Safeguarding Businesses Against Fraud from White Collar Employees

By Michael Klazema on 9/26/2019

According to a 2016 study by PricewaterhouseCoopers, more than a third of all businesses have suffered adverse effects from instances of white-collar crime. These crimes deliver more than a black eye to a firm's reputation; they often have serious financial repercussions, especially if fraud remains undetected for long periods. While many companies may worry about malfeasance by mid-level staffers, those in senior positions are more likely to have the means and opportunity to commit fraud.  

With real consequences on the line, how can companies manage or mitigate the risk of allowing a white-collar criminal into the C-suite? Professional background checks play a crucial role in combating these concerns. 

Lower the Risk of Fraud on the Ground 

Fraud seldom occurs in a vacuum—most white-collar criminals have motives behind their actions and are not merely defrauding the company "because they can." Some risk factors are easy to identify and watching out for them should be an integral part of the onboarding process, especially for senior-level positions. Mounting debts, past bankruptcies, and other sources of financial pressure are the most common triggers, and a pattern of prior criminal behavior may point to a higher risk of future fraud (though it is not a guarantee). 

Professional background checks offer the solution. These tools deliver helpful insights that can allow a business to spot potential threats ahead of time. Consider an example: a company identifies an outside candidate for a high-level position but discovers after requesting a credit report that the applicant has a checkered financial past. While perhaps not automatically disqualifying, such a history should arouse concern. If the exec’s job role involves access to the firm's working capital, it could prove easy for temptation to take hold.  

A credit check can play a role in a broader vetting strategy that carefully considers relevant and recent past offenses, previous employer perspectives, and more.

Create Consistent Internal Procedures for Preventing Fraud 

Past behaviors are not guaranteed indicators of future behavior, and scenarios that make white-collar crime more likely can sometimes develop only after hiring or promotion takes place. Even well-compensated executives can run into money troubles, at which point the funds that they access every day may suddenly look tempting when fraud was never a concern for them before.  

Creating internal policies that reduce the opportunity to commit fraud is essential, as is the implementation of routine, periodic re-screenings as a matter of due diligence. Those charged with oversight should remain separate and impartial, and the business should emphasize ethical values in its corporate culture overall. 

Remain Vigilant with Every New Senior Promotion

Reducing the risk of white-collar crime is a multi-layered effort that requires a well-defined strategy for any business, but especially for larger organizations. Prevention begins with a thorough pre-employment background check paired with ongoing institutional checks that may include periodic re-screenings. empowers businesses to better protect themselves with in-depth, multi-jurisdictional background checks, credit screenings, and other tools. Discover how professional background checks can form the first line of defense against white-collar fraud.

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