In this article, we’re going to be taking a look at what causes a red flag on a background check.
Importantly, this article is to help people better understand the role that background checks can play in the account opening process.
That said, if you’re ready to start applying for bank accounts, you can use our other free international banking resources to learn how you can get an international bank account now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- What Causes a Red Flag on a Background Check?
- Employment Background Check
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
What Causes a Red Flag on a Background Check?
A red flag on a background check can be caused by several different variables. These variables can include information provided by the applicant, historical incidents, and (depending on the role) technical tests like drug tests. We will explore each of these variables in more detail below.
It’s important to note that not all banks will perform all aspects of a background check. In fact, in certain situations, banks may simply conduct a cursory check of publicly available information related to an applicant.
That said, other banks will conduct a deep search to confirm that the individual has provided accurate information about themselves, their employment history, and their achievements.
Not surprisingly, when the information provided to the bank does not align with the information found by the compliance team, red flags will be raised and the applicant will likely be denied.
Alternatively, if your account was flagged and now your account is frozen or closed and you’re wondering if you can reopen a closed bank account you can check out our free article here covering this exact topic.
Information Provided by the Applicant
Background checks compare the information provided by an applicant, confirming whether the information is true or false. When corroborating information, background checks typically consider education and employment history. If an applicant provides false information, which is identified through a background check, this would cause a red flag.
Historical Incidents
Historical incidents are more commonly thought of as being the foundation of a background check. These incidents include criminal history, especially felonies related to violent crimes, sexual offenses, robberies, and similar charges. That said, another important consideration from a banking perspective is poor credit history.
Technical Tests (Drug Tests)
This aspect of a background check will not come into play when opening bank accounts. However, in case readers are reviewing this list in relation to employment or for other purposes, it’s important to note that in certain cases drug tests do form part of background tests.
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Employment Background Check
In many jurisdictions, banks still ask individuals to provide a copy of their resume or curriculum vitae during the account opening process. Banks ask for this in order to confirm identity, corroborate the information provided, and to make ensure that the applicant is someone they want to do business with.
Employee Background Checks
In most cases, banks will then conduct an online search to make sure that the person applying has provided all relevant and accurate information.
Importantly, if a person does not show up publicly online, this can also cause red flags since most bankers expect everyone to have a visible online profile today.
Background Check Company
When opening business accounts, banks will conduct a similar check on the company, the clients, and the information provided. This will include reviewing the business’ website, and other mentions online, and confirming that the information previously provided is accurate.
Frequently Asked Questions
Below are two of the most common questions that we receive from people looking into what causes a red flag on a background check. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Can Be a Red Flag on a Background Check?
A red flag on a background check can include inaccurate information provided by the applicant, historical incidents ranging from a criminal record to poor credit, and technical tests like drug tests. That said, background checks can apply to both individuals and companies. In all cases, banks want to see that the information provided is accurate and reflects a customer that the bank wants to have a relationship with.
What Would Make Someone Fail a Background Check?
A specific incident that would make someone fail a background check will depend on the institution conducting the check and the severity of the discrepancy. For example, if a bank is conducting a background check and the dates are slightly different between the employment history provided and recorded, this is likely explainable. However, if a historical incident like criminal history has not been shared openly, this would likely result in a failed application.
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