Archive for February, 2015

The Role of HR and Today’s Anti-Corruption and Counter Terrorism Regulations

February 26, 2015 Leave a comment

Overseas Background Check ProvidersA key role for Human Resources and Security in any company is the background screening of not only US based employees, but also of employees, customers, suppliers, vendors, agents and other business professionals no matter where in the world an organization may be doing business. HR and or Security are usually on the front line of such activities, although it may be in conjunction with the legal or compliance department.

When asked what is considered best practice when it comes to global employee screening, the short answer is, it depends on an individual business basis. It’s important to understand specifically what the organization is trying to accomplish, what sort of compliance requirements are they looking to meet that is relative to their business, and finally what are the countries involved?

Case Example:

A client recently asked what is considered best practice for Global Employee Screening as it related to complying with the Foreign Corrupt Practices Act (“FCPA”), United States and International Counter Terrorism and Export Regulations. The client had been the subject of enforcement action after it was discovered that the company’s drilling equipment was found in a sanctioned country. It was also discovered that the company had engaged local independent agents from the sanctioned countries without performing proper background checks. Talk about getting caught with your hand in the proverbial cookie jar!

In order to drawl, a set of best practice guidelines on this subject it’s important to have an understanding of what each regulation is and how it applies to security, human resources, and compliance. Then it’s a matter of developing a method and a set of processes that will enable an organization to meet the required outcome there by meeting it’s business requirements.

Let’s review a few of these regulations and discuss their impact on the background check process. Foreign Corrupt Practices Act The FCPA is a federal law that prohibits offering, promising, or giving anything of value, as well as authorizing such an offer, promise, or gift, to a foreign official for the purpose of obtaining, retaining, or directing business to a person or entity. This prohibition is contained in the FCPA’s anti-bribery provisions, which are enforced by the DOJ. The FCPA’s anti-bribery provisions have a much broader reach than many U.S. laws. U.S. corporations can be liable for conduct that occurs entirely outside the United States and multinational corporations can be liable for conduct that bears only a tenuous connection to the United States. This includes employees of overseas subsidiaries, customers, suppliers, vendors, agents and other business associates. With the number and size of penalties increasing, the Foreign Corrupt Practices Act (FCPA) is causing many U.S. institutions to look into how they evaluate all of their relationships overseas. The lack of a due diligence on a company’s agent, vendors, and suppliers, as well as merger and acquisition partners in foreign countries could lead to doing business with an organization linked to a foreign official or state owned enterprise and their executives. This link could be perceived as leading to the bribing of a foreign official and as a result lead to noncompliance with the FCPA. Due diligence in regards to FCPA compliance is required in two aspects: Initial due diligence – this step is necessary in evaluating what risk is involved in doing business with an entity prior to establishing a relationship and assesses risk at that point in time. Ongoing due diligence – this is the process of periodically evaluating each relationship overseas to find links between current business relationships overseas and ties to a foreign official or illicit activities linked to corruption. This process needs to be performed indefinitely as long as a relationship exists, and usually involves comparing the companies, executives, and other business associates to a database of foreign officials that may be classified as “Politically Exposed”.

While financial institutions are among the most aggressive in defining FCPA best practices, manufacturing, retailing and energy industries are highly active in managing FCPA compliance programs as well.

U.S. and Global Counter Terrorism and Export Regulations

Due to the current political climate the last several years, governments around the world have introduced more stringent regulations to combat terrorism and enforce export controls. The United States passed the U.S. Patriot Act along with increased enforcement action related to Export Administration Regulations (EAR). The United Kingdom enacted the Prevention of Terrorism Act 2005, the European Union passed a comprehensive Anti-terrorism Policy, and many other countries around the world continue to introduce similar anti-terrorism and anti-corruption regulations.

