Mitigating Risks with Effective Background Screening

This is the seventh instalment in our 10-part series on unmasking insider fraud and implementing effective risk mitigation strategies.

In our previous posts, we've explored the various types of insider fraud and the devastating impact they can have on organisations. One of the most effective ways to mitigate these risks is through comprehensive background screening. In this instalment, we'll discuss the importance of thorough background checks, outline best practices, and highlight available tools that HR professionals and compliance officers can utilise to protect their organisations.

The Importance of Comprehensive Background Checks

Effective background screening is a critical component in preventing insider fraud. By thoroughly vetting potential employees, organisations can identify red flags that may indicate a higher risk of fraudulent behaviour. According to the webinar hosted by Verifile in September 2024, nearly 50% of insider fraud cases involved theft or deception from the employer, and there has been a 17% increase in fraud committed by employees within their first year of employment.

Comprehensive background checks help to:

• Verify Identity: Confirming a candidate's identity reduces the risk of impersonation or identity fraud.

• Validate Qualifications: Ensuring that candidates have the claimed education and professional qualifications prevents unqualified individuals from filling critical roles.

• Uncover Criminal History: Identifying past criminal activities can highlight potential risks, especially for roles involving financial responsibilities or access to sensitive information.

• Assess Integrity: Reviewing employment history and references provides insight into a candidate's reliability and ethical behaviour.

Implementing an effective background screening process involves several key steps. Here are best practices to consider:

1. Develop a Comprehensive Screening Policy

   Create a clear policy outlining the scope and depth of background checks for different roles within the organisation. This policy should be compliant with relevant laws and regulations, such as the UK General Data Protection Regulation (UK GDPR) and employment laws.

2. Tailor Screening to the Role

   Not all positions carry the same level of risk. High-risk roles, such as those with access to financial systems or sensitive data, may require more extensive screening, including credit checks or higher-level criminal record checks.

3. Use Multiple Screening Methods

   Relying solely on one type of check may not provide a complete picture. Combine various screening methods, such as:

   • Identity Verification: Confirm personal details through official documents.

   • Criminal Record Checks: Obtain disclosures from the Disclosure and Barring Service (DBS) where appropriate.

   • Employment Verification: Confirm previous employment history and reasons for leaving.

   • Education Verification: Validate degrees and certifications with issuing institutions.

   • Reference Checks: Speak with previous supervisors or colleagues to assess character and performance.

   • Media Searches: Conduct open-source intelligence searches to uncover any adverse media coverage and conduct on social media platforms.

4. Include International Checks

   For candidates who have lived or worked abroad, consider international screening to capture any criminal records or issues in other countries. As highlighted in the webinar, fraud from overseas hires is a significant concern, and ensuring extra diligence is essential.

5. Maintain Compliance with Data Protection Laws

   Ensure that all background checks comply with data protection regulations. Obtain explicit consent from candidates, use the information solely for its intended purpose, and securely handle all personal data.

6. Keep Screening Practices Up-to-Date

   Regularly review and update screening policies to reflect changes in legislation, industry standards, and emerging risks. Staying current ensures that your organisation remains protected against new fraud tactics.

7. Provide Training for HR and Recruitment Teams

   Equip your HR professionals with the necessary training to conduct background checks effectively. Understanding legal requirements and best practices reduces the risk of non-compliance and enhances the quality of screening.

Several tools and services can aid in conducting comprehensive background checks:

1. Professional Background Screening Services

   Companies like Verifile offer a range of screening services tailored to organisational needs. These services may include:

   • Identity Verification: Using advanced technology to confirm candidate identities.

   • Criminal Record Checks: Facilitating DBS checks and international criminal records searches.

   • Education and Employment Verification: Confirming qualifications and work history.

   • Media Searches: Conducting searches for adverse media mentions and conduct on social media platforms.

   • Right to Work Checks: Ensuring candidates have the legal right to work in the UK.

2. CIFAS Membership

   As discussed in our previous post, leveraging CIFAS can enhance fraud prevention efforts. Access to the National Fraud Database allows organisations to identify individuals with a history of fraudulent behaviour.

3. Automated Screening Systems

   Utilise software solutions that automate parts of the screening process, increasing efficiency and reducing the potential for human error. Automated systems can also ensure consistent application of screening policies.

4. Open-Source Intelligence (OSINT)

   Conducting online research through publicly available sources can reveal additional information about a candidate. This includes social media profiles, news articles, and professional networking sites. However, ensure compliance with privacy laws and ethical guidelines when using OSINT.

While background screening is vital, organisations may face challenges in implementing effective processes:

Data Protection Concerns

Solution: Work with reputable screening providers who adhere to data protection regulations. Ensure that consent is obtained, and candidates are informed about how their data will be used.

Resource Limitations

Solution: Prioritise screening efforts based on role risk levels. Consider outsourcing to professional screening companies to leverage their expertise and resources.

Keeping Up with Regulatory Changes

Solution: Stay informed about legislative updates affecting background screening. Regularly review policies and procedures to maintain compliance.

Reflecting on the cases discussed in earlier posts, it's evident how effective background screening could have mitigated risks:

• Brandon Leung: A comprehensive criminal record check would have revealed his previous theft convictions, potentially preventing his employment and subsequent fraud.

• Peter Omoruyi: International criminal checks and thorough verification could have identified his criminal history abroad, protecting vulnerable individuals.

• Carl Stokes: Verifying professional qualifications with issuing bodies would have uncovered misrepresentations, ensuring only qualified individuals are entrusted with critical responsibilities.
   

Background screening shouldn't be a one-time activity. Implementing ongoing monitoring and periodic re-screening can detect new risks that may arise during employment.

Benefits of Continuous Monitoring

• Early Detection: Identifies issues such as new criminal charges or financial difficulties that could increase fraud risk.

• Regulatory Compliance: Some industries require regular checks to comply with regulations.

• Protecting Reputation: Mitigates risks that could lead to reputational damage if undiscovered issues come to light.

Conclusion

Mitigating risks associated with insider fraud starts with effective background screening. By implementing comprehensive checks, adhering to best practices, and utilising available tools, organisations can significantly reduce the likelihood of fraudulent activities.

HR professionals and compliance officers play a pivotal role in safeguarding their organisations. A proactive approach to background screening not only protects assets and reputation but also fosters a culture of trust and integrity.

In our next post, we'll explore the role of media searches in background checks, discussing how they can uncover red flags and the compliance considerations involved.

Stay tuned for Part 8: "The Role of Media Searches in Background Checks" coming soon.