Yes and no! We were alarmed when running across last month’s report by the Association of Certified Fraud Examiners (ACFE) that stated 88 percent of occupational fraudsters passed their pre-employment background checks without exhibiting red flags, while 12 percent of fraudsters displayed a red flag but were hired anyway. Those are scary numbers.
Here at GroupOne Background Screening, we believe background checks are powerful tools for catching and deterring employee fraud, but they rarely work alone. A comprehensive background screening process identifies resume lies, discovers past convictions for financial crimes, and uncovers behavioral warning signs that point toward future fraudulent behavior.
But one check alone rarely stops a determined fraudster. A multi-layered screening strategy can uncover the specific red flags including:
- Criminal Record Checks: Directly show past felony or misdemeanor convictions related to embezzlement, theft or fraud, signaling high-risk candidates.
- Employment History Verification: Uncovers “resume fraud” (exaggerated titles, fabricated companies or forged dates) which dishonest applicants use to bypass qualifications.
- Credit History Checks: Provide visibility into an applicant’s financial responsibility—crucial for roles when handling company funds. Severe debt can indicate financial pressures that potentially motivate workplace fraud.
- Reference Checks: Speaking with former supervisors helps verify a candidate’s actual workplace behavior, ethics and trustworthiness.
When Background Checks Fall Short
While pre-employment screening is a critical first step, standard background checks may not reveal everything. They cannot easily detect:
- First-time offenses: If an employee has never been caught or convicted of fraud, their criminal record will show nothing.
- Identity Fraud: Unless a company such as GroupOne utilizes strict, modern employment identity verification, they may unknowingly screen the wrong person or accept fake credentials.
- Collusion: Standard background checks cannot detect ongoing embezzlement or internal collusion that develops during an employee’s tenure.
Best Practices to Prevent Workplace Fraud
Do not fret! To proactively protect your business, use background checks in addition to ongoing, proactive measures such as:
- Regular Audits: Conduct routine, independent financial audits to ensure transparency and keep financial controls in place.
- Implement Reporting Systems: Set up anonymous whistleblower hotlines, as tips and reporting have been shown to uncover a significant portion of occupational fraud.
- Continuous Screening: Consider updating or running targeted re-checks for employees who transition into positions handling sensitive financial data.
Please do not hesitate to contact us at GroupOne should you have questions.
The information and opinions expressed are for educational purposes only and are based on current practice, industry-related knowledge and business expertise. The information provided shall not be construed as legal advice, express or implied.