Criminal checks, the FSA, and Approved Persons - Do you have it right?

For the longest time, HR departments in the City have debated as to whether the FSA requires criminal checks. Often, they decide not to do them and they leave it up the the applicant to disclose any criminal history on their FSA form A. Finally, the FSA has revealed a clear policy. City firms are responsible for doing CRB checks on their approved persons. So, if you are still on the fence, read on:

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Powerchex Warns of the Risk of Insufficient Background Checking
after The FSA takes Action

Insurance Brokerage Firm penalised for failing to conduct basic checks
London, 3rd December 2009. The Financial Services Authority has banned two insurance
brokers for colluding to conceal a criminal conviction. The FSA also cancelled permission for an Insurance Brokerage firm to carry on regulated activities.
Margaret Cole, the FSA’s director of enforcement and financial crime, said:
“We have made examples of [these parties] to send a warning to firms and
individuals: do not lie to the FSA. This case, and others that are due to follow, serve as a clear signal about the consequences of giving anything less than full and frank disclosure of material information to the FSA.”1
Alexandra Kelly, a director of pre‐employment screening firm at Powerchex, believes that the Insurance brokerage firm engineered its own downfall; “The FSA is explicit that it expects firms to conduct checks on individuals applying to work in controlled functions. This unsurprisingly includes criminal record checks as standard. Had the firm in question conducted such checks, the FSA would have had no cause to take such drastic action.”
In this particular case, one of the brothers had applied for a controlled function having recently been convicted of conspiracy to defraud. On his FSA application, he signed a declaration that he had no previous criminal convictions, and was not the subject of any current criminal proceedings. His brother helped conceal the conviction from the FSA, despite occupying a regulated role himself and knowing the risks this involved.
“Sadly it is no longer enough for firms to simply ask their employees to sign a declaration stating that they do not have any criminal convictions,” continues Kelly. “Especially for those individuals applying for controlled functions, it is critically important that relevant identity,credit and criminal record checks are conducted as an absolute minimum. In this particular case, failure to do so has resulted in the cancellation of permission from the FSA to carry out regulated activities. I think this ruling will cause a lot of firms to sit up and take notice.”

Data Security and Data Privacy Laws are not the same worldwide

Ogilvy Renault, a Canadian law firm released the following article which explores the differencies in data security and data privacy rules, depending on the juristiction. It is really useful background information for any company that works with personal and/or sensitive data across boarders.

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04 November 2009
Article by Christine Carron and Martha A. Healey

The protection of personal information is an important issue as business operations become increasingly global in nature. Coupled with the Internet enabling personal data to be distributed almost instantaneously across the globe, privacy has quickly become a critical international concern that can often be confusing due to a global patchwork of laws and regulations. A US organization conducting business in multiple foreign jurisdictions must be aware privacy laws are not equal everywhere. Unless the most restrictive regulatory regime is adopted, country by country procedures may be necessary.

CANADA
Canada While Canada is often assumed to be similar to the US with respect to business practices, privacy regulation is another matter. The Canadian approach to confidentiality and the transfer of personal information is much more in line with the European model than that of the US. (It was, in fact, designed to be this way.) The federal personal information protection regime in the Canadian private sector is mainly governed by the Personal Information Protection and Electronic Documents Act (PIPEDA), which became effective in 2004 and extends privacy protection to all personal data collected by companies on individuals in the course of commercial activity, except employees other than those of a federal undertaking. It follows that, in most cases, personal information of employees is regulated by applicable provincial law. Only Alberta, British Columbia and Quebec have enacted privacy legislation. That provincial legislation, however, is substantially similar to PIPEDA. Ontario has enacted privacy legislation but only with regard to personal health information.

It is important to note that when transferring personal information outside of Canada, the transferring organization has an obligation to provide a comparable level of protection meaning the level of protection provided by the third party must be comparable to the level of protection afforded the personal information within Canada. The Privacy Commissioner of Canada has ruled that, not withstanding the USA PATRIOT Act, personal information transferred to the US can benefit from protection similar to that enjoyed in Canada. She added, however, that notice must be given to individuals alerting them to the fact their information will be stored in the US where it becomes subject to the USA PATRIOT Act.

Another recent, high-profile example involved Facebook, the hugely popular social networking site. On July 16, 2009, Canada's Privacy Commissioner ruled that Facebook was in breach of Canadian privacy laws on several fronts, particularly with respect to the circumstances surrounding consent to the disclosure of personal information to third party application developers and the retention of personal information of users who had closed their accounts. Initially, Facebook resisted complete compliance with the Privacy Commissioner's recommendations. However, given the Commissioner's ability to submit the matter to the courts, Facebook ultimately proposed solutions satisfying Canadian privacy laws.

As Facebook learned, a "global" approach to privacy works only where the privacy policy is written so as to comply with all jurisdictions in which an organization does business. Facebook recently indicated that it plans to amend worldwide practices to implement Canadian privacy requirements globally.

Another recent example illustrating this is the case of Abika.com, a US-based online data broker. On July 31, 2009, after a nearly five-year investigation, the Privacy Commissioner ruled Abika had violated Canadian privacy laws by disclosing the personal information of Canadians without their knowledge or consent to third parties.

EUROPE
The EU has developed a very sophisticated personal information protection regime with stringent standards that has influenced the adoption of privacy laws throughout the world. Directive 95/46 sets out the general principles with regard to the processing of personal information, which are now implemented in the national law of every EU member state. The underlying principles of Directive 95/46 were largely based on those of international bodies, like the OECD's Guidelines on the Protection of Privacy and Transborder Flows of Personal Data.

The EU's privacy legislation closely resembles that of Canada, however, how this legislation is interpreted can lead to some surprising differences, particularly with respect to the validity of consent given to the collection, use and disclosure of personal information.

Consent is in the lynchpin of Canadian privacy legislation. In the EU Directive, persons from or about whom data is collected must unambiguously grant their consent before such data is collected, after having been informed about the purpose(s) for which the data will be used. The interpretation of the validity of consent may impact a US business processing personal information of European customers or employees. For example, relying on employee consent to the collection of certain personal information can prove to be difficult since some European countries question whether that consent is "freely given" given the desire to be employed or to keep employment.

Another key tenet of the EU privacy directive is that it prohibits the transfer of personal information to non-EU countries, including the US, unless those countries provide adequate protection for the information. While the US has not been, officially, deemed to provide adequate protection, the two jurisdictions are negotiating so as to facilitate normal business relations. The Safe Harbor Agreement allows US companies to avoid sanctions imposed by the EU if they voluntarily embrace a somewhat less stringent version of the EU privacy directive.

THE REST OF THE WORLD
Once you move out of Canada and Europe, all bets are off with respect to the extent that privacy legislation exists or is enforced. In many jurisdictions there is no one law or regulatory framework governing privacy. Instead, laws or regulations relating to privacy are often found as a sub-set of sector-specific or constitutional laws.

Asia-Pacific: Regions that have recently adopted privacy legislation include Australia, Hong Kong, Japan, Macao, New Zealand, South Korea and Taiwan. China, Malaysia, the Philippines and Thailand are currently in the process of drafting legislation. Indonesia, Singapore, Vanuatu and Vietnam only have privacy provisions in sector-specific laws. Still, many Asia-Pacific regions do not have privacy legislation, including Brunei, Cambodia, Laos, Myanmar and the majority of the small Pacific island countries.

India: India does not have comprehensive privacy laws in place. The right of privacy is not expressly recognized in the Constitution of India, although the Supreme Court of India has implied it from article 21 of the Constitution, which states that, "No person shall be deprived of his life or personal liberty except according to procedure established by law." However, this right is not absolute and can be restricted under procedures established by law or if a superior interest commands it. Laws that do exist relate to the privacy of data held by public financial bodies (e.g. banks) and electronic data (the Information Technology Act of 2000). India is moving to bring their privacy laws in step with Europe and other jurisdictions. The Personal Data Protection Bill, based primarily on foreign privacy legislations, was introduced in 2006 and is currently still pending.

Latin America: Currently, very few Latin American regions have any privacy legislation and there is no cohesive framework for the region. However, the importance of a harmonized privacy legal framework for the region has been recognized and many countries in this region are currently working on developing it.

CONCLUSION
Although efforts are underway in many regions to harmonize legislation, privacy laws around the world still differ in many respects. Outside of Canada and Europe, privacy legislation is either non-existent or a patchwork of sector-specific laws and regulations. US organizations conducting business in these regions should use the most stringent legislation as the lowest common denominator in order to establish an effective privacy policy.

About Ogilvy Renault

Ogilvy Renault LLP is a full-service law firm with close to 450 lawyers and patent and trade-mark agents practicing in the areas of business, litigation, intellectual property, and employment and labour. Ogilvy Renault has offices in Montréal, Ottawa, Québec, Toronto, and London (England), and serves some of the largest and most successful corporations in Canada and in more than 120 countries worldwide. Find out more at www.ogilvyrenault.com.

The FSA presents it's agenda for fighting economic crime

In a speech to the British Bankers' Association, Margaret Cole, Director, Enforcement and Financial Crime Division, FSA, highlighted the FSA's agenda for fighting economic crime. She touched on a range of issues; here are some highlights of interest to HR:

"We are the gatekeeper of the UK financial system. Firms or individuals wishing to operate in the UK must meet our 'fit and proper' standard. Those who don't, stand to be rejected during our authorisation, approval or change of control processes. There are numerous aspects to fitness and properness – competence, integrity and the ability to establish the right culture and tone at the top are important features.
A murky past, a reputation for unscrupulous business methods or sailing close to the wind will also call fitness and properness into question. Applications from countries where personal histories are obscure or controverted, or corruption is endemic in business life, add to the challenge.

We address these challenges by building stronger links with overseas law enforcement and regulatory agencies, by devoting more people and resources to the cases that call for heightened due diligence and, above all, as you would expect from an intrusive regulator, by a sceptical, questioning approach that does not shy away from making decisions that will be contested. In this we are aided by the fact that the burden of proof is on the applicant to satisfy us of their integrity. That puts us in a strong legal position to take robust decisions, and we have been doing so.

People seeking to bypass the FSA as gatekeeper can expect little sympathy. In September this year we brought our first prosecution against an individual for acquiring a controlling interest in a regulated firm without giving the FSA prior notice and for making false and misleading statements – and we obtained a conviction. A second prosecution is under way.

But we don’t or shouldn’t perform the gatekeeper function in isolation – we do expect authorised firms to work with us in the fight against financial crime and to assist us in keeping undesirable companies and individuals away from UK authorised firms and their customers."

On data security she stated:

"And data security is another area where we can, and will, use enforcement action to support the work of our supervisors. We expect firms to consider how their actions or failures leave others open to the threat of fraud. We continue to learn of data security lapses that put customers’ personal information at risk. This summer’s enforcement action against three units of HSBC saw substantial fines paid for weak controls over the security of customer data. And we will follow up with further enforcement cases to demonstrate the importance of this subject."

Employee fraud; should we be re-checking current employees?

FSA fines and bans former UBS employee for helping conceal unauthorised trading losses
This is a case of a trusted, current employee who betrayed their employer and caused them untold grief, loss of reputation and financial penalties. Andrew Cumming, a former client adviser at the London branch of UBS AG (UBS), was fined and banned by the FSA for his role in the activities that led to the firm receiving an £8 million fine earlier this month for systems and controls failings.
According to the FSA's press release "Cumming has been fined £35,000 and prohibited from performing any regulated function for a minimum period of five years on the grounds that he is not fit and proper.
Paperwork signed by Cumming, who worked in UBS’ international wealth management business, helped to document false loans which were used to conceal losses arising from unauthorised trading.
Customers whose funds were used were told they were providing loans to other UBS customers with promises of high rates of interest. To make these ‘loans’ appear official, documents were produced using UBS headed paper and sent to customers stating that the ‘loans’ were guaranteed by the firm.
The FSA’s investigation concluded that Cumming signed these documents on seven occasions between October 2005 and October 2007 having been asked by a senior colleague to do so, even though he knew the ‘loans’ were not authorised by UBS.
By late 2007, Cumming was fully aware that the ‘loans’ were being used to conceal losses which had arisen as a result of unauthorised transactions but he failed to escalate this knowledge. Instead, Cumming signed a further ‘loan’ and allowed the ruse to continue.

Margaret Cole, FSA director of enforcement and financial crime, said:
“Cumming deliberately misled UBS and its customers. Although he did not stand to make a personal gain, his complicity allowed a colleague to continue making unauthorised trades, while the losses continued to mount up.
“We are committed to deterring behaviour of this kind by banning and fining anyone found to have committed such misconduct.”
In setting the financial penalty, the FSA took into account the fact that Cumming did not initiate the circumstances which led to his misconduct, nor did he conduct any of the unauthorised transactions. Because he agreed to settle at an early stage of the FSA’s investigation he qualified for a 30% discount in respect of his financial penalty. Cumming also proved to the FSA that he is in serious financial hardship, entitling him to a further discount.
If it wasn’t for the settlement discount and Cumming’s hardship, the FSA would have imposed a financial penalty of £100,000.
Cumming worked at UBS’ London branch from 1999 until March 2008, when he was dismissed for gross misconduct relating to this case.
Earlier this month, the FSA fined UBS £8 million for systems and controls failures that allowed employees to carry out unauthorised transactions with customer money. UBS has since repaid the affected customers in excess of US$42 million by way of redress. "

The issue for compliance and HR departments is to decide whether they should be re-checking current employees, what they should be re-checking and how often. Our view is that annual credit checks, especially for approved persons would help alert the employer if the employee was facing financial pro(a threat to their fitness and propriety for a role). Annual criminal checks should be done more selectively, since a court case would not easily go undetected by the employer.

Obviously, no decision should be taken without input from the risk management department, but as a minimum, firms should be asking employees to fill out and sign an annual declaration stating that they have not gotten any criminal convictions or judgments since their last declaration.

Right to Work - What to check and how?

