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Archive for January, 2012

German police clearance may have been forged or faked

January 27, 2012 Leave a comment

A developing story out of New Zealand indicates a government inquiry has been launched into Kim Dotcom’s (born Kim Schmitz) residency as legal experts doubt his alleged clear criminal record.

Dotcom is a German-Finnish computer programmer and businessman who rose to prominence during the dot-com bubble and was convicted of insider trading and embezzlement in its aftermath. He is also known as the founder of Megaupload and its associated websites. He legally changed his surname to Dotcom circa 2005. On January 20, 2012, the New Zealand police placed him in custody under the charges of criminal copyright infringement in relation to his Megaupload website.

German law dictates Dotcom’s convictions should not have been wiped before 2017 and one lawyer believes he may have forged his way into New Zealand.

Arriving in New Zealand, every foreign national must present a police clearance form and until now New Zealand’s Prime Minister John Key has insisted Kim Dotcom’s was clean, but yesterday admitted their background checking process is flawed and that a Government inquiry is underway.

“There’s clearly an anomaly between the way the law is interpreted with tests between residency and the Overseas Investment Act because one looks at convictions and one looks at records and that’s a slightly different test,” says Prime Minister John Key.

Regardless of how the law was interpreted it’s clear that New Zealand’s residency and immigration background check program is severely flawed if source documents are not validated.

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Dubai data protection law expected to be in force by July 2012

January 23, 2012 Leave a comment

The Data Protection Commissioner of the Dubai International Financial Centre Authority (DIFCA) launched – on 15 December 2011 – Consultation Paper No 3 sought public comment on DIFCA’s proposals to amend the Data Protection Law, DIFC Law No 1 of 2007 and the Data Protection Regulations. The consultation closed on 14 January 2012.

It is expected the amended Law will come into effect by June or July of 2012, The newly amended Law embodies international best practice standards, and it is consistent with EU Directives and OECD guidelines, and is designed to balance the legitimate needs of businesses and organizations to process personal data while upholding individuals’ rights to privacy. It should be noted that the Law and the newly amended Law apply only to individuals and organizations established in the Dubai International Financial Centre (DIFC)’.

The proposed amendments will require a data controller to notify the Commissioner of any changes to the particulars of a licensee as soon as possible and in any event within a period of 14 days from the date upon which the entry becomes inaccurate or incomplete. A maximum fine of US$ 25,000 could also be introduced for failing to register with the Commissioner’s Office.

The proposed amendments will also grant powers to the Commissioner to delegate functions and powers to the officers and employees of the DIFCA and powers to the DIFCA Board of Directors to pass regulations exempting certain data controllers.

It is believed that the changes are not so significant on their face, but the combination of amendments to make the rules more practical and more specific enforcement powers suggest some examples may be made of non-compliant DIFCA licensees to encourage better compliance.

Source: As published by DataGuidance http://www.dataguidance.com/.

Malaysia set to implement Personal Data Protection Act that has a bite

January 22, 2012 Leave a comment

The Ministry of Information, Communications and Culture (MICC) in Malaysia has set up a Data Protection Department to oversee the implementation of the Malaysian Personal Data Protection Act (PDPA) of 2010.

The PDPA – which is expected to come into force early this year – will introduce seven data protection principles – including the notice and choice principle, the disclosure principle and the data integrity principle – all aimed at protecting individuals’ personal data from misuse.

‘There is a question as to whether the Department’s role is merely temporary in ensuring the smooth transitional arrangement towards a more appropriate establishment i.e., the Data Protection Commissioner’ and it is believed that at this juncture, MICC has not officially issued a statement in relation to the enforcement date.

Nonetheless, if the latter takes place, Malaysian stakeholders and any legal entities which have a presence in Malaysia will have three months to comply with the PDPA. Bearing in mind that even if the Commissioner has been appointed, the nature of independence is arguably questionable as he or she reports directly to the Minister of MICC, instead of having the level or degree of independence to enforce the PDPA obligations. My advice to businesses is to start strategising and executing.

The PDPA would apply to data users established in Malaysia, or who use equipment based in Malaysia to process personal data. The amount of the fines and the length of imprisonment would depend on the type of violation, with maximum fines set at 500,000 Malaysian Ringgit (approx. $160,000 USD).

Source: As published by DataGuidance http://www.dataguidance.com/.

