All you need to know about background checks

Ensuring the reliability and integrity of the individuals we engage with, whether to hire, offer a loan, or rent out property to, among other things, is significant. Background checks are particularly valuable in this context. Engaging individuals in any capacity without conducting such checks can pose a risk to the success, reputation, and productivity of every organization. This primer explains what background checks are and offers all that you need to know to implement them in your recruitment process.

What is a background check?

A background check is a comprehensive overview of an individual’s commercial, criminal, and financial records. It verifies an individual’s identity, qualifications, and history to verify that they meet the requisite standards and criteria for a particular role. It shows that an individual’s credentials are authentic. An expedited process, or a fast background check, is particularly valuable – it can reduce the time to hire, help businesses secure top talent rapidly and efficiently, and even ensure a cost-effective completion of the recruitment process.

The three stages of background checks

• The pre-onboarding stage

The first stage of background checks is conducted even before the offer is rolled out to the candidate. These instant verifications include ID checks, global database checks, and criminal record checks. Only after these checks are cleared is the candidate allowed to join, and the onboarding process begins.  

• Deep Background Checks 

The second is the post-onboarding background check, where the risk levels associated with the individual are assessed so that the company can effectively address those risks if and when they arise. Detailed checks like Employment check, Address check, and Education checks are conducted at this stage.

• Continuous Monitoring

As the name suggests, continuous monitoring is critical for various aspects of an employee. E.g., it helps identify whether your employee is moonlighting, has any court records or FIRs against them, or any cases lodged against them anywhere in the world.

A candidate who passes the initial BGV may later develop a motive to commit fraud, whether due to financial stress, personal issues, or changing circumstances. Your BGV strategy must account for the fact that a clean background today doesn't guarantee a risk-free employee tomorrow.

That's where continuous monitoring comes in. It helps catch those new risk signals the moment they appear.

Why are background checks so important? 

A background check is essentially your opportunity to truly know who you are inviting into your organization. For employers, this process is fundamental; it’s how you verify the credentials, achievements, job history, and education of a potential employee. When companies treat BGV as just a check-in-the-box compliance exercise, they leave the door wide open for serious problems. The impact of inadequate verification is steep, far exceeding the cost of a comprehensive check: 

• Financial Erosion : In 2024 alone, over $3 billion was lost to occupational fraud. Worse still, insider collusion enabled by compromised employees contributed to over ₹150 Crore in losses
• Legal Landmines : Ignoring data security and proper consent capture leaves you with weak compliance, exposing your business to massive legal exposure. With penalties like India's ₹250 crore fine under the DPDP Act, BGV must be a fraud firewall, not just a checklist.
• Legal Landmines : Onboarding high-risk employees can severely damage your brand and reputation.

Modern threats like AI-generated credentials, fake employment, and synthetic identities frequently go undetected.
Consider these scenarios where traditional checks were blind:

• The Fake Employer Racket : A candidate presented a clean-looking relieving letter. Traditional BGV gave it a pass. However, a deep dive revealed the company website was plagiarized, MCA records showed zero revenue for three years, and the registered address was linked to multiple scams, a classic shell entity used to front a fake employment ring.
• The Ghost University : A degree was submitted, which was from an "institute" with a polished online presence. However, a thorough check revealed that the university was missing from the UGC and AICTE-approved lists, faculty images showed signs of tampering, and a physical visit confirmed that the institute did not exist.
• Concealed Crime : The candidate's data looked so generic that many verifiers would have mistakenly passed it as clean. Only through cross-referencing could the full, intentionally omitted address be linked to an FIR involving a charge as serious as attempted murder.

These examples underscore why basic checks are obsolete. They fail to detect the sophisticated fraud that hurts your business.

Types of Background Checks in India

Most organizations may need very specific categories of checks, whereas a few may look at an end-to-end check. The following are some of the more common types of background checks in India:

