Identity Proofing: Beware of Your Employees

Identity is a unique attribute of every person and it can be used for quite sinister purposes. Identity-theft-related frauds have increased at a huge pace and are used to exploit businesses of all types on a global scale.

Identity Proofing and its Different Aspects

A global survey found that 49% of organizations have been the victim of economic fraud in the last year. This huge figure shows that globally the businesses have lost millions due to these frauds.

Even more alarming is the involvement of employees in those frauds. The same study revealed that 52% of the frauds that the organizations faced were initiated or supported by their employees.

These drastic revelations are inferring two things, one is that global fraud has been increasing and becoming more drastic with the passage of time, second is that the businesses need to pay heed towards identity proofing of their employees as well.

Because the employees are also a source of risk which the businesses acquire. Many businesses are using outsourced identity proofing tools to screen their customers due to KYC and AML compliance regimes. It is high time that the future-centric businesses should invest in their employees’ identity proofing.

Financial institutions:

Financial institutions are at high risk due to the nature of their operations. A list of crimes can be committed by exploiting the services of different types of financial institutions. And these crimes can cause drastic damage to not only the victim organization but to the countries. A recent survey declared that 2 to 3% of global revenue is lost due to money laundering.

The most common victims of money laundering are banks, cryptocurrency exchanges, insurance institutions, and investment firms.

In most of the cases, the employees are involved in the crime. For example, a banker and his wife in Azerbijan were charged with the crimes of money laundering and identity theft.

The banker issued numerous credit cards on his name which were used by his wife to buy luxury goods online and outside of the country. Also, the banker’s wife had properties outside and inside the country which were not justified in accordance with the earning of the couple.

In this above-mentioned case, the banker was the culprit who misused his authority and facilitated the illegal transactions made by his wife.

Although the banker and his wife were highlighted as the culprits, it raised many questions on the credibility of that bank. Such instances not only cause financial loss for the company but it also puts the credibility and credit rating of the organization on stake.

Businesses dealing with huge confidential data:

The businesses that deal with the confidential data of many other businesses need to pay attention to the identity proofing of their employees. These organizations can lose important data due to the criminal intentions of their employees.

Just like the bank vaults are not accessible by every employee of the bank, the same should be the case in the organization dealing with consumer data. Only the people with credible identity should be given access to the confidential data.

Also, the laws like GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) have increased the urgency of the situation. The businesses need to pay attention to their employees’ identity proofing before offering jobs to them.

 Businesses operating in both B2B and B2C models:

The businesses dealing in both B2B and B2C models are exposed to high risk. All types of individuals and businesses may reach them.

Often the money launderers bribe the employees of banks to open their illegal banks or the accounts of their shell companies without exercising due diligence on them. This leads to the use of a bank in crime that involves millions at times.

When an organization runs a complete identity proofing and AML screening on its employees it prevents the risk of onboarding money launderers or the people connected to them. Identity verification service provider, Shufti Pro runs the AML screening on the guidelines of FATF and other global regimes, hence the risk is eliminated. Often the money launderers get their own people hired in the organization using fake identities and then commit crimes with the assistance of these people.

How to cater to the risk coming from employees?

  •  The most feasible solution to cater to this risk is to run in-depth identity proofing on your employees. Running a complete identity proofing on the employees will keep the money launderers and the white-collar criminals at bay.
  • keeping a watchful eye on the employees reduce the risk to some extent. In case an employee is showing unusual behavior towards some client or making suspicious transactions.
  • Keep rotating the tasks among the employees where possible. This will highlight the crime if committed by some employee. The change in tasks will reduce the risk of a crime to prevail in the organization for the longterm.
  • Perform document verification on the documents provided by the prospective employees. It will also help to identify the fake identities. Because if a person is showing fake documents that person could not be of good credibility.

To wrap up, the employees are the assets of any organization. They have the ability to bring in revenue and company value for the organization. The smart businesses are aware of the strength of loyal and hardworking employees. They have the ability to set the organization on the path of success and to nurture it for a sustainable future.

But these employees are also a source of risk for the organizations. The employees at any hierarchal level have access to some of the most confidential data and secrets of the organization.

Hence it is vital to know the true identity of a person before letting them in as an employee. The risk is high and is prevailing in organizations of all types and all sizes. Hence it is important for the businesses to infuse an effective identity verification and AML screening solution into their prevailing system.

These outsourced systems are cost and time-effective and give more precise results than manual verification.

Follow Us
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Inline Feedbacks
View all comments
Would love your thoughts, please comment.x