Know your customer (KYC) is the due diligence and bank regulation that financial institutions and other regulated companies must perform to identify their clients and ascertain relevant information pertinent to doing financial business with them. In the USA, KYC is typically a policy implemented to conform to a customer identification program mandated under the Bank Secrecy Act and USA PATRIOT Act. Know your customer policies have become increasingly important globally to prevent identity theft fraud, money laundering and terrorist financing.

One aspect of KYC checking is to verify that a customer is not on any list of known fraudsters, terrorists or money launderers, such as the Office of Foreign Assets Control’s Specially Designated Nationals list. These lists contain thousands of entries and should be updated at least monthly.

Know Your Customer processes are employed by more and more regular companies of all sizes, for the purpose of ensuring their proposed agents’, consultants’ or distributors’ anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.

Restricted Party Screening
U.S. and other regional, unilateral, and multilateral regulations restrict individuals and entities from conducting transactions with specific foreign entities (individuals, companies, countries). These entities are referred to as Denied, Debarred, and/or Restricted Parties. Examples of these entities include but are not limited to known terrorists, organizations that fund terrorists, and/or parties guilty of trade violations. Typically, these restricted parties are countries subject to embargoes, and persons, businesses, and organizations subject to financial sanctions.

Suppose a multinational company has a compliance and ethics policy and tells its employees not to pay bribes – is that enough, or should the company go further?

A clear corporate policy against paying bribes is important, as well as including explicit language in every employment and agent agreement that prohibits bribery, but it is also critical for companies to conduct thorough employment and pre-engagement background checks on their agents and other third parties.

FSGO §8B2.1. (b)(3) states: “The organization shall use reasonable efforts not to include within the substantial authority personnel of the organization any individual whom the organization knew, or should have known through the exercise of due diligence, has engaged in illegal activities or other conduct inconsistent with an effective compliance and ethics program.”

Certainly, U.S. government regulators expect nothing less. In a February 2009 FCPA settlement (for $579 million) by KBR and Halliburton with the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ), the SEC criticized Halliburton’ s due diligence policy and practice and its failure to conduct adequate due diligence on one particular agent in Japan. If the government shows up at your door asking to see the files on your overseas employees and trading partners, you want to be able to produce sufficient documentation to demonstrate you’ve looked thoroughly at the background and reputation of these individuals before engaging them to work on your behalf. This requirement is discussed in the Federal Sentencing Guidelines for Organizations (FSGO), §8B2.1. (b)(3) Effective Compliance and Ethics Program.

On the other hand, if you open your background check file to the government and it is empty or thin, the organization is going to be in a challenging situation. In the event a FCPA violation is uncovered, it is increasingly apparent from past cases that the government is far more likely to be lenient on a company that has a commitment to an anti-bribery compliance and ethics program, including being able to demonstrate the organization has exercised a responsible level of due diligence on their overseas employees and related business associates.

Aletheia Consulting Group provides multinational companies best in class Background Check Provider Advisory Services. If you would like to learn more about our Services for Multinational Employers please feel free to contact us at

Copyright © 2015 Aletheia Consulting Group

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Global background screening, an integral part of risk management

February 22, 2015 Leave a comment

sextantWith increasing connectivity, there is an advent of a truly global workforce, multinational business 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 an 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.

businesssunsetmtgGlobal 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 recordshistory – 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

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

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German Government Adopts Draft Law Regarding the Enforcement of Data Protection Law by Consumer Protection Associations

February 20, 2015 Leave a comment

2000px-Flag_of_Germany_On February 4, 2015, the German government adopted a draft law to improve the enforcement of data protection provisions that are focused on consumer protection. As reported earlier, the new law would bring about a fundamental change in how German data protection law is enforced.

The draft law enables consumer protection organizations, trade associations and certain other associations to enforce cease-and desist letters and file interim injunctions in cases where companies violate the newly defined protective data protection provisions for consumers. The draft law targets data processing practices for the following purposes: 1) advertising, marketing and opinion research; 2) operating credit agencies; 3) creating personality and usage profiles; 4) selling addresses; 5) other data trading activities; and 6) other similar commercial purposes.

