Excerpted from a UBS Blog by Patrick Kolb
According to an article recently published in the Neue Zürcher Zeitung (NZZ) newspaper, North Korean IT experts are applying for jobs in Switzerland and Germany under fake identities. The applicants utilize advanced tactics to mask their origins, including deepfake identities, proxy servers, and pseudonymous online accounts. They send their salaries to Chinese banks, from where the money is transferred to North Korea. With North Korea subject to international sanctions, this is another way to raise revenues for the regime.
Recent indictments and recommendations
The US Department of Justice has recently announced indictments against 14 North Korean nationals for their involvement in a multi-year scheme to pose as remote IT workers to violate sanctions and commit wire fraud, money laundering, and identity theft. Beyond collecting salaries from US companies, the fake North Korean IT workers allegedly extorted their employers by stealing sensitive data, including proprietary source codes, and threatening to release it unless ransom payments were made. One way to mitigate this risk is conducting appropriate background screening.
What is background screening?
In an ideal world, every applicant is honest on a job application. In reality, many misrepresent themselves. Hiring somebody who is not qualified for a job could be a risk to an organization, especially for candidates seeking a position that requires high security clearance or a position of trust.
According to the Society for Human Resource Management (SHRM), the average cost per hire in the U.S. is $4,700. But many employers estimate the total cost of hiring a new employee to reach three to four times the position’s salary. This means that if a job pays a salary of $60,000, the company might spend $180,000 or more to fill that role. Therefore, the goal of background screening as part of a hiring process is to verify the history and qualifications of potential candidates and to reduce the risk of costly bad hires. A background screening process typically includes the following elements:
- Employment history, reference checks: Validation of employment history and assessment of applicant discrepancies such as omitted positions, tenure and job titles.
- Education history: Confirmation of a candidate’s date of attendance at an educational institution and/or receipt of a degree. For certain positions, e.g., medical doctors and pilots, employers must be able to prove that their employees have appropriate credentials.
- Identity check: Identity theft is unfortunately a common occurrence. An identity check can help determine whether an applicant is who they claim to be. Additionally, it can help verify if the candidate is eligible to work in a particular country.
- Criminal records and global sanctions check: Potential reports of a candidate’s criminal history, including felony convictions, misdemeanor convictions and pending criminal cases, as well as establishing if the candidate has broken any law with international law enforcement agencies.
- Credit reports: Assessing the candidate’s financial responsibility and integrity (particularly relevant for roles involving financial management).
- Other specific checks: Drug tests, driving records.
Based on a survey among nearly 6,000 HR professionals, checks of criminal records, previous employments, identity and education verifications are the most popular type of background screening.
Social media background check seems to have a rather low priority among hiring professionals.One reason could be that not all information sourced from social media is verifiable. Declining an applicant based only on a social media profile can also lead to discrimination lawsuits.
Background check as investment opportunity
In today’s globalized world, information is a crucial asset. A recruitment process today is more than just “box-ticking.” HR managers want to understand the candidate’s strengths, weaknesses and integrity. A wide range of information needs to be analyzed, especially in case of any inconsistent information. Background checks are an important tool in the hiring process that helps mitigate risks that we are seeing in the world today.
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