Global background screening, an integral part of risk management

January 19, 2012 Leave a comment

With increasing connectivity, there is an advent of a truly global workforce, multinational operations has led to an exponential increase in the risks associated with candidate recruiting and contract and or contingent workforce.

Human capital is increasingly being acknowledged as the most important investment for any company. Finding the right talent in the right job at the right time is an enormous challenge that global HR teams are facing in today’s current hiring scenario.

In all of this, in the more recent times, individuals from corporations involved in various crimes as well as increased legal scrutiny related to anti corruption has led to increased realization about the value for background screening all employees, contractors, and vendors at all levels.

Reported incidences of corruption, doing business with vendors listed on sanction and debarred parties lists in the petroleum  sector, unauthorized access to sensitive customer information in financial services sector, instances of staff in educational institutions involved in exploitation cases — all have led to growing awareness of the need for background screening of employees as well as vendor / contract staff.

The reality is that an organization’s reputation is at stake should they hire someone or do business with an entity that has a questionable background. Brand equity and value can be adversely impacted if it is known that an organization didn’t exercise a reasonable level of due diligence before recruiting a certain individual or decided to do business with a trading partner who had a questionable background. Thus, lack of background screening or even not performing best practice type checks depending on the circumstance on current or potential employees and or trading partners is something that could come back to haunt any organization — through reduced business, inability to retain better employees and adverse impact on its public image.

If that wasn’t enough, not only can it be rather embarrassing for an organization that does not excise due care in vetting their employees, contract staff or trading partners such organizations can also be exposed to enforcement action by government authorities for not conducting what may be considered a reasonable level of due diligence or have not applied “due care” as may be required by new and existing anti-corruption laws such as the U.S. Foreign Corrupt Practices Act (FCPA), Sarbanes Oxley, Patriot Act, and US. Federal Sentencing Guidelines for Organizations (FSGO) and many other similar industry and or country specific laws like the UK’s Bribery Act.

The FSGO requires organizational implementation of compliance standards and procedures that are “reasonably capable” of reducing the prospect of criminal conduct by employees, contractors, and business partners. In fact, according to FSGO, due care must be made in avoiding passing on to individuals whom an organization knew, or should have known, had a propensity to engage in illegal activities.

What is considered adequate due diligence or due care according to many of the above mentioned legal provisions is beyond the scope of this article and will be discussed in a later article.

Global Background Screening Industry Overview

Although there has always been some demand for background checks abroad, the initial driving force for international or global background screening was first introduced about ten years ago. This was triggered by the post 9/11 attacks. With a number of Fortune 1000 companies going global — either through setting up their own offices or outsourced work abroad, it was expected that their overseas based entities (mainly IT and BPO companies) followed processes that were an integral part to their recruitment policies. (Incidentally, recent studies show more than 90 per cent of Fortune 500 companies have a formal policy of background screening their employees). This led to background screening of their employees as well as their outsourced counterparts.

The concept of global background screening is no longer limited to just IT or the financial services segments. A growing number of organizations in the manufacturing, maritime, defense, pharmaceutical, petroleum, hospitality, health care, retail, travel, telecom, educational institutions and entertainment industries are adopting international background screening practices.

Today’s multinational companies (MNC) face a growing challenge in managing the collection, use, processing and transfer of mass amounts of personally identifiable information globally, especially in light of the myriad of data protection (privacy) laws that exist today. Effective management of global talent management, data privacy, and security involves a multi-disciplinary approach involving legislation, technology, and business processes in order to fully understand and address data protection and personal privacy issues on a global basis. It also requires recognition that effective management is a process that must include solutions for responding to constant changes in both internal and external factors effecting human resource data use especially when it involves screening candidates around the world.

The actual overseas background screening process involves carrying out various different types of checks based on a number of factors such as type of hire (entry, mid, professional, executive), regulated position, level of risk the individual position poses to the organization, and finally, the country at hand to name a few.  Any misrepresentation in the below listed checks should be reported as a discrepancy. The discrepancy rate is the percentage of misrepresentations/fraudulent/adverse information that a comprehensive background screening procedure should uncover during the verification process.

