A handshake isn’t proof of trust. It’s just the start. Businesses onboard users, approve loans, and process transactions, all assuming everything checks out. 

But assumptions don’t prevent risk, right?

Not every issue is obvious upfront. 

A merchant with a clean application could have a history of fraud. A borrower might leave out past financial crimes. A high-value transaction could involve someone flagged on global watchlists. 

Okay, but what’s the fix? 

That’s exactly what we’re diving into.

We’ll discuss everything about criminal screening and how you can use it for your businesses. This way, you can keep things moving while making sure nothing important gets overlooked. 

Let’s start.

Criminal Screening, Quick Overview

Criminal screening is checking if someone has a criminal record before you let them do something like hiring them, giving them a loan, approving their insurance, or letting them use your financial platform. It ties into KYC (Know Your Customer) and AML (Anti-Money Laundering) protocols. 

In simple words, criminal screening is part of your risk management, and if you mess it up, you can get fined or even shut down.

Criminal Screening Use cases

Before we dive into specifics, let’s explore how background checks help businesses spot red flags and avoid costly mistakes.

1. Banking & Financial Services

Banks don’t want to take unnecessary risks. If someone applies for a loan, the bank needs to be sure they’re not a financial fraudster. 

Let’s say a person with multiple fraud convictions applies for a $100,000 business loan. If the bank doesn’t check their criminal record, they might approve the loan—only to find out later that this person has a history of taking out loans and never repaying them. 

That’s a direct financial loss. Criminal screening acts as a safety net to prevent these mistakes.

2. Fintech Platforms

Payment processors, crypto exchanges, and lending platforms all use criminal screening to avoid onboarding high-risk users. Imagine a fintech app that offers instant money transfers. A new user signs up, links their bank, and immediately starts moving large amounts of money. 

If the company skips criminal screening, it might unknowingly allow a convicted money launderer to funnel dirty cash through its platform. 

Crypto platforms especially need this to avoid sanction violations and money laundering risks. If regulators catch this, the fintech could face heavy fines or even get shut down.

3. Hiring & Employee Background Checks

No financial company wants to hire an executive with a history of embezzlement, insider trading, or fraud. High-risk roles like finance, compliance, and cybersecurity require deeper screening. 

The consequences of skipping this step can be devastating – when embezzlement occurs, companies lose an average of $357,650. And while external threats often get more attention, the reality is that 20% of data breaches come from within, carried out by company insiders.

Long story short, if you skip proper screening, you might end up hiring someone who could steal from the company or land you in legal trouble.

4. Investor Due Diligence

VCs, private equity firms, and angel investors check founders and key executives before writing checks. If a fintech founder has a history of fraud, it’s a huge red flag. Mergers and acquisitions also require criminal screening; nobody wants to acquire a company run by someone with a shady past.

5. Fraud Prevention & Compliance (AML/KYC)

Financial platforms are required to screen users to comply with AML (Anti-Money Laundering) and KYC (Know Your Customer) laws. Regulations like the Bank Secrecy Act (BSA) in the U.S., AMLD6 in the EU, and FinCEN rules all say financial businesses need to check who they’re dealing with – and for good reason. 

Violations can result in fines up to $250,000, five years in prison, or both. Say someone signs up on a lending app and requests a fat loan. If the company runs a criminal check, they might see this person has fraud convictions or identity theft charges. 

Without screening, they approve the loan, and surprise, money disappears. Now they’re stuck chasing a ghost for repayment.

How Criminal Screening Works

In criminal screening, first, you or your system pulls data from multiple sources to check if an individual has a criminal record, is flagged on watchlists, or has been involved in financial crimes. 

The process typically starts with identity verification using government-issued IDs, biometrics, or databases like SSN verification (U.S.) or eID (Europe) to confirm the person is who they claim to be.

Once identity is verified, the system runs checks against:

• National & Local Criminal Databases (FBI, state/county records, police reports)
• Global Sanctions Lists (OFAC, EU Sanctions, UN Sanctions, Interpol Red Notices)
• Regulatory & Financial Crime Watchlists (FinCEN, FATF high-risk country lists, SEC violations)
• Court Records & Civil Judgments (Lawsuits related to fraud, embezzlement, or financial misconduct)

Some businesses also integrate continuous monitoring, meaning if a customer gets charged with financial fraud after onboarding, the system picks it up and triggers a risk review.

Getting Started: How to Screen Criminals?

Criminal screening can be done in two ways: manually or through automated systems using APIs. Each approach has its own use cases depending on the level of risk, compliance requirements, and business scale.

Manual Criminal Screening

This method involves manually pulling records from government databases, court filings, and public records. Businesses can request background checks from agencies like the FBI (U.S.), Disclosure and Barring Service (UK), Europol (EU), or local law enforcement.

While manual screening is more thorough in some cases, it’s slow, resource-heavy, and impractical for high-volume businesses. It’s mostly used in hiring processes, due diligence for partnerships, or high-risk financial transactions where deeper investigation is needed.

Automated Criminal Screening 

For fintech, banking, and crypto platforms handling thousands of users, APIs are the go-to solution for real-time criminal screening. Instead of manually checking records, businesses integrate with third-party criminal background check APIs that scan multiple databases instantly.

Here’s how both stack up against each other. 

 

Criteria	Manual Criminal Screening	Automated Criminal Screening (APIs)
Speed	Slow (Days to Weeks)	Instant (Seconds to Minutes)
Scalability	Limited (One-by-One Checks)	Highly Scalable (Thousands per Day)
Accuracy	High (If Done Properly)	High (AI & Machine Learning Assist)
Compliance Support	Requires Human Oversight	Built-in Compliance for AML/KYC
Global Coverage	Depends on Local Databases	Covers Multiple Countries
Cost	High (Labor-Intensive)	Lower (Subscription-Based APIs)
Use Case	Hiring, High-Risk Due Diligence	Fintech, Banking, Crypto, Onboarding
Monitoring Capability	One-Time Check Only	Continuous Monitoring Available

Why Choose Signzy’s Criminal Screening API?

Signzy provides a comprehensive criminal screening API that allows businesses to instantly verify users against global databases, watchlists, and regulatory compliance lists. 

But it’s not just about criminal checks; Signzy also offers a full identity and business verification suite that covers the following:

✔️ Criminal & Background Checks: Real-time verification against criminal records and global watchlists.

✔️ Identity Verification: AI-powered document verification (passports, IDs, driving licenses).

✔️ Business Verification: Validate companies, directors, and financial records in seconds.

To get started, book your demo here.