In the digital era, background checks are essential to mitigate the financial and security risks associated with employment fraud, including the rise of sophisticated tactics such as deepfake technology.

• HR teams are pivotal in creating a culture of proactive compliance, leveraging various industry best practices to increase the precision and speed of background checks while ensuring recruitment processes comply with legal standards.

• Investing in advanced, tech-forward hiring tools can protect organizations from operational and reputational damage, align new talent with company values, and build a secure workforce.

Employment fraud not only takes a financial toll due to the hiring of an ill-suited candidate but also increases the risk of occupational fraud. The events that marked the beginning of the 2020s spurred unprecedented transformation by compelling organizations to accelerate their digital journey and enable remote working and business continuity. While it ushered in a new working world of tech-powered solutions, the accelerated pace of growth also left organizations vulnerable to heightened fraud risk.

According to the Occupational Fraud 2024: A Report to the Nations issued by the Association of Certified Fraud Examiners (ACFE), out of 183 cases documented in the Asia-Pacific region, 12 (6%) of those were from the Philippines. This report analyzes 1,921 real cases of occupational fraud that were investigated between January 2022 and September 2023. However, it should be noted that the Asia-Pacific region reports the highest loss due to the cost of fraud compared to other regions in the study, with losses amounting to $1.2 million, compared to Western Europe which came in second with losses of $1 million.

According to ACFE’s Report to the Nations 2024, 16% of the organizations that fell victim to fraud had chosen to onboard candidates despite the red flags that were raised during the background screening process, illustrating their dire need to hire.

To mitigate such risks, HR departments can lay the groundwork for organizational compliance efforts and cultivate an environment committed to following rules and policies. Through the support of HR personnel, compliance approaches can evolve from being reactive to proactive, enabling businesses to effortlessly integrate new regulations.

REMOTE HIRING AND BACKGROUND CHECKS
During these challenging times, human resource functions find themselves struggling to bridge the talent gap in organizations through remote hiring. However, without the tried-and-tested safety measures such as employee background checks in place, fraudsters exploit the loopholes in the tech-enabled virtual interviews and skill-assessment processes to con organizations into hiring inadequately skilled, unscrupulous, or downright unqualified candidates for important positions through impersonation, proctored interviews, and so forth. The lack of continuous monitoring also results in issues such as multiple employment and compromised employee performance.

In the realm of talent acquisition, HR teams play a pivotal role in ensuring compliance. They must ensure that the recruitment process adheres to employment laws and remains impartial, equitable, and free of discrimination. In an era where employment fraud is escalating, the onboarding process is particularly susceptible to modern fraud tactics, including overstated resumes, the use of deepfakes (artificial intelligence or AI-produced media where someone’s likeness or voice is replaced with another’s) during interviews, the submission of counterfeit documents, and undisclosed criminal histories. As such, HR can act as a safeguard by employing risk mitigation strategies to recruit candidates with verified qualifications and employment records.

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