Right to Work is an area that always puzzles HR departments. There are so many permutations and the rules keep changing. Below is a helpful article published in the Recruiter Magazine on November 4th, 2009. Read on..
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Companies that supply staff should be wary of the reputation risk to their clients of using staff with no right to work in the UK.
Kenneth Hanslip, head of professional standards at NSL Services, a company that provides traffic wardens (civil enforcement officers) to many local authorities, said that whenever a traffic warden was discovered to be working in the UK illegally there were stories in the press about “terrorist or Taliban traffic wardens”. This would lead to calls from concerned clients.
Other risks of employing illegal workers are a civil penalty of £10,000 per person employed as well as the risk of those individuals carrying out fraud and other criminal activity within the company, said Hanslip.
In one case, he said NSL (formerly part of National Car Parks) lost £43,000 when an accounts clerk committed fraud. “We still do not know who that accounts clerk was, because the person disappeared,” Hanslip told HR and recruitment professionals at a Symposium Events forum on Employing and Vetting Non-UK Nationals in London.
Hanslip said that around 30% of the company’s staff are foreign nationals from outside the European Economic Area (EEA), with many coming from West Africa, but also Afghanistan and Iraq.
Hanslip recommended a number of actions that recruiters could take to reduce the risk of taking on staff without a legal right to work in the UK:
- close liaison with local UK Border Agency immigration teams
- regular National Insurance number payroll sweeps to identify discrepancies
- avoid temporary National Insurance numbers
- if in doubt about the authenticity of a document, seek assistance from document validation services at the UK Border Agency
- don’t take documents at face value - always speak to the person face-to-face
- don’t rely on photocopies of documents provided by the applicant, but check the original and then photocopy it yourself
- don’t assume that those with no right to work in the UK won’t target your company, or industry. People often pick out unsuspecting employers and industries to build up a work history that they can then use to get work elsewhere

Powerchex Wins Innovation Award Second Year in a Row

We are absolutely delighted to have been recognised again in the innovation category of the Thames Gateway Business Awards. Below is the press release
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In the midst of the recession, Powerchex innovates and wins award at the Thames Gateway Business Awards

Powerchex, the leading pre-employment screening firm for financial services, has again won recognition at the prestigious Thames Gateway Business Awards.
This year, Powerchex was praised in the Innovation Category for its new service ‘Know Your Supplier’ (KYS). Judges were looking for businesses that could demonstrate that they had successfully introduced a new idea, technique or practice that had improved their business, how the idea was implemented and how it had impacted upon the business.
The glittering awards ceremony took place at the Troxy on Friday evening with more than 700 people in attendance. Judges paid tribute to Powerchex, recognising the bravery and forward-thinking of an SME prepared to innovate in a recession.
“I am absolutely ecstatic that our achievement has been recognised on such a scale,” stated Alexandra Kelly, Managing Director of Powerchex. “Not only have we shown that we are prepared to innovate and look at something completely new, but also have the confidence to put resources behind the project at such a difficult time for many small businesses.”
This is the second year running that Powerchex has been successful in the Innovation Category of the Thames Gateway Awards. Last year, Powerchex won praise for its pioneering staff training and development programme, which lowered costs by reducing staff turnover and increasing the output per person.
“It is extremely important to invest in your workforce, even in times of economic difficulty,” continues Kelly. “While it can be easy to concentrate only on the front-line of your business, keeping staff motivated and your cost-per-unit as low as possible maximises your chances of not just surviving, but actually growing your market share as markets recover.”
Enzo Testa, Executive Managing Director of Archant London commented; “We are proud to do all we can to support, encourage and promote businesses within the many local areas we cover. The rich mix of successful businesses across The Thames Gateway region make our communities, places we can be proud of. To this end, we are pleased to have organised this event.”

FSA outlines its approval and interview process for significant influence functions

The press release from the FSA below, even though widely expected, will have far reaching effects in how the regulator will view a firm’s assessment of a senior candidate’s competencies. I have no doubt the FSA will be seeking for examples of non-compliance, so it is probably a good idea to go over the files of senior individuals and make sure that all the required information is in place. As part of this requirement, I would also recommend that you keep on file any notes made during interview that support your assessment of the person’s competency.
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The Financial Services Authority (FSA) has written to the CEOs of 5,000 regulated firms to reinforce how its intensive regulatory approach applies to approving and supervising senior personnel performing significant influence functions (SIFs).

The letter reminds CEOs that the responsibility to assess whether a candidate is fit and proper to carry out a role rests with the firm and that firms should, therefore, have robust recruitment, referencing and due diligence processes in place.
As part of the SIF approval regime, the FSA has said it will undertake close vetting of appointments and will expect to interview candidates applying for SIF roles. Therefore, firms are being encouraged to engage with the FSA early in the recruitment process and for major firms, this should be at the point of drawing up a shortlist rather than waiting until the preferred candidate stage.
Firms are also urged to provide sufficient information with their applications (including supporting documents – for example head-hunter reports) and the rationale they have used to conclude that the candidate is fit to proper to perform the role. Applications must be made in a timely manner and any failure to engage promptly with the FSA may impede a firm’s plans to publicly announce a new appointment.
The enhanced SIF regime is one of the FSA’s responses to the financial crisis, which exposed governance and risk management shortcomings across numerous firms in roles such as chair, CEO, and finance or risk director. In the 12 months since October 2008 the FSA has conducted 172 SIF interviews, resulting in 18 candidates withdrawing their applications which shows there is considerable scope for some firms to be more robust in their own recruitment processes.
Graeme Ashley-Fenn, FSA director of permissions, decisions and reporting, said:
“It is crucial, that at a time when effective governance has never been more important, candidates have the right levels of competence and capability to perform these senior roles and that they are fully aware of their responsibilities.
“The onus is on firms to ensure candidates applying for influential positions are fit and proper to perform the role. Our individually tailored approval interviews will help us assess whether the individual has the right experience and understanding but also whether they will enhance the overall management strength and insight of the firm.”
NOTES FOR EDITORS
The FSA now interviews all candidates for SIF positions and in August 2009, extended the scope to include people employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm and to all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm. These changes came into effect on 6 August 2009, with a transitional period of six months.

Powerchex warn that temps require the same level of pre-employment screening as permanent employees

I am sure that everyone has been appauled by the lapses in control that led to innocent children being abused by the people they should trust most, their childminders. This should serve as a reminder that a proper pre-employment screening policy should not exclude casual workers.
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A convicted child sex offender was able to obtain employment in a nursery after staff failed to carry out the required pre-employment screening checks.
Andrew Smith was employed in the kitchen of Norwood Manor Day Nursery through employment agency Reed despite his name appearing on the sex offender’s register after he was caught sending a string of perverted internet messages and webcam footage of him performing a solo sex act to someone he thought was a 13-year-old girl, but was in fact an undercover police officer.
Smith subsequently served 6 months of a 12 month jail sentence and was placed on the sex offenders register for 10 years. The Criminal Records check that is required for those working in nurseries would have revealed this but staff failed to comply.
Alexandra Kelly, a Director at Powerchex, one of the leading pre-employment screening providers, believes that Smith being a temporary employee is no excuse for a low level of vetting, “We advise our clients to determine the level of vetting required using a risk based approach. Temporary workers pose the same, if not a bigger risk to the company than permanent employees. With temps there is an emphasis on the speed of vetting but companies should work closely with their provider of pre-employment screening to ensure that this need does not prevent proper due diligence taking place.”

The Truth Behind Foreign Identity Documents

How many of you find it really difficult to decide whether the documents you are looking at are legitimate. The truth is that most HR professionals have trouble with the numerous documents that they are presented by today's international workforce. Powerchex works with Keesing Reference systems who have developed a brilliant database of travel documents from around the world. If you would like to know more about how to benefit, give us a call at Powerchex. In the meantime, here is an article, by Daniel Suess, the sales manager at Keesing, explaining how to spot questionable documents.

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Challenged when checking foreign passports and ID cards?

Here’s why ...
The number of ID documents currently in circulation is staggering. Every year, 208 countries issue countless documents, ranging from passports, ID cards and driving licences to visas and work permits. What’s more, 150 new document types join the existing pool on an annual basis.
Given the complexity and sheer volume of documents in issue, the authentication of ID documents presents HR departments with a considerable challenge. Indeed, many HR professionals feel that a document’s authenticity can only be established by professional inspectors using bespoke equipment.
And yet the employer is officially legally responsible for inspecting these documents…!
How do you check a Chinese passport?
In practice, day-to-day responsibility for the authentication of ID documents if often assigned to the HR department. As a consequence, HR staff may well be presented with an ID document they’ve never seen before. How, for example, would you authenticate a passport presented by a Chinese applicant? The Chinese passport has its own unique (security) features, including a watermark, an electronic data chip, and a UV feature, for example. The authenticity of a document can often be established on the basis of these features.
So which features should you look for? How, for that matter, would you establish if the individual in question requires a work permit? More often than not, it’s up to the HR department to answer these questions.
An ID document contains unique data. Think, for example, of the personal particulars (the holder’s name, date of birth, tax and social insurance number, etc) and the Machine Readable Zone or MRZ - a magnetic strip, usually located near the foot of the document, containing an alphanumeric code. This unique code is creating by applying an algorithm to the document data. Research has shown that more than 80% of all forgeries and counterfeits are uncovered because the MRZ code is incorrect.
Most people are familiar with only a small number of ID documents. While most employers will recognise a UK passport, few will be familiar with a Polish or Senegalese ID document. Another thing to bear in mind is that recognising a passport is not quite the same as spotting a counterfeit.
Help from the authorities?
To compensate for their inexperience and limited know-how, HR departments are encouraged to draw on the expertise of public-sector organisations such as the Home Office. Unfortunately such assistance doesn’t necessarily allow them to establish the authenticity of all ID documents they encounter. This is because public-sector organisations tend to focus on the inspection and verification of domestic ID documents. As a consequence, their experience is not always relevant to employers that recruit foreign staff.
Legal obligation to inspect and verify ID documents
To tackle identity fraud and illegal working, parliament passed the Law for Employers on Preventing Illegal Working in 2008. Under this law, employees are responsible for preventing illegal working, while the authorities are responsible for monitoring compliance. Employers who knowingly or otherwise recruit illegal workers risk a fine or even a prison term. This makes it all the more important that employers are in a position to inspect ID documents presented by (potential) employees.
The best and probably the only way to avoid illegal working is therefore to establish the identity of a potential employee before he or she is recruited. Ideally, the inspection and verification of ID documents forms part of the employee screening process, allowing the employer to meet its legal obligation to verify an applicant’s identity before offering him or her a contract.
Any employer that fails to comply could face a hefty fine. Indirect damage, including a loss of reputation, can also be substantial. Faced with these prospects, companies are understandably keen to avoid employing illegal workers. While many companies are eager to comply with current legislation, thereby avoiding illegal employment and related fines, few have found an appropriate solution yet.
The extent to which fraud involving counterfeit and stolen ID documents affects the corporate sector and society at large should not be underestimated. Identity fraud is part and parcel of everyday life - its scope increases each year, and the annual losses sustained by its victims run into billions of pounds. Identity fraud is increasingly common in the UK. According to the Association of Chief Police Officers (ACPO), fraud costs the UK taxpayer approximately £20 billion a year. Surprisingly, employees are among the worst culprits, putting employers in a particularly precarious position.
Last but not least: prevention better than cure
Embedding passport checks in the employee screening process allows you to establish the identity of an applicant, thus avoiding (fines for) employing illegal workers. Document checks can also act as a deterrent – a potential fraudster will think twice before applying to a company that verifies applicant identities as a matter of policy. Here too, prevention is better than cure. The development and implementation of internal recruitment procedures reduces recruitment-related risk and avoids illegal working. It also allows you to comply with prevailing legal requirements. The right combination of tools, software and reference materials should enable any organisation to conduct reliable checks.
10 practical tips when checking passports and ID cards
Only accept secure ID documents. In other words, documents that contain security features, such as passports and ID cards. Ask yourself whether a driving licence is acceptable. Generally speaking, these documents do not specify the holder’s nationality. Neither do they necessarily include a photograph. Documents that do not have security features, such as gas bills or bank statements, should never be accepted other than for address verification.
Always check the original ID document – do not accept copies. Make sure you copy or scan documents for your own records (remember to obtain the holder’s permission first).
Always follow the same inspection procedure and be mindful of details.
Always check more than one security feature.
Carefully compare the photograph in the document to the individual who presented it. Pay specific attention to the distance between the eyes, ears, lips and chin rather than the colour or length of his or her hair.
Ask the holder’s age and verify the answer based on the date of birth recorded in the document.
Check the document’s period of validity.
Check the document for damage, incisions and glue residue.
Check the order and number of visa pages. The page numbers must be sequential and should include the same document number.
Inspect the document under a UV lamp. Genuine documents remain dark when exposed to UV light; the watermark remains dark. Carefully compare the UV response or watermark to a reference image. Don’t forget: observing a UV response or watermark does not automatically mean the document is genuine!
Source: Keesing Reference Systems

Another Director Hit by FSA Fine as Powerchex Recommend

Failing to disclose employee lies result in firm being punished

London, August 26th, 2009. The FSA has fined the director of an IFA for failing to disclose
that an approved person had lied about the reason for leaving their previous job.
The FSA fined Christopher Davies, Director of Newquay Investment Services Limited,
£17,500 because of an adviser at Newquay who posed an “unacceptable risk of customers
being recommended unsuitable mortgages”.
It was only after Newquay had applied to the FSA for the adviser to be confirmed as an
approved person that Davies became aware that the adviser’s previous employer had
suspended the adviser because of concerns about his business methods and ethics. Davies
spoke to the adviser and concluded that the adviser had lied to him about why he had left
his previous employment, but did not alert the FSA.
The news of the fine comes not long after the FSA fined Richard Holmes, Director of AIF
Limited, for failing to monitor an appointed representative and carry out sufficient
pre‐employment screening checks.
Director of Pre‐employment specialists Powerchex, Alexandra Kelly, believes that the FSA
will continue to crack down on firms but believes those that are most vigilant before hiring
people are the least likely to find themselves in hot water with the FSA.
Kelly said, “Newquay Investment Services Limited could have avoided the situation by
implementing proper pre‐employment screening practices. If they had known about the
advisor’s past before he joined the company they never would have hired the individual in
the first place and most certainly would not have put them forward for approved status. Our
research has shown that the recession has caused people to hide less desirable aspects of
their past and lie more so effective pre‐employment screening is becoming more and more
important.”