• Legal history Checks : A legal history check is primarily aimed at exposing any criminal history associated with an individual, and bringing to light any former run-ins with the law, convictions, pending and ongoing court proceedings, and sentences served.
• Employment Background Checks : An employment background check helps identify the job history and professional credentials of an individual. This is particularly important where a role involves high-quality skills, professional and trade knowledge, and experience.
• Educational Background Checks : Educational background checks offer insights into the academic history of an individual, particularly their years and institution of study, subjects covered, performance, and completion of the actual degree. In the day and age where there are fake universities and falsified educational records, educational background checks are extremely important.
• Credit Background Checks : Credit checks are useful in bringing up indicators of an individual’s credit history and possible default in any past loans, outstanding liabilities that remain undischarged, and unscrupulous behaviors that may raise red flags for future borrowing.
• ID Checks and Face Match : These are essential to prevent impersonation, using methods like face match over video calls with documents such as a Voter ID or any other ID proof.
• Employer/Education Institute Genuineness Check : This verification goes beyond document validity to confirm if the companies or educational institutes listed by the candidate are shell entities or "ghost institutes".
• Address Verification : Ensures the provided residential address is accurate and helps in detecting fraud schemes that involve masking a true location.
• Social Media Checks : For senior roles, analyzing a candidate's digital footprint and public behavior across social media platforms can reveal behavioral red flags or undisclosed affiliations.
• Drug Use Screening : A key check for roles requiring physical presence, such as delivery agents in logistics or feet-on-street roles in BFSI, to mitigate operational and safety risks.
• Global Database Checks : Important for roles in multinational companies or those with international exposure, these checks screen against global databases and watchlists to identify risks beyond domestic borders.

How can you streamline background checks in your company?

Step 1: Evaluate the shortcomings of your current BGV :

A good place to start, if your company already has a background check process in place, is to understand any shortcomings and limitations in the process that need attention. If you don’t have any process in place at all, you’re starting on a blank slate, so you can skip ahead to step two.

Step 2: Choosing a Background check partner:

Identify a trusted partner to help you implement a background check. You could also develop internal capacity, but this is a decision best left to your organization to take. If you choose an external partner, look for alignment in checks offered, costs, timelines, and other relevant information that can support your decision.

Crucially, when selecting an external partner, you must evaluate their commitment to compliance. A trusted partner must have a Privacy-first architecture that ensures full adherence to regulations like the DPDP Act, featuring secure data storage and proper consent capture and tracking to mitigate your legal exposure and protect candidate rights.

Step 3: Choose the background checks relevant to you:

Look at all the checks you might need to implement. This could be a preliminary list to start with and can grow as you identify more needs over time. Pay attention to the details you most need to know before you bring on a new employee.

It's vital to recognize that one size does not fit all. Your BGV strategy must be customized based on your organization's specific needs. If you have high-volume hiring needs, such as for entry-level positions or during seasonal recruitment, your solution must be built for speed and scale. Look for partners with high daily verification capacities and automated, AI-led processes that guarantee a fast Turnaround Time (TAT) and minimal ambiguity.

In the BFSI industry, jobs come with more risk and tighter regulations because employees often handle:

• Sensitive financial data
• Customer money
• High-value transactions
• Compliance-heavy processes

So when someone works in banking, lending, insurance, payments, fintech, etc., even a small mistake or a dishonest act can cause big financial losses, fraud, or legal violations.

So, your BGV must include stringent checks on Credit History and Financial Integrity, alongside advanced screening for fraud. Compliance with industry mandates (like RBI and SEBI) is non-negotiable, requiring partners to offer customized BGV processes for sensitive roles like loan officers, cashiers, and compliance officers.

Step 4: Streamline the document collection process:

The quality and accuracy of your background check process completely depend on the inputs you give to your Background check partner. There are many ways you can do this seamlessly.

E.g.: Many HRs prefer integrating their HRMS with their Background check partners for a smooth flow of data, while others prefer bulk uploading data on the background check portal directly.

Step 5: Review the final candidate reports :

Once you get your results, check the final candidate report to identify the best way forward. You must inform the candidate of your decision to bring them on or otherwise.

How to Proceed When Dealing With Red Flags

When a BGV report comes back "Red," it’s easy to feel a sense of urgency. Here is how to handle a discrepancy with a human-centric, strategic approach:

• Distinguish Between Error and Intent : Not every red flag is malicious. Start by identifying if the flag is a simple clerical error or a sign of intentional deception, such as deepfake spotting or forgery forensics.
• Examine the "Genuineness" of the Source : If a candidate claims experience at a firm that has no MCA revenue records for years or shares an address with 20 other suspicious companies, you are likely dealing with a fake employer ring rather than a legitimate career history.
• Look for Omissions : Sometimes the "Red" comes from what wasn't said. For example, a candidate might provide a valid name but an incomplete address to hide a high-risk court record or an FIR.
• Verify Digital Authenticity : In an age of remote hiring, a red flag might trigger due to GPS emulators or VPNs used to mask a candidate's true location during digital address verification.
• Prioritize High-Risk Indicators : Flags related to behavioral red flags, criminal history, or identity impersonation should be treated as non-negotiable risks to your workplace safety.
• Take Action and Blacklist : If the fraud is confirmed, such as a degree from a "Ghost Institute" that isn't UGC or AICTE approved, don't just reject the candidate; blacklist the entity to protect your organization from future attempts.
• Audit Past Verifications : When a sophisticated scam is caught, it’s a good practice to revisit past hires who may have been verified by less rigorous, traditional BGV systems.
• Stay Compliant During Rejection : Ensure all findings are logged in a privacy-first architecture with full audit logs, keeping your rejection process compliant with the DPDP Act.