Coordination with Data Protection Authorities

The draft law also will introduce a requirement that courts must grant the data protection authorities an opportunity to comment before issuing decisions.

The draft law must be approved by the Federal Parliament before taking effect.


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How to Establish the Reliability of Global Background Checks

February 19, 2015 Leave a comment

Global Background ScreeningThe following discussion provides a primer and an insight into the rather fragmented nature of the global background check market as well as many of the challenges faced by screening providers outside of their geographic location (country of domicile).

In summary a rather thought provoking question had been made in one of my discussion forums that “not all countries are equal when it comes to the reliability and accuracy of records”. It was also expressed that “multinational employers pay a premium for seemingly questionable international checks.

It’s clear that there is a growing concern from a background screening company’s point of view as to how one should go about evaluating the reliability and accuracy of such results on a country basis. From a practical point of view it is believed that there might be countries that may not be worth performing a records search because… “there are no records to search”, or “70% of the people in a country can pay officials to lose the record”, or “50% of the records become “nonexistent” for political or religious reasons,” etc.

These are all very valid questions, (1) what is the reliability / accuracy and (2) if based on available information, local records might not necessarily provide at least a certain level of accuracy should an organization even attempt such research? As a global advisor in this area we receive these types of questions more often than you would think. We’ll discuss both of these points.

How to Establish Reliability / Accuracy in International Background Check results

In many respects even after 15 years of specializing in the global background check market many would agree that it is still very much considered “The Wild West” and at its emerging stage due to the fragmented nature of differing laws, availability and access to local records and data required to undertake a legitimate check, costs, and most importantly differing points of view on what is legally permissible versus folks that just want to turn a quick buck for less than ethical work product. In the end the latter has done more harm than good but it’s getting better through education and the effects of increased global trade (increased demand) but also increased enforcement action of those that flagrantly violate compliance and personal privacy.

Unfortunately there is no public available resource that details by country each of these aspects of background screening on a country basis, at least at this time. This type of information is generally closely held by companies that actually specialize in this area of the market and many may feel that it is considered part of the “secret sauce” that differentiates them from their competitors (particularly global specialists). Aletheia Consulting has in fact conducted extensive research on a number of geographies around the globe.

Accurate International DataWith that in mind carefully examine each local data source (i.e. criminal records, credit, etc.) by country and by background check element with the following 8 specific questions in mind:

  1. Existence of information in target country?(locate possible sources of the data)
  2. How is information maintained?
  3. Reliability and credibilityof information? (whether held directly by gov agency but also how credible the third party that may be in conducting the search on the customers behalf)
  4. Legality of using consumer informationfor employment purposes? (can it even be used for employment purposes?, if so
  5. If based on answers related to No. 4 that it is legally permissible for employment – how can research be accomplished?Direct to source or through a third-party?)
  6. What is required in order to obtain the information?
  7. Timelinessof delivery?
  8. Affordable costof information?

Questions 1-5 can then be applied to a Risk Matrix and conclusions drawn as to the quality and credibility.

This of course assumes one also factors in the cultural and environmental factors involving a country’s level of corruption (i.e. the practice of paying bribes in order to get out of being arrested or to pay off a claimant prior to court in order to avoid a trial which is actually a common practice in some countries).

A country’s level of corruption and actual fundamental issues around the quality of source data will always be potential factors in international background investigations that one should consider but should never be a deterrent or an excuse for not conducting an adequate level due diligence on a potential non-US or local employee, contractor, or trading partner. Remember many countries including the U.S. have enacted various anti-corruption/bribery and terrorism statutes (Foreign Corrupt Practices Act) as well as various industry specific guidelines (US Federal Sentencing Guidelines for Organizations) such as within the financial services, IT, healthcare, and many other industries that require a reasonable/responsible level of due diligence be applied when making a business decision.