Judgement Call - Powerchex in the FT

Powerchex made another appearance in the FT's Judgement Call Column. For the full article, go to: http://www.ft.com/cms/s/0/622e675c-8c3f-11de-b14f-00144feabdc0.html


THE CV SCREENER
Alexandra Kelly

We were recently asked to screen a job applicant on behalf of one of our clients. He was interviewing for a senior position in a big City institution working with large amounts of capital and sensitive information. He was highly experienced and sailed through the interviews and was subsequently offered the job, at which point his file ended up with my team.
At first glance, his CV and background seemed fine – absolutely nothing there that would cause for suspicion from even an experienced recruitment professional. However, it emerged that this supposedly “ideal candidate”, was in fact an international fraudster convicted of embezzlement in a number of US states.
Needless to say, most embellishments by applicants are not quite so extreme, and more often concern the job applicant who conceals that they were fired from their previous role, or who lies about their job responsibilities or the number of people they managed. However, all these scenarios serve to demonstrate that you can never, ever truly know whether an applicant really is exactly who they say they are. Unless, of course, you check.

The writer is managing director of Powerchex, a pre-employment screening company

HR, Facebook and Screening

This is an ongoing debate between HR departments, recruiters and screening firms. Should we check facebook profiles? Our standard response to all our clients is that we will check business profiles such as zoom and linkedin, but we will not check social networking profiles. Paul Reeves, who is a partner at the law firm of Stephenson Harwood wrote a very interesting posting in Managing people, Technology on Tue, 18/08/2009 - 13:38.

The article first appeared in HR Zone at: : http://www.hrzone.co.uk/topic/hr-snooping-facing-facebook

What do you think?
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In a recent and high profile example of some of the issues associated with social networking sites, the wife of the recently appointed chief of MI6, Sir John Sawers, disclosed details of their personal life and address on her Facebook page, compromising their personal and, potentially, national safety.

There have also been recent examples of footballers and cricketers using Twitter to air their views about their employers. The blurring of the lines between private and public space, which is part of the social networking phenomenon, is key to the problem. These very public spaces have the capacity to threaten existing jobs, future careers, personal safety and corporate reputations as well as providing opportunities to contravene copyright and other laws. Organisations and individuals all have a role to play in managing the impact of social networking.

Reputational damage

An innocent exchange of wall postings on Facebook could lead to an employee breaching their contractual obligations by, for example, disclosing confidential information about a company's business or its clients. This could clearly have an adverse effect so an employer should investigate any allegations of this nature with a view to taking disciplinary action.

An employee who makes derogatory comments about their work, or their colleagues, on their profile could face disciplinary action as well as possible defamation or libel actions, not to mention the potential damage to the company's public image. Employers should consider carefully the type of conduct that warrants disciplinary action and make this clear to employees.

The way an employee behaves in their personal life may not be how their employer would like them to behave but, provided it does not impact their work or the company's reputation, then any disciplinary action would be inappropriate and any dismissal as a result could lead to a claim for unfair dismissal. So not everything an employee posts on their social networking site should have an impact on their employment.

Bullying and harassment

The ability to join work groups on networking sites creates the opportunity for 'banter' between colleagues. In extreme cases, this could lead to a complaint of bullying or harassment for which an employer may be vicariously liable for the actions of its employees, so complaints must be treated seriously and dealt with promptly. Employers need to be alert to these issues and the potential risks they pose.

Managing employer access when recruiting

Some employers have viewed the rise in the use of social networking sites as an opportunity to vet job applicants for their suitability. This can be a risky tactic as it exposes employers to potential discrimination claims. If an applicant who has not been offered a job discovers that their profile has been accessed as part of the recruitment process they could allege that information about their age, race, sex or religion displayed on their profile played a part in the decision to reject them.

While the company may have rejected them for a completely unrelated and fair reason, the existence of this information, which would be discloseable in litigation, will provide an additional hurdle to overcome in defending any claim. If employers do use this as a recruitment tool, then it is advisable to have a paper-trail setting out why a candidate was unsuccessful.

Managing employee access

In light of the issues posed by social networking sites, many employers have considered preventing access to such sites or monitoring employees' use. Each of these options presents its own issues and, despite the potential risks, these sites can be useful for building business networks - LinkedIn and Plaxo are designed for professional business relationships. Restricted use could, therefore, be preferable to a total ban.

In addition, employees could see a total ban as an overreaction by employers to what is an increasingly common form of communication. Banning staff from using the sites could lower morale, especially in industries where long hours are common and access for reasonable periods is used as a break from work.

To manage this issue, employers should consider monitoring employee's use to ensure it is being used appropriately. Recently, an employee who was claiming to be sick updated his Facebook page with the fact that he was absent due to a hangover. The employer used this as evidence against him in a disciplinary process.

Employers should have an internet usage policy in place to monitor employees in order to comply with the Data Protection Act 1998. Public bodies must also factor in the Human Rights Act 1998, in particular article 8: the right to respect for private and family life.

Many internet policies were drafted before social networking sites became popular and may need to be updated to make sure the now cover these sites and the potential issues they throw up. Any changes should be communicated to all employees as this will strengthen an employer's position in the event of any disciplinary action or the need to defend any subsequent claim.

Unauthorised downloads

Employees often use social networking sites to share photographs or videos, including possibly unauthorised data while at work. This could not only damage the company's IT system, but is likely to be breach copyright.

Ownership of information

Where employees use social networking sites for business networking purposes via the employer's IT system, employers may be able to claim ownership of their profiles so that they can retain any information relating to business contacts. This can be useful for employers but they must make their employees aware of this position by including it in any internet policy.

Protecting organisations and individuals

To protect themselves under the current legislation, companies should:
Set out the parameters of internet usage (including downloads)
The consequences for breach of any internet policy , including reference to other related policies e.g. equal opportunities, harassment and bullying
Inform employees about the level of monitoring and the policy itself, including any changes
Follow fair procedures in respect of any disciplinary action and apply the policy consistently
Not be afraid to use information from social networking sites to deal with any misconduct, provided this is done appropriately.

For employees, the onus is on them to understand the policy and to ensure that their own site pages do not breach their employer's policies. They should also bear in mind that their pages are visible to millions of people globally and the consequences this may have.

Graduates are stretching the truth to get work in uncertain economic times

Powerchex has released their annual survey into CV discrepancies. Here is how it was reported in the Guardian:
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Under-21s told 29% more lies on job applications this year than last

Jessica Shepherd
guardian.co.uk, Thursday 6 August 2009 15.47 BST

More under-21-year-olds in the UK are lying on their CVs this year compared with last, a poll has found.
Of 4,735 job applications from all age groups sent to finance firms between June last year and this May, 899contained false information.Powerchex, a company which screens CVs and application forms on behalf of finance companies, found that of the 307 belonging to under-21s, 18% contained lies, an increase of 29% from last year, when only 14% of forms contained false information.
Under-21s are now the most likely to lie on job forms, the company says. Their most common lie was to claim a 2:1 university degree when they had been awarded a 2:2.
Others exaggerated menial jobs to make themselves sound more important. Another common lie was to claim they had left a job because their contract had expired rather than because they had been made to leave.
This year's final-year university students face the highest levels of graduate unemployment in a generation.
Alexandra Kelly, managing director of Powerchex, said: "The pressure of the recession on job markets seems to have led more applicants to believe that they should lie or make embellished claims to get jobs."

Research finds that Linkedin profiles are more accurate than CVs

Candidates are often more honest in their LinkedIn profiles than in the CVs they send employers. At least that’s what LinkedIn founder Reid Hoffman said at the Social Recruiting Summit held recently at Google’s headquarters in Mountain View, CA. I suppose that this makes quite a bit of sense, if you consider that a LinkedIn profile can been seen by thousands of people who know the applicant and can expose any lies or exaggerations.

HR and screening staff should always look at discrepancies between CVs and online claims, but in addition they should also look at discrepancies between an applicant's CV and what they state on their screening/application form. We have found cases where the screening form was accurate and truthful, but did not bare any semblance with the CV on the basis of which the applicant was interviewed and made an offer.

Does your company do criminal checks on new employees?

According to government figures released today, criminals on probation committed more than 1000 serious crimes over the last two years, including nearly one murder a week in England and Wales.

1,167 offences were committed while the offender was being supervised by the probation officer. The total included 94 murders, 105 rapes and 43 arson attacks. This year's Ministry of Justice figures showed a further 657 criminals on probation were found guilty of serious violent or sexual crimes. More than 400 other criminals are accused of committing serious further offences, but their cases have not yet come to trial. The details were revealed in the 2008 offender management caseload which reveals details about the scale of prison and probation workload.

At the same time in a separate study in the United States Carnegie Mellon University researchers have created a model for providing empirical evidence on when an ex-convict has been “clean” long enough to be considered “redeemed” for employment purposes. The new study, which appears in the current issue of Criminology, estimates that after five years of staying clean an individual with a criminal record is of no greater risk of committing another crime than other individuals of the same age. The research comes at a time when President Barack Obama’s crime agenda includes breaking down employment barriers for people who have a prior criminal record, but who have stayed clean since their earlier offense.

What this makes abundantly clear to HR directors is that they need to be aware if a potential employee has a criminal record prior to making a decision to employ. A criminal record should not necessarily prevent employment but being aware is being forearmed.

FSA confirms changes to the rules for approved persons

Folllowing through with its revamp of SIFs (Significant Influence Functions) approval process, the FSA has issued a policy statement confirming the changes. Recent events in financial markets, forced a re-think on the competency of SIFs and there is widespread belief that if certain senior people in banking had a better understanding of the banking world, the crisis may have been less severe. The FSA intents to inteview senior appointments to determine whether they have a good understanding of the risks specific to the business they will be managing.

See below, for the press release and policy statement:
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The Financial Services Authority (FSA) has confirmed an extension of the approved persons regime for those that perform a ‘significant influence’ function at firms.
In its supervisory enhancement programme (SEP) the FSA stated that it would place greater emphasis on the role of senior management, including non-executive directors (NEDs). Today’s policy statement sets out changes to the approved persons regime which improves FSA’s approach to ‘significant influence’ functions by ensuring that those likely to exert a significant influence on a firm fall within the scope of the approved persons regime.

In particular, the FSA has:
· Extended the scope and application of CF1 (director function) and CF2 (Non- Executive Director) to include those persons employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm;
· Extended the definition of the significant management controlled function (CF29) to include all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm; and,
· Amended the application of the approved persons regime to UK branches of overseas firms based outside the EEA.

Graeme Ashley-Fenn, director of permissions, decisions and reporting division, said:
“It is important that directors and senior managers at firms understand their regulatory obligations and have the relevant competencies and experience to carry out their roles with integrity.
“Since October 2008, the FSA has carried out 115 interviews for ‘significant influence’ posts at high impact firms. Nine applications have been withdrawn as a result. Once in post, where individuals fail to meet the required standards the FSA will consider enforcement action.”
These changes will come into effect on 6 August 2009 with a transitional period of six months. Firms should now begin assessing which individuals require approval and submit timely applications to comply with the end of the transitional period.

Full Policy Statement: http://www.fsa.gov.uk/pubs/policy/ps09_14.pdf

Powerchex's monthly employment offers survey makes it in the FT

Powerchex has a finger on the pulse of employment offers in financial services firms. With over 300 clients in the industry, we are the first ones to see a downturn or pickup in employment offers. Since September we have been publishing a monthly survey of job offers in financial services. Our findings have been picked up by several publications, most recently by the FT. Read on:






Spoilt for choice on ex-banking employees
By Ruth Sullivan
Published: July 19 2009 08:53 Last updated: July 19 2009 08:53

Asset managers keen to recruit new talent have never had it so good as banks, reeling from the financial crisis, have cut employee numbers, putting a lot of teams out on the street.
Earlier this month, Morgan Stanley Investment Management’s global portfolio solutions team left en masse to set up a new Dutch global macro fund, linked to Worldview, while the real estate team at Citi Alternative Investments, headed by Daniel Pine, has decamped to Forum Partners, a real estate investment manager.
Henderson Global Investors has also been on the look-out for good people for its structured products team, recruiting from banking ranks in the past few months. The asset manager has picked up Ganesh Rajendra from Deutsche Bank to head its advisory team. It has also secured Dan Maynard from Morgan Stanley and hired a five-strong currency team from Fortis investment bank.
But in spite of a wealth of choice, it is important to make sure senior management, analysts or traders from an investment banking environment will fit in an asset management culture. Those who were involved in investment management at banks are more likely to suit asset managers than former traders.
Hermes, the UK asset manager owned by the BT Pension Scheme, has been hiring in the past 18 months, adding 55 people to its headcount with 95 new hires and 40 job losses. “Investment banks have been an obvious area that we have recruited from where investment management had become an integral part of their business strategy but that no longer applies in many cases,” says Rupert Clarke, chief executive.
But ex-prop desk traders that Hermes talked to were not such a good fit. “Very often they are incredibly smart individuals but in many cases they do not demonstrate the sense of responsibility that recognises this is somebody else’s money,” says Mike Webb, head of business development at Hermes.
Boutique asset managers have also been hiring from the large pool of ex-banking employees, taking on analysts and senior managers up to managing director level, says Andrew England, managing director at Morgan McKinley, a City recruitment consultant. “It is a huge coup for a boutique to take on a senior banker with specialist skills and good client relationships,” he says.
Rather than seek employment again, some former bank employees have set up their own fund management businesses, says Alexandra Kelly, a director at Powerchex, the pre-employment screening firm for financial services.
“More than 50 bankers have set up 13 hedge funds and asset managers in the past three months,” she says.
Asset managers are not the only ones taking advantage of the glut of talent on the market. Stockbrokers are also dipping into the pool, making up one of the biggest recruiters in recent months.
Job opportunities in brokerages rose by 77 per cent between April and June compared with the first three months of the year, says Powerchex.
Sarah Dudney, a partner at Lockwood Gibb & Associates, a financial services executive search group, attributes some of the brokerage hiring to “a new breed of small debt advisory and trading boutiques setting up in the past six months as investment banks struggle with deleveraging [and job cuts]”.
However, many bankers are fighting to get back into the big investment banks as the industry shrinks, she says. “If your career has been defined by high revenue in the world of investment banking, it is hard to change. Nobody wants to leave the party.”
Amin Rajan, chief executive of Create-Research, identifies several other directions unemployed bankers are taking in countries including the UK, US, Netherlands, France and Germany, where some of the biggest job cuts have been made.
These include financial engineering, debt restructuring, and mergers and acquisitions.
“Many have been developing good personal relationships with clients in their previous jobs, ready for starting up their own businesses,” he says.
However, he believes the biggest group of “banking refugees” are those “in denial [about their chances of getting back into the industry]. They are the complacent ones who have made a lot of money, are taking life easy and waiting for demand to pick up,” he says.
In the past two years, some bankers sought employment overseas in the Middle East, Singapore and Hong Kong but many have returned after those jobs, in turn, have been cut after a three or six-month period, says Ms Kelly.
Fewer job offers are on the horizon in investment banking than in many other areas of financial services. Eighty per cent fewer jobs were available in the second quarter this year compared to the same period a year earlier in the UK, Europe, and Asia, according to Powerchex.
And the outlook so far this year continues to be limited, with 50 per cent fewer job offers in the second quarter compared with the first three months.
Asset managers may be spoilt for choice for some time to come as ex-bankers, looking for longer-term, less precarious roles compete for a niche in the industry. The test will be whether they stay put when investment banks start hiring again.

