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"WHY IDENTITY AND BACKGROUND VERIFICATION ARE IMPORTANT"

Writer's picture: EDCI IndiaEDCI India

Identity Verification: What Is It? 

 

Its necessity is demonstrated by the fact that, despite technical progress, identity theft has surged recently. According to the most recent data, 1 in 16 individuals experienced some kind of identity theft in 2018.  Each year, these types of thefts cost billions of dollars. Theft of personal information is a lucrative industry. IN addition to names and addresses, IDs now include contain fingerprint and iris scans (as in Aadhaar) as personal information. Regretfully, there hasn't been enough advancement in technology to keep this data. As we have seen in the past, the data is kept in databases that are susceptible to data loss. The latest Russian secret intelligence agency hack, the Facebook data leak, and the Aadhaar data breach all demonstrate how susceptible all systems are and how anyone's identity can be stolen. Although these databases are secure, any system can have security breaches.

 

When you begin dealing with individuals, the necessity of identification verification becomes critical. Identity theft is become a major problem worldwide.

 

 

Identity Verification by Banks Before Loan Approval

 

External Due Diligence

 

When someone is applying for a loan, opening a bank account, or completing other financial procedures, identity verification is a crucial step in making sure they are who they say they are. Identity verification contributes to Know Your Customer (KYC) and anti-money laundering (AML) initiatives at financial institutions that evaluate and track customer risk, even though it is a crucial security precaution in the fight against new account fraud.

 

Enhancing Loan Approval Processes with KYC: KYC plays a pivotal role in streamlining loan approval processes by providing lenders with comprehensive insights into the financial backgrounds and creditworthiness of borrowers. Through thorough KYC checks, financial institutions can assess risks, verify customer identities, and make informed decisions regarding loan approvals. KYC ensures that loans are extended to legitimate borrowers, reducing the risk of default and non-compliance. External due diligence thus plays a great role to prevent sanctioning loans with fake documents.

 

 

Is Background Verification Necessary?

 

Yes, as people usually perform personal background checks for a variety of private purposes, such as screening possible renters, employing caretakers, or investigating the past of someone they want to interact with directly. Criminal histories, credit histories, and confirmation of personal references are a few examples of these checks. Personal background checks are used by landlords to evaluate the dependability and financial security of potential renters, and by people to protect their loved ones. It is crucial to remember that personal background checks need to be carried out legally and with the agreement of the subject.

 

 

The Need for Address Verification and Documents thorough background check in various segments:

 

In order to make well-informed judgments regarding employing, renting, or interacting with someone, employers, government organizations, landlords, and people all do these checks. In the cutthroat culture and labor market of today. Verifying each employee is a need as data security is becoming a top priority for companies worldwide.

Background checks are becoming a necessary component of the employment process and many other facets of our life in the cutthroat job market and society of today. They are an essential tool for people, businesses, and landlords to guarantee safety, reliability, and adherence to legal standards. Since data security is becoming more and more important, it is imperative that documents and addresses be verified thorough background check. To ensure the safety of their workers and clients, employers utilize criminal background checks to evaluate the possible danger of employing someone with a criminal history. When you begin dealing with individuals, the necessity of identification verification becomes critical. Identity theft is become a major hiring problem worldwide.

 

There may be serious repercussions from hiring the wrong individual, such as financial losses, legal responsibilities, and reputational harm to the business.

 

Significance of Criminal Background Verification:

 These investigations cover a wide range of topics, including credit history, work history, criminal histories, and educational verification. Employers may make educated judgments by using universal background checks, which provide them a thorough picture of a candidate's past. A more thorough investigation of a person's record is part of universal background checks, also known as comprehensive background checks. Universal background checks provide a more comprehensive evaluation. This may prevent an organization from employing a fraud person getting into the system.

 

Background Verification of Construction Site Workers

 

Many construction site workers might not have standardized paperwork, particularly if they are migrants. In comparison to white-collar professionals, it might be far more challenging to verify their backgrounds due to their irregular school credentials and unofficial work history. Employee turnover is generally high in the construction industry, since workers move or change employment often. The task of performing thorough background checks on each applicant might be daunting for sectors like real estate/ construction that engage people with high volumes and some of them engage in crimes and start being absconded from the state where he is employed.

 

 

 

 

 

Legal Perspective of Background verification

 

In some sectors, background verification is mandated by the government or industry regulations. For instance, hiring security personnel, drivers, healthcare or childcare workers without proper verification can be a legal violation in some cases. Background verification can also help identify and prevent the exploitation of vulnerable workers, such as underage workers. Compliance with these regulations is not only necessary to avoid legal penalties but also ensures ethical hiring practices. A through background verification may be helpful to prevent child abduction, murder by servant, rape cases and other crimes by caretakers engaged at home.

 

To cite an example, when being arrested for the murder of a 67-year-old Tahnee Heights resident on Nepean Sea Road, Malabar Hill, the 20-year-old servant admitted during questioning that he killed his owner Jyoti Shah when she tried to create an alarm after he stole jewellery from her bedroom locker.

 

 

References:

 

Indian Institute of Banking and Finance, 21st APABI International Conference 2024.

 

Harrell, E. (2021) “Victims of Identity Theft, 2018” NCJ 256085,

U.S. Department of Justice, Office of Justice Programs, Bureau of Justice Statistics

Jain, M (2009) University of Washington, The Henry M.  Jackson School of International studies “The Aadhaar Card: Cybersecurity Issues with India’s Biometric Experiment” accessed online on 31st January, 2025 from https://jsis.washington.edu/news/the-aadhaar-card-cybersecurity-issues-with-indias-biometric-experiment/

 

Hindustan Times (2025) “Murder in Malabar Hill: 20-year-old servant killed his employer after she caught him stealing” accessed online on 1st February, 2025 at 19.44 hrs from https://www.hindustantimes.com/cities/mumbai-news/murder-in-malabar-hill-20-year-old-servant-killed-his-employer-after-she-caught-him-stealing-101710442434360.html

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