  • Identity check – confirms candidate is who they say they are
  • Right to work check – confirms candidate is authorized to work in a given country
  • Address verification – confirms candidate’s current residency
  • Education – confirms academic credentials
  • Employment – confirms claimed work history
  • Reference check – confirms professional reputation
  • Professional credential verification – confirms professional certifications
  • Criminal records history – determine if candidate has a propensity to engage in illegal activities
  • Regulatory and Compliance / Sanctions Search – determine if candidate has been sanctioned by relevant regulatory authorities, has been the subject of other enforcement actions, or identified as a possible politically exposed person
  • Adverse media – news articles that contain derogatory information the candidate
  • Conflict of interest – evaluate if candidate may be involved in multiple interests
  • Drug Testing – determination if candidate has a propensity to abuse illicit drugs
  • Trading Partner / Vendor Screening – determine if vendor is legitimate and of good standing

It is critically important that ALL checks are initiated only after an authorization in writing by the concerned candidate is obtained.

A “credible” international background screening company will ensure that the process goes only through the legal / legitimate route of obtaining records or verifications. This may imply relatively later verification compared to some agencies who provide “quick,” “easy,” “cheap” criminal record results from every country on the planet but through processes which may not be able to stand the scrutiny of law! This was most recently highlighted in a case involving a company who purported to provide court record checks from a country where it is well know that court records are not the best practice source for employment purposes. The end result was a series of missed criminal records that should have been reported, the loss of a screening company’s entire clientele, and finally an ongoing litigation involving suspected fraud and misrepresentation.

While more and more screening companies offer international or global service, the best way of managing background checks at least internationally is to ensure that international background checks are done by organizations that actually specialize in this area. This assumes the provider is able to demonstrate they have more than just a passing knowledge of available products. In fact specialized providers should be able to demonstrate a thorough understanding of the local data sources, a clear understanding of the specific geographic and search requirements, the legal environment (laws related to data/record access rights, personal privacy, relevant employment and human rights laws), and who are able to offer specific answers to questions related to best practice screening in the given country. A specialized global background screening organization would not ordinarily compromise its reputation by not following local compliance requirements.

Way forward
Data shows that individuals with a questionable background tend to join organizations that do not conduct background screening of its employees or contract/vendor staff.

Hence, when these organizations do start conducting background screening, they find many discrepancies (number of employees who have misrepresented facts on their resumes or have a criminal background) and/or go through huge attrition (as employees who have misrepresented facts or have negative background prefer to leave than be found out) when they announce background screening.

This is validation of how background screening becomes a deterrent against employees or prospective employees or even vendors misrepresenting facts on their resumes or employment applications. Thus, background screening proves to be a good insurance against risk to reputation related to bad hires as well as trading partners!

The international or global background screening industry is still in its emerging phase. There are many organizations/institutions overseas who, as a policy, do not share information with third parties for verification purposes. For some organizations and institutions which do not mind sharing information, it can be a longer process as databases are manually maintained and verification process involves going through very old data maintained physically.

Employment checks that can be conducted at the click of a button in the US have to be conducted through phone calls, faxes, or emails or site visits in India.

Moreover, many organizations abroad do not maintain databases or records for temporary employees, which lead to unavailability of such crucial information.

Criminal background information that is available through various online databases and court records in the US are not comparable with what is available in other geographies. In many countries, such information needs to be sought at the central repository level and even locally in the concerned jurisdictions.

Collaborative online database solutions involving all parties concerned — the candidate, the recruiter, the verifier, the verifying authorities, etc. — will help in developing a ‘pre-qualified and pre-checked’ ready-to-hire talent pool — which is the need of the hour in the present economic scenario.

Aletheia Consulting Group provides multinational companies best in class International Background Check Provider Vendor Evaluation and Audits. If you would like to learn more about our Services for Multinational Employers please feel free to contact us at terry.corley@AletheiaConsultingGroup.co.

International personal privacy compliance for global staffing directors

January 17, 2012 Leave a comment

The responsibilities and obligations of employers under European Data Protection Directives and the UK Data Protection Act. Terry Corley, Aletheia Consulting Group, reviews the issues that a Director of Human Resources for a multinational organization can expect to face in the Global marketplace.

Susan Lane is a newly appointed Staffing Director at a large professional services firm, Abacus Accounting, Inc (ABACUS) based in the United States. ABACUS also maintains offices in over 50 countries, including Asia, Europe and Latin America. Today, the majority of all HR-related activities are maintained by ABACUS’s corporate headquarters in the US.