Copyright The Financial Times Limited 2009

Vetting tenants - What should you check before letting someone into your property?

In this weekend's FT there was an article about the increase in the level of checking tenants. This is fully undestandable in the current economic environment, but what kinds of checks are appropriate for a tenant?

"Letting agents are putting prospective tenants through rigorous credit checks as property owners want to see proof of income, including bonuses, as well as highly personal information such as the value of investment and share portfolios and savings accounts.
Knight Frank, the agent, said it had reviewed its reference process for new tenants to make sure it could provide enough data for landlords. Rather than using traditional credit checking agencies it is now conducting manual checks itself.
In some cases it is having to procure an indication of the tenants’ net wealth from their banks as well as guarantees from their employers that their jobs are permanent and not under threat, and details of their anticipated bonuses. " states the article in the FT.

Considering that the risk to the landlord is similar -if not greater- to the risk to an employer, then it would only make sense that checks that confirm the likelihood of the tenant remaining in employment should be conducted. Obviously an employer is unlikely to confirm whether they intend to make someone redundant in the near future, but asking the right questions may give you a good indication as to the relative job security of a prospective tenant.

FSA fines director for appointed representative control failings

HOT OFF THE PRESS - FSA PRESS RELEASE

The Financial Services Authority (FSA) has fined Richard Holmes, a director of insurance broker AIF Limited, £20,020 for control failings in relation to an appointed representative firm (AR).
In September 2006, Holmes appointed an AR without carrying out the necessary checks, using only assurances from two business contacts. These individuals were subsequently banned by the FSA on 2 November 2006.
The following February, an insurance underwriter advised Holmes that the AR had premiums outstanding and rather than checking further, he relied on assurances from the AR that the premiums had been brought up to date. Again, when the AR appeared to have problems paying insurance premiums promptly to AIF, Holmes failed to increase his monitoring in any way and nor did he investigate the way the AR was carrying out its business.
Finally, following a complaint made by a client of the AR in September 2007, regarding its failure to put insurance in place, Holmes terminated the AR’s status.
Holmes subsequently became aware that the AR had received clients’ premiums but failed to pass them on to the underwriter, leaving the clients uninsured. In addition, the AR had also instructed AIF to arrange insurance policies on behalf of clients but had failed to pass on the client premiums to AIF.
The FSA is satisfied that Holmes then ensured that AIF took steps to arrange alternative insurance for the clients who had been left uninsured and also ensured that cover was maintained where AIF had already provided instructions to the insurer. The cost to AIF of ensuring clients remained on cover was approximately £27,000.
Jonathan Phelan, head of retail enforcement, said:
“Senior management at firms are responsible for the standards and conduct of the businesses they run – this applies to all firms both large and small. In particular, senior managers should ensure that their appointed representatives are appropriately overseen.
“As a director of the firm, Richard Holmes failed to carry out sufficient initial checks and then failed to monitor adequately the activities of the AR over a period of almost a year despite identifying a number of concerns early on during the AR agreement – this falls below the standards that FSA expects of firms. Directors who fail to discharge their personal responsibilities, including monitoring ARs properly, give rise to a risk of consumer loss and we will take action against them.”
The FSA took into account that Holmes did not deliberately set out to contravene its requirements; co-operated with the FSA and took remedial action to ensure clients were not left uninsured.
Holmes agreed to settle at an early stage of the FSA’s inquires and therefore qualified for a 30% discount under the FSA’s executive settlement procedures. Without the discount the fine would have been £28,600.

Powerchex wins Business of the Year - Again!

Powerchex have scooped the Business of the Year award at the Docklands Business Club and East London Chamber of Commerce Business Awards. The awards and gala dinner were sponsored by Barclays and were held at the prestigious Formans Fish Island, overseeing the 2012 Olympics site. Powerchex’s success follows on from last year when they were awarded Business of the Year at the Thames Gateway Business Awards.
Powerchex were shortlisted for the much converted Business of the Year award alongside other businesses who had managed to sustain growth and profitability despite the tough economic conditions. The company have followed up on impressive financial results in 2007 and 2008 by continuing to be profitable in 2009 despite the recession. They have also acquired over 50 new clients since the turn of the year and boast an impressive office in London close to many of the financial institutions they service.

Powerchex specialise in employee screening and check the background, employment history, criminal records and professional qualifications of applicants on behalf of financial institutions and set the industry benchmark of 5 days for a background check. Alexandra Kelly, Managing Director of Powerchex, first took her idea to the Dragons Den on the BBC but was told that pre-employment screening could not be delivered in 5 days. Undeterred, Alexandra went it alone and started the business in 2005 with 1 employee, one desk and 2 computers.
Within months Alexandra convinced one of the largest insurers in the world to give Powerchex a chance and four years later they are just 1 of 310 financial institutions who entrust Powerchex with their employee screening.
Richard Keenan, Local Business Manager for Barclays, said, “Despite the economic downturn, Powerchex demonstrated their ability to grow the business substantially, concentrating on beating the competition hands down whilst developing their staff in a highly effective manner. Alexandra is the driving force behind the business and the team and Alexandra herself have built a solid foundation. I wish them all the best in the future.”
Powerchex reputation preceded them when they entered the Business of the Year category in this year's DBC/ELCC Business Awards sponsored by O2. Sweeping the opposition aside Alexandra Kelly stepped up to the podium to hear DBC Chairman Rita Beckwith tell her audience "Alexandra's vision, perseverance and entrepreneurial skills took Powerchex from a failed Dragon's Den competitor to become a highly respected, successful company. The motivation and management skills of her team deliver outstanding service and innovation to their clients."

Powerchex sign up to the Information Commissioner's Personal Information Promise

Powerchex have strengthened their commitment to data protection by signing up to the Information Commissioner’s Personal Information Promise.
The initiative was launched by the Information Commissioner in January 2009 in response to recent reports of major data losses by organisations and is designed to improve compliance with the Data Protection Act and help restore public trust and confidence in those who are entrusted with their personal information.
The Information Commissioner is urging the heads of organisations to sign up and commit to the principles outlined in the pledge to prove that they are dedicated to protecting data. So far senior leaders from organisations such as T-Mobile, British Gas, BT, the NHS Information Centre, Royal Mail and Vodafone, have all signed up.
Alexandra Kelly, Managing Director at Powerchex, said it was an easy decision to make. “Powerchex are already registered with the Information Commissioner as a data processor and data controller so this just backs up what we already do. Protecting the personal data of our clients and their applicants has always been one of our top priorities. Whether that means making sure that visitors are always escorted around the building or disabling USB ports on all of our computers, we have always been dedicated to complying, and more often than not, going beyond what the law requires.”

What are the most common CV lies?

According to Les Rosen, author of the Safe Hiring Manual and founder of the NAPBS (National Association of Professional Background Screeners), the six most common fabrications from job applicants are:

Claiming a degree not earned: Yes, believe it or not, applicants will make up a degree. Sometimes, they actually went to the school but never graduated. Some applicants may have had just a few credits to go, and decided to award themselves the degree anyway. On some occasions, an applicant will claim a degree from a school they did not even attend. The best practice for an employer is to state clearly on the application form that the applicant should list any school they want the employer to consider. In that way, if an applicant lies, the employer can act on the lack of truthfulness regardless of whether the educational requirement is part of the job requirements.

Diploma Mills or Fake Degree: A related issue is diploma mills or fake degrees that can be purchased online. For those that actually attended classes, read books, wrote papers and took tests to earn a diploma, you apparently did it the old fashioned way. Now, getting a “degree” is as easy as going online and using your credit card. There are even websites that will print out very convincing, fake degrees from nearly any school in America. In fact, the author obtained a degree for his dog in Business Administration from the University of Arizona-and the dog had been dead for ten years. A transcript was even obtained and the dog got a “B” in English! Some sites will even provide a phone number so an employer can call and verify the fake degree. Some of the degree mills even have fake accreditation agencies with names similar to real accreditation bodies, in order to give a fake accreditation for a fake school.

Job Title: Another area of faking is the job description or job title. Applicants can easily give their career an artificial boost by “promoting” themselves to a supervisor position, even if they never managed anyone.

Dates of Employment: Another concern for employers is applicants that cover up dates of employment in order to hide “employment gaps.” For some applicants, it may be a seemingly innocent attempt to hide the fact that it has taken awhile to get a new job. In other cases, the date fabrication can be more sinister, such as a person that spent time in custody for a crime who may be trying to hide that fact.

Compensation: A related issue is pay – applicants have been known to exaggerate compensation in order to have a better negotiating position in the new job.

Lack of Criminal Record: Nearly every application will have a question about past criminal conduct. Although employers may not “automatically” eliminate a job applicant without a showing of a “business necessity,” if the person lies, then the employer would have grounds to deny employment based upon dishonesty.
The common denominator in all of these: they can be all be discovered by a program of pre-employment screening. To quote a phrase popular in the 1980s. “Trust, but verify.”

Powerchex issues statement on Data Security in Financial Services

Powerchex warns financial institutions on poor data security


London, June 19th, 2009. Powerchex Limited, the leading pre-employment screening firm for financial institutions, has backed the Financial Services Authority (FSA) in their stance on the data security measures finance firms should be employing to protect customer data.

In a paper released in April 2008, the FSA highlighted a number of examples of bad practice by financial services firms. Amongst their findings they discovered that generally a high level of vetting is being applied to senior staff, but junior staff and those working in areas that would allow them to view sensitive data are not being vetted appropriately. Most notably very few firms were found to be conducting criminal record checks on junior staff.

“We strongly advise our clients to determine the level of vetting required using a risk based approach rather than a rank based approach. Someone who works in a call centre is likely to have access to large volumes of customer data. So are they less of a risk than a senior manager? Not in our view, so why should they be vetted to a lower level?” says Alexandra Kelly, Director of Powerchex.

The FSA also found that some financial firms were subjecting temporary workers to less rigours vetting than permanently employed colleagues carrying out similar roles. Kelly believes that firms are starting to realise the biggest threat is from within.

“Temporary workers pose the same, if not a bigger risk to the company than permanent employees. Data Security is not just an IT issue. Firms should appoint a senior manager who heads a committee that has representation from all areas of the business, including Human Resources. And firms should also be asking their suppliers the same questions they ask themselves in regards to how sensitive data is kept safe.”

The FSA backed up their report by handing out a hefty fine to Merchant Securities Group Limited (Merchant Securities) in June 2008 for weak data security. Margaret Cole, Director of Enforcement at the FSA, said, “Reducing financial crime in the UK is a priority for the FSA and our recent data security report showed that many firms still need to do more to get it right. We will not wait until information has been lost or stolen before taking action against a firm. The level of the fine for a firm of this size should serve as a warning to others to take data security seriously.”

As the need for financial institutions to hold and transfer sensitive data increases, so does the risk they face. In the future financial firms are likely to employ more and more stringent data protection measures and their employees and suppliers can expect to be checked more thoroughly and more often.

Powerchex supports the launch of PREFiT

In the past 3 years the Met Police, through its Operation Sterling has established a number of forums in key business sectors as part of its approach to combating fraud. PREFiT which is to be officially launched on June 19th at the New Scotland Yard, is the Vetting and Screening Industry’s Counter-Fraud Forum.

Recent high profile cases have brought vetting in the forefront of HR policy but due to the specialised nature of the searches, it is not practical for most organisations to conduct the full spectrum of checks in house. “For the past five years Powerchex has worked side by side with HR professionals in assisting them to strengthen their pre-employment screening policy. A wider independent forum such as PREFiT will provide further guidance and best practice in our efforts.” states Alexandra Kelly, Director of Powerchex.

Even though PREFiT currently represents a very small number of firms in the industry Powerchex has been assured that it is the full intention of the Metropolitan Police to make it an industry wide forum designed to support employers in their effort to prevent fraudsters entering the organisation through the false pre-text of seeking employment.

“PREFiT is a great initiative by the Met Police which Powerchex supports. The Vetting/Screening Industry has been gaining awareness amongst employers who have been the victims of economic crime. This initiative will strengthen and further support employers in their battle against fraud.” says Alexandra Kelly, Director of Powerchex.

In the financial services industry, screening has been the norm for several years. The FSA which is the industry regulator for financial firms has provided guidance as to the level of checks that organisations must perform prior to employment. In other sectors, screening is still very new and HR departments need support with policy.

In an email to Powerchex (powerchex.co.uk), Russell Day Detective Superintendent of the Specialist Crime Directorate Metropolitan Police stated: “PREFiT is designed to be complimentary to the NAPBS (the official industry body for the screening industry) and to enable an interface with the other industry forums to raise awareness and good practice to target harden businesses. It is an essential part of the emerging MPS Fraud Strategy 2009-2013 and compliments the recently launched National Fraud Strategy. The forums have additional benefits because it allows access to a target audience to provide counter-terrorism awareness training and to shape our response to the London 2012 Olympics.”

