Many executives today have studied, lived or worked internationally. One of the most indispensable ways to make sure you don’t end up with legal, financial or reputational damage from your next merger or acquisition is to conduct an international background check on any executives of companies you plan to go into business with.
With the world becoming more and more interconnected, companies are expanding their operations with international collaborations as they tap into diverse markets. This gives bad actors more opportunities to hide their illicit activities across borders… making your job of uncovering potential risks to your business even more difficult – and a lot more necessary.
Unfortunately, standard background checks miss many of the red flags that would be uncovered in an executive due diligence investigation that includes an extensive international background check.
Not only that, but conducting international background checks can be a real headache. Every country has its own rules and laws you have to follow. Some countries prohibit obtaining such records in the first place, making an already difficult task even more challenging.
In short… a LOT! There may be many risks involved for you or your business.
That’s because without proper vetting, you run the risk of hiring individuals who may have a history of criminal activity, financial improprieties, or other red flags that could ultimately harm your company’s reputation and bottom line.
If you only check an executive’s background locally, you may miss important indicators about that individual. Every country should be checked individually to see whether an executive has any significant issues in their history such as sanction violations, criminal convictions, or not having the qualifications they are claiming such as their education, professional licenses or employment history.
Without conducting an international background check, you could miss crucial details when it comes to an executive's financial history. Maybe they have shady dealings in their past, have violated sanctions requirements, have undisclosed debts, or financial skeletons in their closet that they obscured or failed to report to you. These hidden surprises can blow back on you later, causing serious financial headaches and even regulatory exposures.
You might also run afoul of international or country-based regulations such as anti-corruption laws by working with a particular individual or company. Or perhaps the executive was compliant in their business in one country but you missed the regulations they violated in another, putting your company at risk by acquiring their company or simply working with them.
The last thing you want is to find yourself on the other end of dealing with something similar to the Germany-based company Wirecard. After Wirecard declared insolvency, it was discovered that $2.1 billion was missing from the company's accounts despite allegations from German regulators that the money never existed in the first place. Wirecard’s CEO, as well as two senior executives, face multiple years in prison if convicted.
Imagine if you had gotten into business with one of the executives completely unaware they were a key part of this scandal because they were able to hide their former place of employment and history.
Such background failures can also take a massive toll on your reputation. If you’re not careful, your good name can go down the drain in a flash. While it’s possible to bounce back from fines or regulatory breaches, when your reputation takes a hit, your company's worth could quickly devalue. After you receive negative media coverage and your brand suffers, you can lose customers and shareholders, find yourself dealing with litigation or regulatory fines, lose some of your best employees, and lose the productivity of the ones who choose to stay. Even recovering from reputation damage is often very costly and can take a very long time. Many companies have experienced this and it is often difficult and costly to reverse.
This is especially true as supply chains grow increasingly complex and reach all corners of the globe. The further down the supply chain, the greater the reputational risks become as the visibility of the executives you get into business with is decreased or may be a lot more murky. With greater reliability on foreign markets and companies, the more places bad actor executives have to hide, or to cover up their illicit dealings.
For example, Moderna recently found itself grappling with an unfortunate scenario. The company hired a CFO in the middle of 2022, only to swiftly part ways because his background check failed to turn up the securities reporting violations he was accused of commiting at his previous place of employment: Dentsply Sirona.
The fallout was not just financial – although it did include a significant $700,000 hit for the CFO's salary and a subsequent dip in the company’s stock price – it also created a formidable public relations nightmare.
While Moderna claimed they had done “appropriate” due diligence on the CFO’s background, one must ask how they failed to uncover the obvious red flags. Commonplace background checks focus on only 4 or 5 key areas, looking at education and employment verification, alongside a criminal history review and a reference interview. But these routine checks provide just a sliver of public information, often missing significant details - especially those that are concealed or undisclosed.
The situation becomes even more difficult trying to piece together the history of a new executive hire or board member who has worked overseas. Every country operates under its unique set of laws, and in certain jurisdictions, there are explicit prohibitions preventing agencies from accessing certain records.
Your company is also opening itself up to potential lawsuits from shareholders as well as liability if you fail to complete due diligence on your international background checks. A typical standard procedure consists only of a basic international background check on executives or a surface-level scrutiny of businesses against global watch lists. This reveals only a fragment of what the business has undertaken or the executive has participated in.
International background checks completed with deeper-level due diligence are the best way to avoid bad actors that can leave you liable for activities that could cripple your business like bribery and corruption; often finding 30% more information than a routine or basic background check.
Due diligence backgrounds are instrumental in mitigating the risks associated with executive fraud by providing a comprehensive and global perspective on an individual's professional and financial history. The goal is to uncover potential red flags early on, enabling you to make informed decisions and safeguard against fraudulent activities.
By assessing an executive's compliance with laws and regulations in various jurisdictions, you can scrutinize any history of legal issues, regulatory violations, or sanctions to give you insights into any potential fraudulent or unethical behavior.
For example, imagine hiring an executive who claimed to have been working as a consultant in another country for 9 years…
Only to discover too late that they were actually in prison for felony fraud the entire time!
This is an actual case discovered by the investigators at Infortal.
International background checks are also able to root out people pretending to be something they are not. Infortal has uncovered 100’s of cases, for example, where executives have clear relationships with State Owned Enterprises (SOEs) that are sanctioned by the U.S.
They are also necessary to root out potential executive fraud schemes, such as violations of the Foreign Corrupt Practices Act (FCPA) your company could be liable for.