8 Essential Features to Look for in Your BGV Partner

When selecting a Background Verification (BGV) partner, you need a solution that moves beyond simple checks and acts as a true "Fraud Firewall". Based on the essential capabilities of a modern system, here are the key criteria you must look for in a BGV partner for your organization:

• Look for AI-Powered Verifications : Does the partner use Artificial Intelligence to catch sophisticated fraud like forged documents, fake employment, and deepfakes?
• Insist on Robust Risk Intelligence : The partner should be able to detect shell companies or fake educational institutions. Risk intelligence should even include flagging legal, financial, and behavioral red flags.
• Prioritize Fastest Turnaround Time (TAT) : Can the partner handle high volumes without hiring bottlenecks, even during peak hiring periods?
• Ensure Minimal Ambiguity : Look for a system designed to produce near-zero "amber cases," providing clear approvals or rejections to simplify your decision-making.
• Require Privacy-First Architecture : The system must be DPDPA-ready (i.e. compliance with India's Digital Personal Data Protection Act) with consent tracking and audit logs to ensure compliance and data security.
• Check for Seamless Integration : The solution should integrate easily with leading HRMS (Human Resource Management Systems) and ATS (Applicant Tracking Systems) to ensure candidate delight and efficient workflow.
• Verify Continuous Improvement : Does the partner have a continuous fraud feedback loop to evolve risk signals every month, keeping your defenses ahead of new threats?

Enhancing your employee onboarding experience :

Some BGV companies offer point solutions, while others offer a comprehensive suite of services designed to enhance the overall employee experience. A prime example is IDfy360, a one-stop platform that can be used to build custom journeys for various onboarding use cases. It also acts as a hub to integrate all your existing HRMS, ATS, and other HR and onboarding tools for a seamless flow of data.

Moreover, it also gives you the option of customizing the look and feel of the onboarding journey to suit your brand guidelines and custom fields. Such solutions make BGV an integral and pleasant part of the onboarding process both for HRs and employees alike, rather than a separate, isolated task.

Best Practices in Conducting Background Checks :

Here are a couple of best practices for getting your background check game in order.

• Choose your checks as per your requirements : Specific background checks can be useful for particular needs – i.e., employment background checks for hiring purposes. However, it is a good idea to look at the full spectrum of the individual’s background.
• Prefer digital-first background check companies : Technology can strengthen your background check process, at low costs, speed, and accuracy will no longer be compromised, and room for human error can be reduced significantly.
• Automate as many processes as you can : Automate processes where possible, rely on artificial intelligence and other cutting-edge tools to support background checks, and double-check aspects verified by human effort to ensure cogency and clarity.
• Do not compromise on quality over TAT : Avoid compromising on quality in the name of speed. Fast background checks can definitely work, but only if you have a watertight mechanism and the right skills in your staff to conduct them at that speed.
• Pay attention to the details : Pay attention to the small and big details. For example, in looking for a legal background check, looking only for convictions and pending litigation cases concerning large crimes and letting petty crimes escape your attention can prove costly.

How is AuthenTick by IDfy Different from Other Background Verification Companies

AuthenTick by IDfy is not just a verification tool; it's a strategic platform designed to handle the complexities of modern fraud and compliance, setting it apart from traditional BGV systems. It transforms BGV from a basic checklist into a powerful strategy for risk-free hiring.

Here is a comparison of AuthenTick by IDfy versus Traditional BGV across critical parameters :

To conclude, implementing a background verification process in your organization can go a long way in securing your operations, sustainability, and workforce integrity. As more and more avenues for fraud continue to unfold, it is important to be ahead of the curve to stymie any potential for fraud. Not doing so can prove to be rather costly – both in terms of money and reputation. A good way to go is to start with an external partner who can provide you with the right tests to suit your background check needs.