In addition to requiring her to assume her daily human resources responsibilities, the Vice President of Human Resources tasked Ann to determine if ABACUS is compliant with data privacy (data protection) requirements in relation to how they handle employee data abroad. There was concern in Management that they might be at risk of liability for non-compliance. They were also conscious that the company had not given sufficient consideration to many of the emerging international data privacy issues in the past and that a number of its normal processes and policies may have to change as a result. The Vice President therefore asked Ann to report to the Board with her recommendations.

ABACUS recruits new candidate
As ABACUS’s Finance Director for European operations, based in London, recently accepted a position with another firm, Ann’s first major task was to oversee the recruitment of a replacement. At the same time, management took the view that it could also improve the level of customer service for select Asia Pacific locations it provides and thus asked Human Resources to recruit three new client services representatives for their Singapore and India offices.

To find a new Finance Director, Ann decided to use the services of an executive search firm as well as the staffing firm normally used by ABACUS to fill vacancies. She then further instructs both agencies to locate qualified candidates from the countries for which the positions will be filled.

US executive search firms recruiting from abroad
The very nature of the efforts of an executive search firm, head-hunter or staffing firm means that personal information is inevitably collected without an individual’s knowledge or consent, at least during the initial stages of recruitment. It may, however, be a little challenging when a US-based employer plans to employ local nationals in a foreign country when the employer may not be familiar with the differences in employment and privacy legislation prevalent in a given country. Fortunately, this is currently of little concern for Ann, at least until the recruiter provides her with the names of candidates that meet ABACUS’s initial recruitment requirements.

Complying with local data processing guidelines
It is at this point that lane would normally begin processing personal information about a US-based candidate. However, after talking with corporate counsel and the company’s Chief Privacy Officer, she learns that based on the UK’s Employment Practices Data Protection Code it is better if she is provided with applicant information in a manner that doesn’t constitute the processing of ‘data’. She will otherwise be obligated to notify the candidate that she is processing their personal data ‘as soon as practicable’ after receiving information from the search firm.

Company adequacy determination
Transferring personal data back to the US at this point would also require ABACUS to determine if the company meets adequacy protection requirements as dictated by the European Union Data Protection Directive (95/46/EC). These laws limit the transfer of human resource data from the EU to third countries, such as the US, unless the third country or entity is found to provide an adequate level of protection. Accordingly, any employer such as ABACUS processing applicant data in the EU must first revise its HR data practices to the Directive and member state laws while the data is still in the EU.

These laws impose substantial requirements on the collection, transfer, processing and use of virtually all employee data. Member states such as the United Kingdom have further enacted laws such the UK Data Protection Act 1998 to implement the Directive that also apply to employee and consumer personal information.

In the short term, Ann determined that until ABACUS is capable of meeting adequacy requirements, she should not request personal information to be sent to her from the UK electronically back in the US. This thereby reduces the risk of it constituting ‘personal data’, although it is unlikely that a paper-based record of an executive recruiter’s notes would be caught by the Directives or the DPA due to the restrictive definition of ‘relevant filing system’. If the suggested names are not considered suitable then Ann will immediately destroy the information.

Legal basis for transfers
When transferring employee data from the EU to third countries such as the US, companies such as ABACUS are required to identify and implement a legal basis for such transfers. Employers operating in the EU that collect or process personal information in the EU without adhering to member state laws or that transfer personal information from the EU to a country without adequate protection or a relevant exception may incur substantial legal liability.

A growing challenge
Organizations are facing a growing challenge in managing the collection, use, processing and transfer of mass amounts of HR personal information, especially in light of the myriad of international personal privacy laws that exist today as well as emerging technologies designed to manage HR data in a global environment.

Effective management of overseas data privacy, HR policies related to international applicants, and security involves a multi-disciplinary approach involving policy development, legislation, technology and business processes in order to fully understand data protection and privacy issues. It also requires recognition that effective HR data management is a process that must include a comprehensive Human Resource, Data Privacy Management Plan for responding to constant changes in both internal and external factors effecting global employee data use in multinational organizations.

Background Screening Overseas Is Limited

January 13, 2012 2 comments

The following article is from Workplace Management and explores the landscape of background screening overseas. More and more screening companies that have popped up over the last decade are now marketing their services for international background screening from nearly every country on the planet, but employers should be aware of the information they can legally generate is likely to be more limited.