For example, executives at Goldman Sachs Malaysia pleaded guilty to conspiracy to violate the FCPA. These executives conspired together to pay over one billion dollars in bribes to high-ranking government officials in Malaysia and Abu Dhabi to obtain lucrative business for Goldman Sachs. In addition to these criminal charges, there was a recovery of over $1 billion in assets associated with and traceable to the money laundering and bribery scheme. Imagine the damage to the reputation of Goldman Sachs in this situation.
Such cases of fraud, embezzlement, or other financial crimes would not be found through a standard background check.
Verifying an executive's educational and professional credentials on an international level ensures that the information you have on the executive is accurate. Inconsistent or fabricated credentials can be indicators of potential fraudulent behavior.
Additionally, an international background check often includes a behavioral analysis of an executive's past behavior and whether leadership issues may exist, including harassment. This can help you identify any patterns that may indicate a predisposition to engage in fraudulent or egregious activities after you hire them.
Conducting international background checks not only mitigates your reputational risks, it also demonstrates your commitment to due diligence - which builds trust with your stakeholders, including clients, partners, investors, and the public.
It helps you ensure compliance with global legal and regulatory standards to steer you away from potential legal troubles, reinforcing your reputation as a responsible business entity. And it lets global stakeholders know you are committed to integrity and responsible business conduct: fostering trust and positive relationships around the world.
Infortal is a licensed investigative company that specializes in due diligence investigations – a much higher bar than a standard background checking operation.
Infortal not only has 38 years experience conducting extremely accurate international background checks, but we also offer a double guarantee when it comes to the accuracy of our information.
Not only do we 100% guarantee that we are conducting the background check on the right person, but we guarantee that the information our sources provide will be 100% correct.
This industry leading guarantee ensures that you are easily able to position yourself with a positive and reputable global image and shows that you have a commitment to ethical business conduct, risk mitigation, and the protection of stakeholders' interests.
The unique life experiences of the Infortal staff brings decades of international expertise and travel to work for you whenever you need a thorough international background check that ensures you’ve covered every possible basis.
As the CEO of Infortal Worldwide, Candice Tal is instrumental in helping companies navigate risk and optimize operational success for their business, employees, and assets. With over 30 years of expertise in the investigative field, she is widely recognized as a leading subject matter expert in global due diligence investigations. Candice's insights have been featured in various media and business publications, and she has made significant contributions to the compliance industry's foundational book, The Compliance Handbook.
As the Vice President of Global Compliance & Investigations at Infortal Worldwide, Chris Mason is at the helm of the International Investigations Team. His role involves collaborating with clients to orchestrate due diligence investigations, and streamlining pathways for private equity investment, M&A transactions, and the global expansion of businesses. As a licensed attorney with a CAMS certification and more than a decade of experience specializing in investigating financial crime, Mr. Mason has contributed his expertise while working as Chief Economist of the International Investor Program (DHS) and was subsequently VP Anti-Money Laundering (AML) at a distinguished global investment bank.
In his capacity as the Director of Geopolitical Risk at Infortal Worldwide, Dr. Ian Oxnevad heads the firm's Geopolitical Risk Intelligence & Analysis initiatives. Dr. Oxnevad's insightful Geopolitical Risk perspectives serve as the guiding force for Infortal Worldwide's Geopolitical Risk training program, due diligence investigations, and advisory services on global risk intelligence. Combining his background as a political scientist and political economist, Dr. Oxnevad skillfully intertwines economics with security studies to evaluate a spectrum of issues, including geopolitical risk, economic warfare, intelligence, terrorism, corporate espionage, and money laundering.
Infortal works with all industries, and specializes in high tech as well as biotech and big pharma, the medical device industry, financial institutions, banks, AI and robotics companies.
At this point, the question you may be asking yourself is: what makes an international background check from Infortal so different?
The simplest answer is that Infortal goes above and beyond a simple background check. Our investigations start where public records end. Public records are also limited outside of the US. We start by conducting a keyword search of around 30 red flag keywords that searches through tens of millions of online records for anything that looks fishy. But that’s just the beginning.
We next conduct deep dive due diligence using Open Source Intelligence (OSINT) inquiries which go much further than publicly accessible records. This delves into the deep, dark and historical data of the internet that goes far beyond basic Google searches. In fact, Google only covers a small fraction of what’s actually available on the Web.
The OSINT process assesses criminal history, financial and legal matters, civil litigation, relationships and affiliations with other business or government entities, reputation concerns, ties between executives and foreign officials, involvement with shell companies, indications of fraud, traces of money laundering, financial irregularities, conflicts of interest, and more. It goes far beyond a linear public records check. We also look at what information is missing. What should be there that is not easily found?
But we don’t stop there. That’s because a thorough international background check requires the use of local resources. Conducting a search using the language of a given country often yields much different results than simply running the search in English. In fact, certain countries like China and Russia even have their own version of the internet and this must be taken into account. Our boots on the ground local contacts in 160 countries give us a much more accurate perspective of what’s really going on with the executive who spent time working there. We can even conduct interviews with the people overseas they have purported to work with.
The data obtained through our deep due diligence investigations in the international background check process is irreplaceable, offering a shield to companies against executive malfeasance, reputational harm, regulatory fines, penalties, and potential legal challenges.
Executive due diligence, distinguished for its meticulousness, provides additional assurance in fulfilling your board of directors’ fiduciary duty of care and has the capacity to unveil indispensable information that standard background checks will most likely fail to detect.
If you would like to further explore the intensive process used by Infortal with every background check, you can read a further summary of it here.
If you have questions about a specific type of situation or want guidance on different levels of due diligence feel free to Contact Us.
We would love to speak with you about your specific due diligence investigation needs and offer a complimentary consultation which you can book here.