Employers and recruiters are increasingly expected to protect their organisations from potential fraudsters through screening, both at the hiring stage and periodically once employment has started. PREFiT in conjunction with NAPBS Europe will give them the tools to succeed in this goal.

Don't they ever learn? More CV lies on the Apprentice

Lorraine Tighe has been caught out lying on her CV stating that's she has worked for a company longer than she actually did.

The Apprentice wannabe's lie is exposed on the show when she is grilled in an interview from Sir Alan Sugar's close business friends.

Karren Brady, the managing director of Birmingham City Football Club tells her: "If intuition is your gift, why didn't you use it to put your correct dates of employment down?

"You've overstated your length of time working in your current employment by 12 months, which is quite significant."

Claiming it was a "misprint", Tighe replies: "I suppose I have not fully succeeded in the way that I think I am capable of."

Brady adds: "So is that why you lied on your CV?"

Lorraine, looked puzzled and said, or it must have been a typo... Easy to see why this sort of answer can destroy an applicant's professional credibility, what is not so easy, is to understand why she did it. She knew her CV would be scrutinized and she knew her references would be checked.

It is so common for people to think they can get away with it. For some reason, that we have yet to understand, applicants who know that they will be checked, keep on lying. In this difficult job market this can be career suicide, don't they see it?

When is an expert, an expert?

It took a bitter divorce case for Ms Labeur to be discovered for the fraud she is. Her husband decided to inform the authorities during the divorce; can one safely assume that she would have gone undetected otherwise? It is cases like this that demonstrate the huge pitfalls of not peforming even the most cursory checks before appointing an employee or an expert. This will undoubtedly lead to lawsuits, as the outcome of several cases may have to be re-examined.
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Adam Sage in Paris reports:

Régine Labeur was hailed as a respected psychologist whose evidence was pivotal in more than 400 trials in the Dordogne, southwest France. She testified in criminal cases, explaining, for instance, the hidden character of serial rapists or the trauma suffered by families and friends of murder victims.

She also played a central role in many divorce cases, assessing the emotional stability of parents seeking the residency of their children. So when officials discovered that she had apparently never qualified as a psychologist, there was widespread stupefaction.

Mrs Labeur, 53, is accused of fooling judicial authorities with false certificates that went undiscovered for four years.

She has been placed under formal investigation on suspicion of fraud and usurping the title of psychologist and faces a maximum sentence of five years in prison and a fine of €75,000 (£67,000).

Maître Frédérique Pohu-Panier, her lawyer, declined to comment on the allegations. The inquiry is understood to have started when Mrs Labeur’s husband, from whom she is divorcing, told police that she lacked qualifications.

“It’s incomprehensible,” Françoise Lorrin, another judicial psychologist in the Dordogne, said. “When I applied, I submitted my degrees and also scientific publications, which prove your competence.” Le Parisien newspaper said there was no record that Mrs Labeur had published a single paper.

“Certain filters didn’t work,” Yves Squercioni, the state prosecutor in Périgueux in the Dordogne, said. “You can’t become a judicial expert through improvisation.”

Mr Squercioni ruled out a review of the cases in which Mrs Labeur had given evidence, despite the fraud claims. However, a lawyer in the Dordogne told The Times: “A number of us are looking at the possibility of lodging appeals. It is difficult because the French judicial system is always very reluctant to reopen cases that have been judged.

“But it might be possible to overturn rulings in cases where her reports were critical — in custody cases where she wrote that a father was psychologically incapable of looking after his children, for example.”

The scandal is reminiscent of the French film Intimate Stranger, in which the actor Fabrice Luchini played a false psychoanalyst. It also highlights the importance of l’expert psychologue in the French judicial system.

Last month, for example, Mrs Labeur was called to Dordogne Criminal Court to tell the jury about Thierry Caballero, a serial rapist, after a consultation with him while he was in prison awaiting trial.

Her words were damning: “He is far removed from reality as far as his actions are concerned, he does not feel any remorse, he is incapable of controlling his urges.” She said that Caballero, who was sentenced to 14 years in jail, had a “fragile” character and added: “Perhaps he has a hidden side.”

According to Le Parisien, Mrs Labeur earned €60,000 a year for her reports for French justice — a significant sum given that many of France’s 40,000 fully qualified psychologists struggle to make a living.

Should there be pre-employment screening to fish out terrorists?

The FSA has warned again and again about the risk of potential terrorists infiltrating the UK financial systems through gaining employement in permanent or contracting/temp post. Most financial institutions conduct pretty rigorous checks on their permanent employees, but the majority of temps and contractors go unchecked, thus providing an easy route to entry.

Sanctions checks are a quick and cost efffective way to spot any applicant who may be a suspected or convicted terrorist or money launderer. Make sure that your pre-employment checks include sanctions as part of the basic background screening of permanent employees and contractors alike.
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Angsuman Chakraborty reports on his blog:

I know most of you would be outraged at such a question. However just for a moment take a look at the biodata of a jehadi who worked as a senior software engineer / architect at Yahoo. He is a capable technologist, has deep understanding of Linux, Unix & nginx, httpd and other technologies. He is a must hire at most companies he will apply to. However the situation changes drastically if you knew he was a hardcore jehadi and responsible for mass-murder / terrorist attacks.

The key question obviously is how prevalent are such hi-tech jehadis?
Worldwide Muslim fundamentalists are aggressively enlisting the help of computer professionals for hacking (Peerbhoy hacked unsecured wi-fi networks to spread terror threats and more). Peerbhoy's mentor himself enlisted 8-10 hi-tech professionals. He had one person dedicated to bring around Peerbhoy to their cause. They pamper such professionals, tell them about the plight of moslem's worldwide and indoctrinate them in the cause of jihad (and houris?).

So I would say there is a distinct possibility that any company can face the plight of Yahoo. Imagine the embarrassment of Yahoo worldwide for hiring a muslim terrorist. Would you like to work for a company which hires terrorists, albeit unknowingly? I don't blame them; nevertheless it is bad PR. It tarnishes the image of the company, may even create fear within employees and definitely harrassment for all.

In light of apparent surge in hi-tech jihadis, does it make sense to have a system to screen out potential trouble-makers?

Theoretically, can we even think of a set of questions which can screen out potential terrorists? Remember the lame questions you get asked at the airport security check-in? That would be the worse end of the spectrum and I don't think will give any benefit.

Only subtle psychological questioning can potentially reveal such people. I think terrorists are common people who probably have a bad gene which somehow allows them to forget the value of human life. It appears the attraction of several dozen virgins in heaven is also rather hard to ignore. Should we look for repressed personality, people who feel persecuted in some way by the world? This is such a wide area to explore.

I am sure many entrepreneurs are thinking about it too, even if they won't admit it. What is your take on this issue?

Company Directors are not immune from fraud

It is not unusual for companies to neglect applying their normal pre-employment screening practices when it comes to their directors, board members and non-executive directors. Research released by the UK's Insolvency Service showed that there is a significant increase in criminal malpractice amongst company directors.

The directors of 91 companies were banned for financial crime over the year as more directors turned to fraud to try to salvage something for themselves from ailing companies. In this tough economic times, companies should also make an extra effort to conduct proper due dilligence on their suppliers, especially those suppliers who have access to sensitive company information, or client data.

Guy Logan reports for Personnel Today:

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HR must be on watch for directors’ fraud
Guy Logan05 May 2009 14:11


HR must be extra-vigilant against a rise in fraud by company directors during the recession, a lawyer has warned.

Statistics published by the government's UK Insolvency Service at the weekend revealed that the number of directors banned for criminal malpractice jumped by almost one third (31%), to 1,852 directors who were charged in the 12 months to March.

Disqualification proceedings launched against directors for crimes such as fraud or theft rose by 72%, while cases of misappropriation of assets grew by almost 20%.

Edward Starling, solicitor at law firm Wedlake Bell, warned that company directors were just as likely to commit fraud as junior employees.

"It's well known that fraud increases in the recession, but it's possible that some counter-fraud departments miss serious fraud because they are too focused on the smaller fish [more junior employees]," he told Personnel Today.

"The increase in disqualification cases being launched over the past year is huge, and this number will only rise in the coming months."

Starling added that limited resources for the Insolvency Service, which unearthed the majority of cases of malpractice by directors, would mean many bosses would elude justice.

Research last year found one in five employees admitted to committing fraud by exaggerating expense claims.

E-Verify in Hot Water about Error Rate

An SHRM (Society for Human Resource Management http://shrmjax.org/pdfs/08-0447%202nd%20Quarter%202008.pdf) backed bill launched an employment verification debate on the other side of the pond. Apparently monster-sized databases are debated around the world, not just in the UK.
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Mark Schoeff Jr reports for Workforce Week


With momentum building for Congress to address comprehensive immigration reform later this year, two members of the House have introduced a bill to put employment verification at the center of the debate.

Written by Reps. Gabrielle Giffords, D-Arizona, and Sam Johnson, R-Texas, the measure would establish a mandatory electronic verification system that replaces an existing government-run system that has been roundly criticized by employer groups.

Giffords and Johnson hope their bill, the New Employee Verification Act, will either be the foundation for work-site enforcement in a broader immigration bill or move through Congress on its own.

The bill was introduced Wednesday, April 22, and announced by Giffords and Johnson on Thursday, April 23. It was originally offered in the previous Congress but had to be reintroduced because it did not become law.

The legislation mandates that all employers sign up for the Electronic Employment Verification System, which is based on the new-hire system used in each state to enforce child support payments. About 90 percent of employers use the new-hire system already.

Information for recently hired employees would be checked against Social Security and Department of Homeland Security databases to determine work eligibility. The system would eliminate the I-9 immigration form.

Alternatively, employers could register for the Secure Electronic Employment Verification System, a network of government-certified private sector companies that would authenticate a workers’ identity through a biometric identifier like a thumbprint.

The bill would establish civil and criminal penalties for employers that knowingly hire illegal immigrants.

Giffords and Johnson have been working with the HR Initiative for a Legal Workforce on the legislation. The organization is led by the Society for Human Resource Management and also includes the HR Policy Association and the National Association of Manufacturers.

The HR groups have led a charge against E-Verify, the government-run electronic verification system that is currently used on a voluntary basis by 118,917 employers.

“E-Verify’s significant error rate and reliance on paper-based identity documents often deny legal workers employment and can lead to fraud and identity theft,” the HR Initiative wrote in an April 23 letter to members of Congress. “Employers, in turn, are left vulnerable to sanctions through no fault of their own.”

E-Verify detractors say that the 4.1 percent error rate in the Social Security database could lead to millions of people being incorrectly ruled ineligible for work.

E-Verify proponents, which include many Republicans and conservative Democrats, say that the system confirms 96 percent of queries instantly and has an error rate of less than 1 percent.

Like E-Verify, the Electronic Employee Verification System would rely on the Social Security database. But the Giffords-Johnson bill requires that the Social Security information be cleaned up before the new system is launched.

In a conference call with reporters Thursday, Giffords called the proposal a “simple, effective, balanced alternative to E-Verify. It is a realistic piece of legislation.”

She also touted a provision that would establish federal pre-emption of state laws on employment verification. Her home state of Arizona was the first of several to mandate that employers use E-Verify—an experiment that is not succeeding, according to Giffords.

“Immigration is in the federal purview,” she said. “We should be dealing with it at the congressional level, not piecemeal state by state.”

It’s not yet clear when Congress will take up immigration reform. A comprehensive bill sparked political combustion in 2007 and died in the Senate. In the last couple weeks, the Obama administration has indicated it wants to address comprehensive immigration this year.

So far, individual dimensions of reform—such as verification and employment visas—have not been able to move on their own. But E-Verify is scheduled to expire on September 30, which might give work-site enforcement separate momentum.

Johnson says the electronic verification bill doesn’t have to be held up until comprehensive reform is complete.

“This year, we stand a great chance of passing it out of the House and Senate,” Johnson said. “It doesn’t have to wait. It can be combined later.”

As the immigration debate gets under way, HR organizations are trying to influence the outcome, especially on verification.

“SHRM feels strongly that employers should be part of the solution to illegal immigration,” said Mike Aitken, SHRM director of government affairs.

Small finance houses need to do more to keep out rogue clients

Large financial institutions are quite stringent when it comes to screening their suppliers. Due diligence can be thorough and exhaustive. Small to medium financial firms often satisfy themselves with much less. An email, a credit or media check may be enough to satisfy them. The FSA in a consultation paper issued last year, stated that financial institutions should vet their suppliers and other third parties to ensure that they have sufficient controls to ensure data security. In addition, companies should take the time to check the publicly available sanctions list on the Treasury's website, to make sure that they are not providing financial services to rogue firms and money launderers.

Patrick Hosking and Michael Herman report in The Times:
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The Financial Services Authority (FSA) said last night that many small and medium-sized financial institutions have insufficient command and controls to prevent them doing business with those on the Government's blacklist of financial sanctions.The list, which is maintained by the Treasury, includes about 1,400 individuals and 500 entities in Britain and abroad. It includes individuals and businesses linked to al-Qaeda, the Taliban as well as North Korea and Iran and people linked more generally to terrorist financing.Providing banking or other financial services to members of the list can be a criminal offence and businesses are required to have sufficient controls in place to avoid this.After surveying 228 financial firms, the FSA concluded: “There is significant scope across the industry for improvement in firms' systems and controls.” Leading financial institutions were also said to be “falling short”. The report highlighted one specific area of ignorance among British firms: a widespread belief that the sanctions applied only to foreign entities and individuals. In fact, the FSA reminded financial businesses that the banned list contains 50 individuals and 12 entities based in the UK.It also said that there was widespread confusion about the sanctions regime, with many firms believing that it took affect only with financial transactions above a certain size and therefore exempted smaller businesses.Another failing was that many firms were screening new clients retrospectively, sometimes weeks after an initial account had been opened, instead of before clients were taken on.The Treasury is responsible for policing firms that break the sanctions, but the FSA's remit includes making sure that UK financial groups have sufficient systems in place to prevent them from accepting blacklisted clients.

Launch of CRB's new Vetting and Barring Scheme

The Criminal Records Bureau is overhauling their process and introducing a new Vetting and Barring Scheme designed to offer a more stream-lined, faster system of workplace vetting for those working with children and vulnerable adults. There w ill be no significant changes for financial institutions who apply for Standard Disclosures for Approved Persons. The main change initially will be that Standard CRB checks will no longer be available for those working with children or the vulnerable; all such individuals will be entitled to an Enhanced check.

