorized to process background checks for mortgage loan officers only.

The CSBS said 26 state agencies are now able to use the new feature for 116 different types of state licenses, with more states being added in 2017.

“Relying on NMLS to process more background checks greatly simplifies a necessary, but burdensome process for a far greater number of financial institutions,” said Texas Banking Commissioner Charles G. Cooper, chairman of the CSBS.

Congress authorized the expansion of the criminal background checks in 2015 by amending the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, otherwise known as the SAFE Act (12 U.S.C. 5101—5116). When initially enacted, the SAFE Act mandated a nationwide licensing and registration system for residential mortgage loan originators. As part of the licensing process, mortgage loan originators were required to submit fingerprints to the NMLS for a criminal history background check to be conducted by the FBI.

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