Overseas Background Check ProvidersWhat to expect from your local or global background check provider

When working through a 3rd party (in-country partner or even one of the “wholesale international providers”) aside from the usual production guidance i.e. what they require from you to undertake the search and what to expect in return I recommend you require them to demonstrate a sufficient working knowledge of the geographies they claim to be able to support. This needs to be supported by their willingness to educate you and or provide sufficient guidance for you to be able to communicate the local cultural and legal provisions governing access and use of the data to your clients or even candidates. You should then have this information cross referenced and verified independent and directly with the source agency and the relevant privacy commission (if applicable).

In the end there must be transparency with your background check provider. If not than you or your organization may be placed in a risky situation of possibly violating an applicant’s personal privacy rights or even worse an organization failing to be able to demonstrate that they applied the necessary level of due diligence in their background screening process.

I am not a firm believer in “blind faith” or “blind trust” as someone mentioned in the discussion about relying on their provider without verifying the facts.  This is an unwise practice and creates significant risk. Our clients come to us for expert advice and if we don’t know the answer to their question than we should know how to derive the right (accurate/truthful) answer or tell them we simply don’t know.

Some folk’s spoke of records not being available in certain geographies and that is absolutely accurate. In fact one of my most famous recommendations to clients is that “any firm that purports to offer and deliver criminal records for employment purposes from every country on the planet, don’t walk away, run away!” This simply isn’t legally permissible in a multitude of countries and is an outright criminal offense. As a provider of international background screening services however it is our job to be able to speak to both the local environment as well as our experience to be able to offer best practice advice for our clients in order to address and in some cases offer next best available options to consider.

In conclusion, just because criminal records in a country may be paperwork intensive, expensive, take an extremely long time to accomplish, or worst case scenario not very accurate due to the reasons discussed as long as the organization has applied that reasonable level of due diligence…meaning that if it is legally permitted and available for employment the organization should have the check done by a responsible provider. The question then may become what source and as long as you’ve applied the guidelines we discussed above during the sourcing and selection process you should be okay. If as a provider you don’t have the in-house expertise of the local geographies than we believe you have one of two options (1) spend the time to research the various geographies on your own (although it will be a very long, painful, and expensive process), or (2) hire or partner with local and or global subject matter expert that has already done the leg work and who is able and willing to be your subject matter specialist.

International Background Check Market Outlook

All and all the global background check market even with its rather interesting challenges continues to grow and further develop in leaps and bounds nearly by the month. I am a firm believer that through continued education of our buyers, providers, applying best practice concepts, and striving to do the right thing as a business owner and as an industry will many of these challenges have less of an impact on the emerging international background check market.

For more information about Aletheia Consulting Group’s advisory services in international background screening please feel free to visit our website or email us at .

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Now there’s a Global Advisory Service for Background Check Suppliers

February 18, 2015 Leave a comment

ACG LobbyAletheia Consulting Group is not just another background check consulting firm. Our answer to screening companies looking to go global is not simply “outsource all of your international screening support.” We help you actually build your own international product portfolio through a combination of direct access to sources abroad as well as help you come up with “The winning strategy”.

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Country Level Background Screening Essentials

February 18, 2015 Leave a comment

ACG CSE Box CoverCountry Level Background Screening Essentials provide the information today’s global HR professionals need when implementing global background screening programs. Topics covered: Applicable Laws, Employer Policy Development, Government Identifiers, Overall Good Practice Background Screening Guidance, Permissible Screening Components, Notice Requirements, Use Restrictions, Guidance on Specific Background Checks.

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Expert Global Background Screening Procurement Advice

February 17, 2015 2 comments

businesssunsetmtgGlobalHR ►GLOBAL BACKGROUND CHECKING? Need advice on how to find the right global background screening partner? Aletheia helps multinational HR and Security professionals opting for global background due diligence best practice approaches to meeting required background checking requirements prior to engaging third-party service providers. For additional information how Aletheia can help navigate these business issues email us at

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