Read below for the announcement from the CRB:
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Today, the Home Office announced new measures to protect the vulnerable with the launch of the new Vetting and Barring Scheme later this year.

The changes planned for 12 October 2009 and the new safeguards that will be introduced to enhance the protection of children and vulnerable adults are outlined below.

From 12 October 2009:

The creation of two new ISA barred lists. These lists will replace the existing List 99 and POCA, POVA Lists.
Access to these new ISA lists will be available on request as part of an Enhanced CRB check.
Eligibility for Enhanced CRB checks will expand to include more employment and voluntary positions; such roles will be known as regulated positions.
Standard CRB checks will no longer be available for those working with children or the vulnerable.
There is no change to the current application form or application process.

From July 2010:
Individuals will be able, via Registered/Umbrella Bodies, to apply to the CRB for ISA-registration if they are applying to work with children and/or vulnerable adults in England, Wales and Northern Ireland. There will be a 5 year phased roll out for ISA registration of those individuals who currently work with children and/or vulnerable adults.
Employers will be able to express an interest in a person’s ISA-registration and informed of any changes to that person’s ISA-registration status.
The CRB will introduce a new application form to allow applications for ISA-registration and CRB checks to be made on the same form.
Employers can carry out free, online checks of a person’s ISA-registration status.
From November 2010:
It will be a legal requirement for individuals to register with the ISA if they intend to work or currently work with children and/or vulnerable adults in England, Wales and Northern Ireland.

For more information about the full range of safeguards and the dates when each one comes into force, please click here to view the full Home Office press release.
For the latest information coming out from the ISA and its new service please visit the ISA’s website (www.isa-gov.org) where you can register to receive regular updates.

CIFAS Staff Fraud Database

CIFAS FRAUDSCAPE

The CIFAS Staff Fraud Database is a data-sharing scheme that enables responsible employers to file proven cases of staff fraud in order to prevent the perpetrator moving unchallenged to a new employer to commit further fraud.

An employer accesses the database in order to:

file data about identified staff fraud cases
check staff fraud records filed by other CIFAS Members.

This can be done either to pre-screen applicants or to screen current employees. Almost 120 employers already share information in this way. As a member of the Staff Fraud Database, Powerchex can access the database on behalf of CIFAS members.Click on the link below for an analysis of the cases of staff fraud filed to the CIFAS Staff Fraud Database by those organisations.

http://www.cifas.org.uk/download/fraudscape.pdf

Should hiring decisions be made by looking at social networking sites?

Views vary widely on the subject of trawling through social networking sites as part of the pre-employment screening process. Here at Powerchex our view has always been that there are too many legal and ethical pitfalls to this process and for that reason we do not incorporate these searches to our screening process. As an employer you need to make up your mind of course. Here are two views on the subject that may help you decide:
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Louisa Peacock reports for Personnel today:

A quarter of employers worldwide are checking social networking sites such as Facebook and MySpace for information about job candidates, research has revealed.
The study by talent management consultancy DDI found that 25% of 1,910 job interviewers across the globe, and 12% of employers in the UK, were checking out candidate profiles or photos before deciding whether to interview them.
More than half (52%) of those that did look up prospective employee profiles on such sites admitted they used the information to make hiring decisions.
The news comes just days after Personnel Today reported that employers should encourage their staff to use Facebook and Twitter to help network with their peers.
However, less than a third of 3,523 jobseekers (32%) surveyed by DDI worldwide, and just a quarter (25%) of applicants in the UK, believed that what they put on social networking sites might affect their chances of getting a job.
Steve Newhall, vice-president for Europe at DDI, said: "Interviewers should realise that much of what is put [on Facebook] is for fun, and is unlikely to reflect a candidate's on-the-job demeanour or performance. It's difficult to gauge when looking at Facebook-type data if the information is true or has any relevance for the job role in question. A well-planned and conducted selection process will uncover relevant information about candidates' ability to do the job."
The 2009 Global Interviewing Practices and Perceptions survey found that German employers were almost twice as likely as any other country to conduct online searches, with 46% reporting they use this technique to make hiring decisions.
The practice of checking social networking sites becomes more prevalent the younger the interviewer. Globally, only 19% of those over 50 checked these sites, compared to 46% of those under 25.
The global survey interviewed 248 employers and 704 jobseekers in the UK.
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Jo Wort, professional support lawyer, and Gagandeep Prasad, solicitor Charles Russell present the legal view on the subject:


There are several issues raised by this approach to recruitment. The first is one of potential discrimination arising out of the age profile of internet users. In adopting a policy of online application only, it is likely that many older candidates will be excluded before the recruitment process has even begun. If faced with an age discrimination claim, the company would have to seek to justify this approach.
Trawling through these sites on receipt of an application is pre-employment vetting. Potentially, this raises both discrimination and data protection issues. For example, there may be information obtained from these sites that relate to an individual's sexual orientation, or religious belief that impact, or are perceived to impact, on the eventual decision whether or not to recruit. Information that impacts on recruitment decisions in this way will be grounds for a discrimination claim.
A further issue with trawling these sites is the question of verification. What weight do you place on the information found? Was it placed by the individual themselves, or a disgruntled former friend or colleague? The Employment Practices Data Protection Code makes clear that an employer should "not place reliance on information collected from possibly unreliable sources. Allow the applicant to make representations regarding information that will affect the decision to finally appoint". The applicant should therefore be given the opportunity to deal with information that the company has found on a social networking site that negatively impacts on any decision whether or not to recruit.
Such searches are effectively pre-employment vetting and the Employment Practices Data Protection Code states that employers should "only use vetting thing as a means of obtaining specific information, not as a means of general intelligence gathering". This should only be undertaken where there are significant risks to clients/customer, and ideally only late in the recruitment stage, so that not all applicants are vetted routinely.
Searching social networking sites as a recruitment tool raises many potential issues and, as a matter of best practice, should not be generally adopted.

Verifying Chinese Degrees and Qualifications

Anyone that has tried to verify a Chinese Degree will tell you that it is a time consuming and sometimes unreliable process. The easier way to do it is through the China Academic Degrees and Graduate Education Development Center.

The Introduction of CDGDC China Academic Degrees & Graduate Education Development Center (CDGDC) is an administrative department directly under the Ministry of Education, operating under the joint leadership of The Ministry of Education and The Academic Degrees Committee of the State Council (ADCSC). CDGDC is a non-profit agency with the independent qualification of legal entity.

Their website is: http://www.cdgdc.edu.cn/xwweben/xw_aboutus.jsp and any company or individual can apply on line for a verification. These verifications need to be applied for in Chinese at: http://www.cdgdc.edu.cn/rzgl/apply/login.jsp and the cost varies between £25 and £35. Payment needs to be made by bank transfer and the verification process takes 20 days or less. If you find this too complicated and time consuming, we can do it on your behalf for a small admin fee.

Thousands of policemen have criminal records

According to a recent investigation by the Guardian newspaper, records were obtained under the Freedom of Information Act. These records indicate that more than 1,000 service officers have been convicted of assault, burglary and dishonesty. This is an interesting finding that raises questions as to whether people of questionable character should be in law enforcement.

Jo Adetunji reports for the Guardian:

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More than 1,000 serving police have criminal convictions ranging from assault to burglary, according to figures obtained under the Freedom of Information Act.
The data, obtained by the Liberal Democrats, showed 1,063 officers with criminal records, including 59 for assault, 36 for theft and 96 for dishonesty. Other offences include battery, fraud, perverting the course of justice and forgery.
Chris Huhne, the Lib Dem home affairs spokesman, said the figures showed that some officers who committed violent offences while serving or were proved dishonest were being allowed to keep their jobs.
He said police chiefs needed to "get tough on bad apples" in their teams.
"It is staggering that so many of the people entrusted to protect us from crime have criminal convictions themselves. It is even more worrying that so many police officers convicted of serious crimes involving dishonesty or violence have been allowed to keep their jobs. The public entrust the police with the use of legal force precisely because they are self-disciplined and restrained, which is why anyone convicted of a violent offence should be dismissed. I cannot see how a police officer convicted of dishonesty can perform their duty effectively.
"The trust that is absolutely vital in policing is seriously undermined when police officers are being convicted of crimes of dishonesty. Allowing police officers convicted of offences of violence or dishonesty to continue serving merely brings the vast majority of law-abiding and diligent officers into disrepute."
Although there were vetting procedures for dealing with new applicants, there was no Home Office guidance for dealing with officers committing offences while serving, Huhne said.
"There is a disturbing lack of consistency in how police forces deal with officers who are convicted of crimes. The Home Office recognises this decisive problem for applicants but not for serving officers."
According to the data, obtained from 41 of 52 forces, a further 210 officers have resigned or been dismissed from their jobs since 2004 because of their convictions. Only 37 have been dismissed for dishonesty.
The Association of Chief Police Officers (Acpo) said officers convicted of crimes would not automatically lose their jobs.
Peter Fahy, the Chief Constable of Greater Manchester and head of workforce development for Acpo, said: "The police service expects good conduct and probity from its officers and staff at all times. Where wrongdoing is alleged, police officers are investigated and action taken as appropriate to each case.
"It should be remembered that there are just over 140,000 police officers in the country. It is very rare that a person with a criminal conviction will be recruited into the police service.
"Where an officer has committed misconduct, which can include a criminal offence, a range of disciplinary actions can be taken. Each case is judged on its merit. The force concerned will then take action depending on a range of factors including the severity of the offence and its impact on an officer's ability to carry out their duties."
According to the figures, the forces with the highest number of police with convictions are the Metropolitan police with 274, West Midlands with 121 and Strathclyde, 107. Merseyside has 82, while Manchester and Kent have 44. Grampian has 34 and South Wales 31.
The forces with the highest percentage of officers with criminal convictions are Merseyside and West Midlands, followed by the Met and South Wales police.

Criminal Records Checks and a firm's recruitment policy

We are often asked as to what firms should say on the recruitment policy as it relates to criminal records checks. Below is our suggested wording:
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When reviewing the results of a criminal records check an organisation should consider:

• Whether the offence would cast doubt on the individual’s or organisation’s reputation.
• Whether the offence would affect an individual’s ability to do the job.
• Whether the conviction is relevant to the particular post.
• The length of time since the offence occurred.
• The nature and background of the offence (e.g. violent crime or a history of violence which may impact on an organisation’s duty of care to its staff).
• The seriousness of the offence.

The Information Commissioner is showing his teeth... finally!

Big news today about a company which was holding, processing and selling personal data which was obtained with questionable means and without applicant consent. Powerchex issued the following press release:
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“Show respect for personal data” warns pre-employment screening company Powerchex

The Information Commissioner’s Office is showing its teeth in a case that may spur far reaching regulation of companies that maintain and sell personal data.

As part of an investigation of the Guardian, The Information Commissioner’s Office closed down an investigating firm that was maintaining and selling data from an illegal database. Buyers of the information, which include some of the biggest construction firms in the UK, will also be prosecuted.

Yesterday David Smith, the deputy information commissioner, said: "This is a serious breach of the Data Protection Act. "Not only was personal information held on individuals without their knowledge or consent, but the very existence of the database was repeatedly denied [by the industry]. "The covert system enabled Mr Kerr to unlawfully trade personal information for many years, helping the construction industry to vet prospective employees. Kerr held information on thousands of construction workers and profited by checking names against his database."

“Companies have often shown a cavalier attitude on how they store, transmit and protect personal data” states Alexandra Kelly, Managing Director of pre-employment screening company Powerchex.

“Light sentences from the Information Commissioner, as well as a perceived impression that companies that break the code will not be prosecuted have resulted in a lax treatment of personal data including employee, customer and other such sensitive data.”

The Financial Services Authority, which regulates the UK financial services sector, recently issued a consultation paper to help firms ensure that they treat customer and employee data in a secure fashion.

Examples of good practice in terms of treating personal datas laid out in the report include:

· All customer/employee data to be disposed of securely using shredders or confidential waste bins
· Treating all data as confidential waste to eliminate confusion about which type of bin to use.
· Providing guidance for travelling or home-based staff on the secure disposal of customer data
· Conducting due diligence of data security standards at third-party suppliers before contracts are agreed
· Regular reviews of third party suppliers’ data security systems and controls
· Ensuring tht third-party suppliers’ vetting standards are adequate
· The use of secure internet links to transfer data to third parties

“Companies that handle personal data should make sure that third parties who process this data are also compliant with the Data Protection Act” says Kelly, “and of course, everyone must be registered with the Information Commissioner” she concludes.
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The Guardian that broke the story after investigating reported:

More than 40 major British companies face legal action for allegedly buying secret personal data about thousands of workers they wanted to vet before employing them.
The information commissioner, Richard Thomas, will today publish a list of the companies he believes may have broken data protection laws, after an investigation by his office that was sparked by fears that many workers were being unfairly "blacklisted".

The commissioner alleges that the firms, including Balfour Beatty, Sir Robert McAlpine, Laing O'Rourke and Costain, have, for many years, covertly bought details of workers' trade union activities and their conduct at work.

Thomas believes that workers have been unfairly denied employment because they have had no chance of challenging any inaccurate information, some of which has been stored for decades.
Asked by the Guardian to respond to the claims, many companies refused to comment. Others denied using the data to "blacklist" troublesome workers covertly, or said they had stopped buying the data.

The commissioner has already taken action rapidly to close down a private investigator who is accused of clandestinely compiling an "extensive intelligence database" of 3,000 workers with details that stretch back to the 1980s.

The commissioner is to prosecute the private detective, Ian Kerr, who is accused of selling the information to companies in the construction industry when they wanted to vet potential staff. Thomas said he had seized documents which, he says, show that files on individuals included comments such as "communist party", "ex-shop steward, definite problems, no go", "do not touch", "orchestrated strike action" and "lazy and a trouble-stirrer".

David Smith, the deputy information commissioner, said: "This is a serious breach of the Data Protection Act. Not only was personal information held on individuals without their knowledge or consent, but the very existence of the database was repeatedly denied.

The covert system enabled Kerr to unlawfully trade personal information on workers for many years, helping the construction industry to vet prospective employees.

