In order to avoid problematic employees who may be involved in criminal activities, it's vital for businesses to conduct Employee Background Checks before or after onboarding them and inducting them into the company.
With the ever-evolving financial crime landscape, Anti-money laundering measures have become more important than ever to protect the business from getting ensnared in the illicit activities of their clients and to prevent the fraudulent crimes. Employee background check is a fundamental element of AML/CFT regulatory guidelines. Let's dive deeper into how Employee Background Checks protect businesses? And why is it essential to conduct background checks of fresh employees? As well as let us learn the repercussions of non-compliance with background checks requirements of new employees. And what is the role of the Human Resources department in the onboarding of new employees?
The international regulatory bodies, government agencies and law enforcement organizations have mandated anti-money laundering and counter terrorism requirements for the financial world to comply with in order to prevent the financial firms become the facilitators of financial crimes such as corporate frauds, identity frauds, money laundering, terrorist financing, embezzlement of state funds, securities frauds and beyond. The international anti-money laundering regulatory authorities have obligated the background checks of potential employees due to the following solid reasons:
Diminishing the Risk of Insider Threats
Institutions such as banks, investment firms, insurance firms, mortgage brokerage firms, credit unions and others are always at the risk of hiring an employee who may be prone to facilitate money laundering operations and terrorist financing networks. This may also occur deliberately or unintentionally. Background checks help expose the previous work experience, uncover their suspicious affiliations, and susceptibility of a potential employee to be a conduit of financial crimes.
Cultivate Trust and Building Credibility:
Determination and commitment to ethical conduct is appreciated and demanded in all industries. This is especially true in case of the financial industry. Conducting background checks and vetting a new employee cultivate trust in the organization and it helps build the firm's credibility in the market.
AML Regulatory Requirement
The international regulatory bodies, law enforcement agencies and government organizations clearly require the firms operating in the financial industry to screen and monitor their employees and conduct thorough background checks in order to mitigate the risks of legal repercussions, regulatory fines and loss of credibility.
Role of Human Resource Department in Complying With Background Checks
In the corporate world, the human resources department is responsible to conduct background checks of fresh employees and they are responsible to monitor the ongoing screening of current employees.
Setting Up Action Plan For Comprehensive Background Checks
HR professionals are responsible for laying out a comprehensive action plan for conducting thorough background checks before or after onboarding a resource hire in the company.
Screening of New Employees:
HR professionals execute screening of fresh employees in line with anti-money laundering and counter terrorist financing requirements. Conducting criminal history checks, verifications of academic as well as professional certifications and examining their previous work experience in line with AML/CFT regulatory guidelines.
Organizing Training & Awareness Programs
Human resources department is responsible for organizing training programs for educating the firm’s resources on the importance of complying with Anti-Money Laundering and Counter Terrorist Financing requirements, as well as repercussions of non-compliance for the firm and for the international financial system.
On-going Monitoring of Resources
The international regulatory bodies, and governments organizations have obligated all the firms to conduct ongoing monitoring of all their resources. In this regard, the human resource department works closely with the compliance department to conduct periodic background checks of all the resources and re-evaluate any risks posed by any of them.
Vetting your employees and conducting thorough background checks is a risk based approach and has far reaching implications for the firms. It helps to preserve the market reputation of a firm and helps counter the risk of access of confidential information to the outside criminals and eliminate al the vulnerabilities in terms of internal employees facilitating financial crimes and compromising firm’s efforts to comply with Anti-Money Laundering and Counter-terrorism financing efforts. For financial institutions, all this responsibility lies with the compliance department as well as human resource department. They will be conducting continuous monitoring of all the resources and crafts policies to stay compliant with the regional as well as international anti-money laundering regulations.
Financial institutions have a paramount part in preventing the financial crimes and keeping up the integrity and credibility of global financial systems. They can either act as the conduits of financial crimes like money laundering, corruption, bribery, terrorist financing, embezzlement of public funds, and face substantial fines by the law enforcement agencies and regulatory bodies, or they can comply with the Employee Background Checks requirements and market regulatory guidelines and save their business reputation.