International background screeningBackground Screening Overseas Is Limited

‘What works in the United States doesn’t work abroad. … In Europe, what’s private stays private,’ an attorney says.
By Fay Hansen
The background screening industry in the United States is a relatively unregulated multibillion-dollar sector that has no comparable foreign counterpart. U.S.-based employers with screening policies designed to meet their domestic needs and the U.S. legal framework face a completely different reality when they move abroad. Particularly in the European Union and increasingly across the developing world, a job applicant’s right to privacy trumps an employer’s right to collect information about a potential employee. ”What works in the United States doesn’t work abroad,” says Andrew Boling, partner at Baker & McKenzie in Chicago. “You have to assume that your screening practices will be restricted. And in the European Union, background screening is much more limited, even for an applicant who is applying for a job in the United States. Criminal background checks are limited if they are allowed at all. Credit checks are even more restricted and seldom done, with very limited exceptions.”

In many overseas locations, employers are not plagued by the same levels of employee theft and fraud and workplace violence that prompt high levels of screening in the United States. “Anecdotally, if you look at issues like workplace violence, the incidence is much lower in Europe,” Boling says. In addition, sharp differences in legal liabilities diminish the need for screening. “The negligent hiring concept is a very U.S.-centric risk,” Boling says, “so screening issues abroad are not as grave as in the United States.”


“What works in the United States doesn’t work abroad. … In Europe, what’s private stays private.”
—Andrew Boling, partner,
Baker & McKenzie, Chicago


The severe limitations placed on screening in other countries arise from a fundamental appreciation for and deference to individual privacy rights. “Outside of the United States, individual privacy rights enjoy the same protections that we give to our First Amendment rights,” Boling says. “In Europe, what’s private stays private.” In France, for example, credit checks generally are not permissible even if a job applicant consents.

The levels of consumer debt are also generally lower outside the U.S., and personal bankruptcy is much more uncommon, so credit checks commonly generate a lower number of negative hits in the countries where they are permissible. Non-U.S. employers also take a different approach to the financial status of job applicants. “How you manage your personal finances is considered to be irrelevant to how you qualify for or perform on a job,” Boling says.

U.S. employers operating abroad often do the maximum amount of screening allowed by law, but they are likely to encounter greater limitations going forward, Boling notes. Although laws concerning background screening are still emerging in the developing world, he sees a trend toward adopting the more restrictive approach to screening that is common in Europe rather than the more unregulated U.S. approach.

“In Asia, there is embryonic legislation that is following the European model, but is somewhat less restrictive,” he says. China’s 2008 workforce legislation, for example, embraced the European model of employment rights. U.S.-based screening companies are now marketing their services outside the United States, but employers should be aware that the information they can legally generate is likely to be more limited.

Workforce Management, February 16, 2009, p. 37

Insight to the New Hungarian Labour Code

January 12, 2012 Leave a comment

The new Hungarian Labor Code has been recently published in the Official Gazette. The Act No I. of 2012 is scheduled to enter into force by 1 July 2012 and it will lay down, inter alia, the general rules governing workplace privacy.

From data protection aspects, the new legislation requires the implementation of the following changes by local employers:

– The new act makes it mandatory for employers to provide prior written notice to the data subject employee on the processing of his / her personal data. This notice must include in a way easy to understand all relevant facts of data processing, further, the scope of such information must conform to the provisions of the Data Protection Act on notice;

– In contrast to the former legislation, the new Labor Code permits the monitoring of employees without consent, however, the employer must provide prior written notice to the employee on the use of such technical measures (if any) which may not violate the human dignity of the worker. Further, prior to the implementation of monitoring measures, consultation with the works council is always a must. Practically, local employers shall adopt a policy on monitoring measures if they wish to monitor employee communications or use CCTV on the workplace.

Notably, the new Labor Code does not provide any legal basis for data transfers (including data transfers between group-companies, or international data transfers), therefore, in this respect the general rules of the new Data Protection Act shall be considered.

The regulation of workplace privacy issues is a very significant step forward because the former legislation – adopted prior to the Data Protection Act of 1992 – did not contain any rules on data protection issues. Considering that the new legislation also lays down general clauses, such as the prohibition of violation of personal rights as well as the requirement to respect employee’s privacy, the Data Protection Agency – in charge for the enforcement of employment related privacy provisions of the Act – could rely on the earlier practice of the Data Protection Commissioner on workplace privacy issues. Notably, the Commissioner followed a particularly strict interpretation of the data protection principles in relation to the processing of employee data, such as necessity and proportionality which also conforms to the practice of the Article 29 Working Party.

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