"Kerr held information on thousands of construction workers and profited by checking names against his database.
"Trading people's personal details in this way is unlawful and we are determined to stamp out this type of activity."

Construction workers have long complained that they have been stopped from getting work because companies were covertly turning away people they believed to be active trade unionists. Hard evidence has, until now, been hard to come by, and the construction industry has always denied it.

Steve Acheson, who believes he has been blacklisted, said he was "absolutely thrilled" by the findings of the commissioner's investigation.

The electrician, 55, from Denton in Manchester, said: "I've been angry for so long. It affects your character and demeanour - it's the fact it's so blatantly unjust. I was disgusted that one man could make a living from denying other men the right to work".
The Labour government has been criticised for passing a law banning the practice of so-called blacklists in 1999, but then, in a U-turn, deciding not to take the final step of implementing the law on the grounds that "there was no hard evidence that blacklisting was occurring". Technically, therefore, "blacklisting" is still legal.

Last night, the Department for Business, Enterprise and Regulatory Reform said it was prepared to review its position.

"The government is committed to monitoring any evidence that blacklisting is resurfacing in the UK," said a spokesman for the department. However, the information commissioner has powers to take action if he believes data protection laws have been broken.

His officials raided the offices of Kerr, the private investigator, in Droitwich, Worcestershire last week, seizing what the commissioner calls "an intelligence database" of 3,213 individuals.
Thomas said the "comprehensive card index system" held "sensitive" personal data, including details of trade union activity, employment conduct and personal relationships.

He added there was also information about whether the individual "may pose a threat to industrial relations between an employer and its employees". Some information was more than 30 years old, he said.

He has also seized invoices, which he says were issued by Kerr to companies for checking names on his database. He said they showed that the companies had paid Kerr an annual subscription and then a fixed fee for each name they wanted him to run through his database.

The Guardian understands that, in what appears to be a system for centralising records in the construction industry, companies sent information to Kerr so that it could be pooled with other firms.

Kerr agreed to close his business after the commissioner ordered him to stop selling the contents of the database on the grounds he had broken data protection laws.
Yesterday, Kerr said he was not operating a "blacklisting" service as he never made any judgments about the individuals and instead left it up to companies to decide whether to employ them.

Thomas launched his investigation last summer after an article in the Guardian about alleged blacklisting in the construction industry. The commissioner intends to order the construction companies to stop buying workers' personal data.

The importance of conducting Criminal Checks

As the story below demonstrates, financial firms run the risk putting their organisations in financial peril by not conducting basic criminal searches. As a minimum media searches should always be part of a proper screening process, since they will unveil any high profile case that reached the local or national press.
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TWO Zimbabwean insurance workers based in Sheffield who plundered customers' personal details then used them to scam hundreds of thousands of pounds from policy holders have been jailed for five and-a-half years.
Failed asylum seekers Edward Dzingai, 27, and Gregory Maumbe, 26, both worked at Norwich Union's Pomona House in Pear Street, Ecclesall Road.
They used their positions to gain access to the personal insurance policy details of 28 "gone away" customers - clients for whom the company had no current address - often targeting elderly or vulnerable people.
Ian West, prosecuting, told Sheffield Crown Court: "Dzingai and Maumbe's positions in the organisation gave them access to the computer databases - the names and details of the policy holders and copies of the signatures of these 'gone away' cases.
"They would use this information to manufacture fraudulent surrender letters and the funds would then be transferred to the bank accounts detailed on these letters."
They targeted 28 policies yielding more than £655,395 between September 2005 and October 2007.
They also tried to steal a further £144,000 but failed.
When police raided their homes and examined their computers they found details of another 53 policies worth £1.5 million.
Dzingai, of Windy House Lane, Manor, and Maumbe, of Fretson Road, Manor, pleaded guilty to one count of conspiring to obtain money transfers by deception.
They claimed they were forced into the scam by men who threatened to hurt their families in Sheffield and Zimbabwe.
Maumbe admitted receiving up to £40,000 for his part in the operation, while Dzingai said he received between £1,500 and £2,000 for five different transactions.
Sentencing them to five years in prison for the deception case, plus an extra six months for possessing fake passports, His Honour Judge Patrick Robertshaw said:"You were actually possessed of freewill and made the choice to play a crucial, critical role in this fraud over a significant period of time.
"The breach of trust involved was serious, flagrant, calculated, deliberate and protracted."
The prosecution claim Allan Manhire, 26, from Liverpool, arranged the bank accounts through which the money was laundered. He faces trial at a later date.
Several other defendants, some of them UK nationals, have admitted opening bank accounts into which the money was laundered.

Facebook posting can get you fired

As reported in the Times today an employee was fired as a result of a posting on Facebook. This raises interesting ethical and legal questions both in terms of checking social networking sites for employment purposes as well as in controlling what employees can say with impunity about their employer in what is essentially a form of media.

At Powerchex we do not formally check social networking sites for pre-employment screening purposes, however, we do recommend that recruiters take a look at what the applicant may have posted on Facebook and other similar sites.
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A 16-year-old girl from Essex was fired after she described her office job as "boring" on her Facebook page.
Kimberley Swann, 16, of Clacton, had been working at Ivell Marketing & Logistics, in Clacton, for three weeks before being fired on Monday.
"I think they've stooped quite low," she said.
The firm's Steve Ivell said of the decision: "Her display of disrespect and dissatisfaction undermined the relationship and made it untenable."
Miss Swann said: "You shouldn't really be hassled outside work. It was only a throw-away comment.
She says Clacton is boring but we're not going to throw her out of the house for it
Janette Swann
"I came home from work one day, sat on the computer and said something about my job being boring."
Details were passed to her employers after she allowed colleagues access to her page, Miss Swann said, adding that she was not given the chance to explain.
Her mother, Janette, 41, said: "I think she's been treated totally unfairly. She didn't mention the company's name.
"This is a 16-year-old child we're talking about. She says Clacton is boring but we're not going to throw her out of the house for it."
Mr Ivell said: "Ivell Marketing is a small, close-knit family company and it is very important that all the staff work together in harmony.
"Had Miss Swann put up a poster on the staff notice board making the same comments and invited other staff to read it there would have been the same result."
TUC general secretary Brendan Barber said employers needed "thicker skins" in relation to social networking websites.
He said: "Most employers wouldn't dream of following their staff down the pub to see if they were sounding off about work to their friends."

Departing workers often steal data from ex-employers: study

A study by Ponemon Institute reveals that more than half of departing employees steal data from their ex-employers. Other than the obvious implications raised concerning the data security policy or lack there of, at the site of the ex-employer, one needs to consider the fact that these employees must be quite confident that their ex-employer will not disclose this sort of information to the new employer. Given the percentage of dishonestly involved, new employers are well advised to probe into these sort of issues during the referencing process.
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Many ex-employees in the U.S. are walking off with companies' sensitive and confidential data when they leave their jobs, a new study has found.
And of those, most have either used or plan to use the data for their next job with another company.
"Not only is this putting customer and other confidential information at risk for a data breach, but it could affect companies' competitiveness and future revenues," said the study released Monday by the Ponemon Institute, a Michigan-based independent think-tank that researches information and privacy management practices in business and government.
Among 945 survey participants who had been laid off, fired, or changed jobs in the past year, 59 per cent admitted to taking company data with them, said the study, which as sponsored by Symantec Corp., the internet security company that makes Norton Antivirus.
Of those:
65 per cent took email lists.
45 per cent took non-financial business information.
39 per cent took customer information, including contact lists.
35 per cent took employee records.
16 per cent took financial information.
About 61 per cent took the data as paper documents or hard files, 53 per cent burned the information onto a CD or DVD, and 42 per cent downloaded it onto a USB memory stick.
When asked if their former company permitted them to keep the information, 79 per cent admitted that the company did not.
The study's results suggested that the stolen information was valuable to competitors — 67 per cent of the ex-employees said they used confidential, sensitive or proprietary information from their ex-employer to help secure a new job, and 68 per cent said they planned to make use of the data.
Companies share blame
The study's author suggested that companies aren't doing enough to stop the thefts:
Only 15 per cent of companies in the survey conducted a review or audit of the paper and electronic documents taken by employees.
92 per cent of employees took CDs, DVDs, USB memory sticks and PDAs with them when they left, and 89 per cent reported that the company did not do an electronic scan of the devices.
24 per cent of employees were able to access their former employer's computer system or network after their departure and 44 per cent continued to receive email on the company's account.
"Even if layoffs are not imminent, companies need to be more aware of who has access to sensitive business information," said Larry Ponemon, chairman and founder of the Ponemon Institute, in a statement. "Our research suggests that a great deal of data loss is preventable through the use of clear policies, better communication with employees, and adequate controls on data access."
Dissatisfied employees more likely to steal
The study found that only 13 per cent of respondents who had a favourable view of their former employer kept some of the company's information, while more than 61 per cent with an unfavourable view took the data.
When employees who took the data were asked why it was acceptable to do so:
54 per cent said other employees kept the information when they left the company.
50 per cent said no one checked their belongings when they left.
11 per cent said their former supervisor said it was permissible to keep the information.

One if four have lied at interview

Recruiter magazine reveals in their weekly update a startling statistic:
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Around a quarter of British workers have lied at interview, according to a Monster poll.
According to the poll, 28% of workers admitted lying in a job interview, with a further 14% stretching the truth in the hope of appearing better qualified for a job. However, most people have remained honest, with 58% of those surveyed claiming that they have never lied or been economical with the truth to secure a job.
Julian Acquari, managing director at Monster UK and Ireland, says: “Today’s tough job market understandably heightens the temptation for jobseekers to lie in interviews. Competition is fierce and we are aware of the increased need to stand out.
“However, there is a fine line between embellishing facts about yourself and telling lies. It is never advisable to bend the truth under any circumstances as it is likely to catch up with you. At the end of the day honesty is always the best policy.”

Increase in IT contractors' offers in Financial Services

Powerchex's own research of the number of offers make in the month of January as they compare to the month of December 2008, show a significant increase in offers primarily in investment banking. IT contractors' offers have also increased substantially. Contractor UK a leading industry website reports our findings as follows:
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Recruitment of IT contractors by British financers has beaten all stated expectations, halting a consecutive monthly decline in the number of IT freelancers that they hire.Financial staff screening firm Powerchex said IT contractor job offers in January rose by almost 30% compared with December, when they went into the red by 75%.Yet the number of IT contractors the firm screened last month was down 68% on the same period in 2008, suggesting City IT hires are “definitely not back to normal.” Reflecting on January’s upturn, Powerchex’s founder Alexandra Kelly told CUK it may be that financers think that they shed too many IT contractors in December. Then, the number of IT contractor job offers was “dismal, so much so that investment bankers, stockbrokers, insurers and hedge fund managers were all likelier recruits.Now, however, some hiring freezes have melted, projects are being looked at afresh and related staff are being seen as vital for “competitive advantage,” Ms Kelly said. Financial services companies taking this approach with IT contractors in January were mainly serving the investment banking and insurance sectors.“There do seem to be signs of some increased hiring for contractors in the financial services space,” testified Paul Elworthy, financial IT recruitment director at Hudson.“But I would loathe to refer to it as a recovery quite yet. January is usually the beginning of the new budgets so there is a little more freedom to hire so the change from December to January can be quite a positive one. “I would put it down to a seasonal trend but that said, we are seeing more positivity from a number of our clients in their hiring, particularly for IT contractors”.Hudson said 70% of candidates it placed last month were freelance, with demand strongest for Subject Matter Experts in specific technologies, product lines or disciplines.

Regulators within EU countries

This is a link to all the financial regulators in the European Union. These records are kept at the country level and regulation can still vary even within the EU. Keeping in touch with local regulators and incorporating their directives has been at the cornerstone of our screening process.

http://www.jmlsg.org.uk/bba/jsp/polopoly.jsp?d=773&a=9912

On the JMLSG website, there are other resources outlining the ML regulations and how they can affect the requirements of firms in terms of screening current and future employees.

A flood of fake CVs for IT jobs

According to The Times of India fake CVs and qualifications are flooding the Indian IT market. This trend represents a real danger to companies outsourcing IT development to India on more than one front. There is the obvious risk that the person may have a false or stolen identity and could be working on behalf of organised crime. A further risk is that the employee is not qualified for the role they will be doing and can cause serious damage to the IT infrastracture of the client. Companies are advised to not let their guards down when outsourcing any part of their work whether it is in the UK or internationally. Auditing the screening arrangements of a supplier is basic risk mitigation.


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BANGALORE: Not content with faking passports, visas and CVs, expert forgers are also meeting the needs of dubious IT aspirants. moolah by selling fake access and identity cards, appointment letters, pay revision letters, bank statements
Agents across the country are raking in the , and even relieving letters of companies and banks. A fortnight ago, Wipro Technologies interviewed a candidate who walked into its MG Road office with a whole bunch of fake documents, including an interview call letter from Wipro. Its HR staff smelt a rat and on interrogation, they uncovered the true extent of the candidate’s duplicity. Wipro let the Andhra Pradesh-based fraudster go after obtaining a written apology, in which he wrote, “I went to a shopping mall in Bangalore. There I met a job consultant. I paid him Rs 3,000 and in turn he got me fake certificates, ID card, offer letter, letter of salary hike, pay slips and bank statements. With these, I applied for a techie’s job in Wipro." An e-mail interview call letter received by another candidate had the following details: "Dear candidate, your resume is found on TimesJobs.com and you have been selected for the job you sought for. Your interview will be held on February 10 at Wipro’s Noida office. You have to come with photo copies of all required documents. First you have to deposit Rs 5,300 in any branch of a bank (name withheld) in the account number XXX in favour of Sr HRD. This money along with your travel allowance and DA will be refunded by the company on the day of the interview." Wipro has taken a serious view of the matter and even shared some cases with its peers. “It’s a serious menace growing in alarming proportions. We have given special training to our talent acquisition team to be extremely cautious of such questionable elements trying to creep into the system. We are talking to ten of our peers so that together we can find ways to fight the menace. The idea is to create a pool of fake CVs and share them between us so that we are insulated. This will also create awareness in the market," said Pradeep Bahirwani, vice-president, talent acquisition
, Wipro Technologies. According to Bahirwani, candidates from secondary cities easily fall prey to these "agents". According to a recent KPMG report, one of every four CVs in the Indian tech space is fake. Also, six of every ten fake CVs have a direct or indirect link to Hyderabad.

