Pre-employment credit checks have become customary for many overseas companies, and the results of the checks are likely to affect the company’s choice of whether to hire the employee, as well as the employee’s promotion.
Almost all job applicants and hires in the U.S. are required to undergo background checks, and for some specific positions, there are even laws that require the checks to be conducted before an employee can be hired.
In cross-border employee employment, employee credit checks are even more important, which not only provides a way for companies to protect themselves, but also has a positive impact on maintaining employee stability and the long-term smooth running of business.
What is an employee credit check?
The acronym for employee credit checks is KYC, or Know Your Customer. In the past, the checks were often used in the financial sector to enable companies to understand your customers or employment, conduct business legally and compliantly, and ensure their own security. Today, you may already know that credit checks are a global trend and have begun to gain popularity outside of banking, such as Google requiring global advertisers to pass a check in order to place ads, and more and more employers in the global labor market are using this method to require candidates to complete checks. Before hiring an employee, especially when hiring an overseas employee, companies also need to know the true identity of the employee as well as his past information, just as they do with a financial customer. Employee credit checks typically include
Verification of true identity information
Verification of basic information to ensure that your employees are not fraudulently using their identities
Various types of negative information screening
including but not limited to sanctions lists, political figures, terrorism lists, criminal records and lists of people wanted by law enforcement agencies in various countries
Of course, there is some more private information that should not be included in a credit check – the legal privacy of employees should also be protected, and special attention should be paid to this section when choosing a service provider.
The role of credit checks
Identity verification
In remote employment it is likely that the employer will not have access to the hired employee in reality. Identity verification allows the employer to know the true identity of the employee, verify that the employee is who he claims to be, and avoid damage to the employer’s interests due to the lack of true information. For example, on the PayInOne platform, employees must pass identity verification before they can sign up with employers, ensuring that the signing is authentic and valid.
Anti-Fraud
Remote employment and online work greatly increase the possibility of fraud. Especially in business scenarios such as overseas promotion, KOL business and social media, the lack of secured employment may pose a significant risk of fraud to employers. In the first half of 2020, it was reported that nearly $117 million was lost due to fraud on social media across the United States.
Reducing the risk
Bind employees and guarantee that employers can hold employees personally accountable for their actions. If the identity of an employee is not verified, the employer is likely to incur additional financial, legal and reputational damages if the employee commits any illegal acts in the course of employment because the employer does not know the person’s true identity and therefore cannot be held accountable.
Avoiding Illegal Employment
Prevent unlawful employment due to lack of knowledge. For example, hiring minors without verifying their identity may result in employers violating national anti-child labor laws.
Avoiding Penalties
Employment with criminals, sanctioned individuals, politicians, terrorists, etc., without pre-employment screening may result in anti-money laundering scrutiny by the financial institutions you use, and even investigations and penalties by regulatory and law enforcement authorities in various countries, greatly affecting your company’s interests and damaging your reputation and even the normal flow of funds and company operations.
How to conduct a credit check?
Pre-employment identity checks are critical for employers and involve identifying your employees and understanding their personal background, which allows you to assess their risk profile and thus further avoid unnecessary risks.
PayInOne’s one-stop automated onboarding vetting service accurately verifies the true identity of employees, helps employers extract key personal information and provides risk alerts, and there are no privacy concerns – PayInOne is compliant with the EU GDPR privacy policy and all information is strictly protected.
PayInOne provides a service that requires no additional effort from companies, employees can submit information on their own and the entire investigation process will be completed automatically by the system. The automated self-verification platform ensures efficiency, maximizes the avoidance of potential friction and subsequent risks during the onboarding process, and provides a seamless onboarding and employment experience.
Employee credit checks can provide companies with the ability to protect themselves and ensure their legal compliance, and are an essential part of the process when companies hire overseas.
