Concerns over financial services employees

Here’s how the industry can address the risk

In January 2021, seven Hong Kong bankers were arrested in a city-wide money laundering sweep. At $6.3 billion dollars, it was the biggest take down of its kind in a decade.1

In Singapore, a former loan officer was one of three financial professionals who duped bank customers out of $3.6 million by tricking the customers into applying for loans and ultimately transferring the funds into their personal accounts.2

Why are “trusted” employees within the financial services industry executing these crimes? Here, we share what’s happening and how financial firms can address the issue and confidently hire trusted employees.


A triangle of temptation.

Three factors are known to drive internal employee crime: opportunity, motivation and rationalisation. All three conditions are present within the financial services industry.

Opportunity comes with having direct access to customers, money, accounts and other sensitive or proprietary information. Often, entry-level associates at financial services firms are trusted with many, if not all these things. For example, the Singapore loan officer mentioned earlier used his close access to customers and their accounts to commit his crimes.

Motivation and rationalisation are closely linked. If an employee is experiencing financial difficulties, it might motivate them to exploit their position or access for their own financial gain. Likewise, employees who feel wronged or unappreciated by their employer might rationalise theft, fraud other criminal behaviours, believing that the company “owes” them.

In addition, remote work—popularized by the COVID-19 pandemic—presents additional risk. While some are slowly returning to the office, many will continue to telecommute, which means there will be less day-to-day oversight over transactions and processes. This could potentially lead to increased opportunity for theft and fraud.


Who ultimately pays the price of employee crimes? The business.

Employee-driven crimes within the financial services industry often make the headlines, which can erode public trust in the business and the larger brand. In turn, this can stunt growth since business integrity and reputation are top of mind when customers are choosing a service provider to handle their hard-earned money and strategic investments. Why choose a firm with a black eye when there are plenty of others with a perfect reputation?

Likewise, studies have shown that the longer an employee works for a business, the more money they can steal over time. One report focused on the Asia-Pacific region revealed that employees with more than five years at an organisation stole 59 percent more for a median loss of $238,000, compared to those working with the company for less than five years who were responsible for a $150,000 median loss.3

The threat of employee crimes can also fuel stiff penalties from financial regulators, as in the examples below from 2020, according to ACAMS TODAY magazine.

  • The Monetary Authority of Singapore revoked the licence of a Singapore-based asset management firm and fined two trust companies ($816,415 for one firm and $296,878 for the other) for anti-money laundering (AML)/counter-terrorist funding (CTF) control failures.
  • The Hong Kong Securities and Futures Commission penalised a securities brokerage company $5 million; forced an international securities firm to pay $2.5 million; and forced another securities firm to pay $477,220 for AML violations.4


Nothing is foolproof, but you can “babyproof” your organisation.

To guard against employee risk, and depending upon applicable laws and regulations financial services employers are required to perform comprehensive employee background checks. At a minimum, background checks can help employers better understand: 1) an employee’s identity (i.e., ensuring they are who they say are); 2) an employee’s prior history of criminal behaviour; and 3) any industry sanctions, penalties or bans against an employee.

What’s more, it also helps mitigate the risk of potential loss within the broader industry by requiring employees from moving between financial institutions to disclose previous misconduct to their new employer. Since most background checks are not dependent on employee-provided information, they can reveal offences and infractions that a candidate or employee may intentionally exclude from their application, resume or CV.

Make no mistake: background screening isn’t a foolproof method of preventing internal crime—nothing is, for that matter. However, it can help mitigate the risk to an organisation by establishing a baseline standard for all employees.

In fact, most regulators provide financial services employers guidance to the type of background checks that should be performed.  For example, the Hong Kong Securities and Futures Commission provides formal Fit and Proper Guidelines that include specific background screening direction pertaining to an individual’s:

  • Current or prior bankruptcy and debt judgements
  • Criminal offences
  • Professional censure, discipline or disqualification within financial services or other industries
  • Relationship(s) to insolvent businesses


At First Advantage, we offer specialised, screening for financial services businesses that address unique, industry-specific employee risk. Knowing that financial regulatory agencies, screening requirements and guidelines vary throughout the Hong Kong and ASEAN region, we work with service providers to build dynamic employment screening programmes that account for jurisdictional variances, organisational size, scope and risk tolerance, and job-related risk. To learn more, download our Background Screening Solutions for the Financial Services Industry tip sheet.

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