The Times of India

Companies should be very vigilant in screening their employees as fraud nears record levels

As the global economic downturn takes hold it is very likely that more fraud will come to light. Tightening economic conditions are likely to both reveal existing frauds, or act as an determinant for new frauds. Companies are urged to screen new employees carefully and not neglect to periodically re-screen employees in high risk functions.

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The BBC On Line reports:

While fraud by professional gangs remained pretty constant, fraud by individuals increased dramatically.
Individual cases of fraud accounted for around £300m, a three-fold increase on 2007.
Professional gangs accounted for £806m.
The financial services sector suffered from £388m of alleged fraud - a 10-fold increase on 2007. However, £220m of this total was accounted for by an alleged £220m attempt to hack into Sumitomo Matsui Banking Corporation's systems.
Companies were badly hit, with a five-fold increase in fraud, up from £24m worth of cases in 2007 to £125m last year.
"Internal frauds are becoming more prevalent and should set alarm bells ringing within organisations. In difficult times, they could even become the tipping point between the survival and demise of an organisation," said Mr Patel.

India tightens pre-employment screening practices after Mumbai attacks

Many stories of lax pre-employment screening have be reported out of India. The attacks in Mumbai are finally making companies and authorities, look close at their vetting processes as reported in the Hindu Business Line below:
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Shaken by the magnitude of the terror that struck the two hotels in Mumbai, companies across industries would step up employee verification procedures, especially for contract employees and those employed in ‘sensitive positions’ such as security staff, hospitality and airlines frontline staff and telecom employees.
Mr Rajesh A R, Vice-President of staffing solutions company TeamLease Services says that for ‘sensitive positions,’ there is likely to be additional verifications like checking permanent addresses, apart from routine education and previous employment checking.
“Before the Mumbai incident, companies did not feel the need to spend the money on additional checks such as these, especially for employees whose salaries were about Rs 4,000-Rs 5,000/ month.” Companies will therefore prefer to employ people who come with third party verification. “Candidates who have got themselves verified would stand a better chance of being employed,” he feels.
Very soon, he believes, this would also become mandatory for temp (contract) employees in the hospitality, airline, BFSI, retail and telecom sectors.
Col Vijay Reddy, Director of Footprints, a background screening firm, says that he has been recommending permanent residence verification of employees to all his clients, especially for contract staff in security agencies and the hospitality sectors.
“Now, they realise that people from the neighbouring region can easily pass off for Indians unless verified for permanent residency and that also by an independent agency.”Police verification
The hospitality sector, meanwhile, says the industry has been going through the usual procedure of identity checks. According to Ms Harinder Singh, General Manager, The Lalit Ashok, Bangalore, the hotel does go through the proper process of verifying for some positions. “We make sure there is police verification and identity checks too,” she says.
Mr Subrata Majumder, General Manager, The Park, Bangalore, says, “We make sure we demand police verification for various positions. We check documents, but how genuine they are is definitely a concern.”

In the meantime Aislinn Simpson of the Telegraph reports...

Indian call centre manager arrested over British insurance scam
The manager of an Indian call centre handling the insurance details of hundreds of British customers has been arrested over fears of a major scam, according to police.

According to the police, Edward Burns, an Indian citizen, was working in the insurance claims division of Delhi-based EXL, which handled British insurance firm Aviva, the parent company of Norwich Union.
The 30-year-old is feared to have been using identities of British insurance customers to make false claims for up to two years.
He has admitted siphoning off nearly £57,000 to bank accounts in Britain but this is only in relation to 12 customers and police believe the scam could be much larger.
They also fear that other British firms who hold accounts with EXL may have been affected.
The local head of police, Ashok Kumar Chaturvedi, said police also plan to interrogate three people thought to be accomplices of Mr Burns in Britain.
He said: "As this has been going on for two years, we suspect a much bigger financial fraud to British customers."
It is not yet clear how Mr Burns is alleged to have perpetrated the fraud, but it is understood that police believe his accomplices in Britain would collect the insurance payout and take a cut out to him in India.
EXL Service has played down the scale of the alleged scam, saying it was a "small-scale isolated incident".
A spokesman for Aviva said: "We can confirm that, through our own control mechanisms, we have discovered an isolated case of fraud by an employee of one of our supplier partners. We are currently working with the local authorities to take the appropriate action. At no time was any policy holders' money at risk."

A tale of two references...

This week brought two interesting stories about referencing. Two companies, one in the US, the other in Australia, reacted quite differently to adverse referencing. What would you do?

First, Microsemi as reported in the FT by Richard Waters

In spite of the new spirit of puritanism sweeping through US boardrooms, some chief executives are still being forgiven an occasional lapse into dishonesty.
That was the stance taken this week by directors of Microsemi, a small Californian technology company, after it was revealed that the company's chief executive had been less than forthright about his educational qualifications.
Rather than showing Jim Peterson the door - the fate that has often befallen other chief executives who have lied about their credentials - Microsemi's directors have decided that he should stay on, although with financial penalties that could cost him $1m.
News of the board's leniency drew a mixed reaction. "It's one data point about a person, about their willingness to falsify a record in a tight spot," said Wayne Norman, professor of ethics and philosophy at Duke University.
He added, though, that the company's directors were right to take a broader view of Mr Peterson's conduct over a number of years, and to consider the impact on shareholders of making a leadership change.
Justifying the decision not to jettison the chief executive after his nine years at the helm, Dennis Leibel, chairman, said: "The board's mission is to protect shareholder interests by balancing the results of the independent inquiry against the great value and strategic vision that Jim Peterson has created at Microsemi." He credited the chief executive with building a "highly successful and profitable enterprise".
Complicating the case was the fact that the disclosure about Mr Peterson's false credentials was made by Barry Minkow, a short-seller who has a track record of profiting by uncovering such irregularities.
The work of short-sellers in ferreting out discrepancies like this probably helped in the longer term to keep chief executives honest, said Mr Norman.
In a regulatory filing, Microsemi said that an investigation by law firm Munger Tolles & Olson had concluded that Mr Peterson did not have a bachelor's degree and MBA from Brigham Young University, as he had claimed.
Instead, he had been awarded an associate's degree by a college that later became part of Brigham Young, and had also earned "substantial credits" towards a bachelor's degree at the university.
Microsemi said it would impose financial penalties on Mr Peterson, while also introducing a heightened level of scrutiny that would involve deeper background checks into its senior executives.
While adding that the company "takes this matter very seriously", Mr Leibel stopped short of criticising the chief executive's dishonesty directly and said the company's directors "are not commenting on his beliefs, understandings or state of mind".

Meanwhile, in Australia...

A COMPANY has won more than $160,000 compensation from a recruitment firm that recommended a manager who was a former bankrupt and fraud.
The firm failed to conduct adequate background checks on the sales manager, who subsequently defrauded the company of $120,000.
Sydney water treatment equipment supplier Wedeco hired Driver Recruitment, trading as Authorised Solutions, to find sales manager for Southeast Asia, reports The Australian.
According to a NSW Court of Appeal judgment, the successful candidate, Stephen Riddell, worked for Wedeco for 18 months before it was discovered that his qualifications were false.
Wedeco found Riddell was an undischarged bankrupt and that "in his business activities he had engaged in fraudulent practices''.
Wedeco sought damages for breach of contract and for negligence and recovery of loss suffered.
The court heard that when the recruiter put forward Mr Riddell for the job, his CV said he had been employed as an area manager with another company, Tyco, for the past two years
In reality, Mr Riddell had stopped working for Tyco 5 months earlier.
Two Tyco employees nominated by Mr Riddell as referees said that when asked for a reference, they told the recruiter he no longer worked for the company and they could not speak about his work performance.
His former supervisor said that had the recruiter contacted him, he would have said Mr Riddell had had two warnings and that he was in the process of recommending his sacking when Riddell resigned.
The court found the recruitment firm breached its contract with Wedeco and its duty of care because the company failed to speak to the two referees.
It was ordered to pay $164,224 to Wedeco.

The Right Fit

Companies which rely on finding out just how good their new recruits are once they are in the job could be putting their finances and reputation at risk. This is the key message in a new guide produced by recruitment communications and candidate assessment experts, TMP Worldwide.In its latest White Paper ‘The Right Fit: Reducing the Risk of Recruitment’, TMP provides organisations with a guide to measuring the value of potential employees before they are in position.TMP Worldwide, Chief Executive, Andrew Wilkinson who launched the White paper at the HR Business Directors Summit held at the ICC in Birmingham on the 21st and 22nd January (http://www.hrevent.com/), says finding the ‘right fit’ means being clear about which behaviours lead to effective performance for your organisation. These need to be measured against the specific requirements of the job i.e. job competencies and should be linked to how organisations attract candidates via their employer brand.“Now, more than ever, expensive mistakes in recruiting the wrong people cannot afford to be made. Companies need to make sure they are attracting and retaining people who will add maximum value rather than just fill vacancies,” said Wilkinson.He suggests that the following four step approach will eradicate risky recruitment based on gut instinct.1. Understand the behaviours that lead to better performance which should be documented in an organisational competency model2. Attract the right people through defining and communicating an honest and compelling employer brand3. Create a ‘fit for purpose’ recruitment process4. Engage with candidates in their journey to becoming employees through a seamless on boarding programme.The White Paper takes business leader and recruiters through defining, creating and communicating an organisational competency model.According to TMP’s Wilkinson, Employer Brand is also key in establishing the differentiator that makes a company stand out from it competitors. “Having an effectively managed employer brand can improve engagement levels by up to 30% and increase the size of the labour pool by around 50%,” he said.When it comes to finding the ‘right fit’ Wilkinson recommends that companies start by identifying the behaviours and characteristics of high performing individuals to understand ‘what great looks like’. Once this is in place recruiters can use a number of tools from competency-based interviews, competency-sifting questionnaires and tailored assessment centre exercises to detect a candidate’s suitability for a role, says Wilkinson.Through the AMEC Nuclear case study within the White Paper, recruiters can see how TMP helped the company to create a competency framework which its HR and Capability Director says will differentiate AMEC Nuclear and drive the business forward.“Organisations will see immediate value and reduced recruitment risk from our ‘right fit’ approach which will identify the right people with the right behaviours for the company’s culture and vision,” concluded Wilkinson.‘The Right Fit: Reducing the Risk of Recruitment’ is available via email. Please contact Amy Johnson at amy.johnson@tmpw.co.uk
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Finding the right fit with a new recruit is truly the "Holy Grail" in resourcing. Time and again we interview line managers who give every indication that an applicant would not be the right fit for the organisation they are joining. Subsequent research proves that indeed the longevity of the employee is short and the performance leaves a lot to be desired. The skills and abilities may be there, but further assessment is imperative when making the recruitment decision. At Powerchex we talk to referees and this helps us communicate to the resourcing team our observations on the fit of the applicant. It is quite often that an offer is retracted based on this criteria. Now that the labour market is a bit looser, I would recommend to companies to take the time and effort to establish the right fit when making their decision.

Checking Suppliers is Good Corporate Governance

The Financial Services Authority (FSA) has today fined Aon Limited (Aon Ltd) £5.25 million for failing to take reasonable care to establish and maintain effective systems and controls to counter the risks of bribery and corruption associated with making payments to overseas firms and individuals.
According to the report published today by the FSA, between 14 January 2005 and 30 September 2007, “Aon Ltd failed to properly assess the risks involved in its dealings with overseas firms and individuals who helped it win business and failed to implement effective controls to mitigate those risks. As a result of Aon Ltd’s weak control environment, the firm made various suspicious payments, amounting to approximately US$7 million, to a number of overseas firms and individuals. “
Margaret Cole, director of enforcement, said: “This is the largest financial crime related fine imposed by the FSA to date. It sends a clear message to the UK financial services industry that it is completely unacceptable for firms to conduct business overseas without having in place appropriate anti-bribery and corruption systems and controls.”
In April 2008 the FSA published its paper on Data Security where it states that firms should conduct due diligence on third party suppliers including ensuring third party suppliers’ vetting standards are adequate.
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It is not unusual for companies with robust employee vetting programmes to neglect to apply the same standards to the third parties they deal with. This case and the size of the fine levied, clearly demonstrate the perils that this practice can entail.

Jail time for applicants who lie on their CVs

NHS’s pre-employment screening practices come under scrutiny after director jailed for CV exaggerations. A senior director at the NHS has been jailed for exaggerating his qualifications during his job application.
In January 2007 Lee Whitehead was appointed director of planning and modernisation at Stoke-on-Trent Primary Care Trust (PCT) after falsely claiming that in addition to being a member of the British Psychological Society (BPS) he had a first class bachelors degree, a Master’s degree and a doctorate, when in fact he only held a second class BSc in Psychology and was not a member of the BPS.
6 months after bring appointed Mr Whitehead resigned his £78,000 a year job after suspicions were raised by a coworker and Mr Whitehead was unable to provide proof of his qualifications. Even though the post-holder was not required to hold either a Master's or a PhD, or be a member of the BPS, the court handed out a 12 week prison sentence after Mr Whitehead pleaded guilty to obtaining a pecuniary advantage by deception and making a false instrument.
The lies were not discovered by pre-employment screening checks but by a suspicious coworker and Mr Whitehead had made the same claims on applications going back to June 2003. These included the Vale of Aylesbury PCT, where he had worked from April 2005 until he started employment with Stoke PCT.

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It is very surprising that the NHS has chosen to appoint a senior official without checking their qualifications. Mr Whitehead occupied a position of public trust in a Primary Care Trust and there is no excuse that his background wasn’t thoroughly investigated at the recruitment stage.
This is not the first time that the NHS has failed to spot fraudulent applicants for senior positions. In 2003, Neil Taylor produced a bogus degree certificate to land the position as head of the Shrewsbury and Telford Hospitals NHS Trust. The risks that the NHS takes when they skimp on the background investigation or when they start an applicant prior to the checks being completed can have very serious repercussions and it is a particularly risky approach when the qualifications are of a clinical nature. This can endanger patients' lives.