Nearshore Americas

Compliance Mandates Lead to More Aggressive Background Checks

The level of compliance that companies meet when hiring job applicants and suppliers, especially when it comes to data protection and fraud prevention, is a critical differentiator for nearshore outsourcing. For companies that are subject to strict anti-corruption regulations, such as the FCPA or UK Bribery Actor stringent data protection laws like the GDPR at the European Level, background checks are especially important.

Background Checks: Greater Competitiveness

Many companies locate some of their strategic processes, whether commercial or operational, to nearshore locations. Nearshore providers may be in charge of hiring employees and suppliers, but since are they considered an extension of the same organization, they are subject to the same regulatory requirements.

Sometimes, however, third parties are hired to perform the role of screening employees and suppliers for the nearshore operation. The parent company needs to be confident that the provider demonstrates high standards of compliance, at least equivalent to those of the parent company itself.

Under either scenario, meeting compliance standards when contracting employees or suppliers is a crucial competitive factor. In the first case, with oversight, the parent company mitigates the potential risk of illicit acts being committed in its nearshore operations and ensures a global standard. In the second case, local screening companies have the opportunity to expand their business by meeting the global company’s compliance standards.

Data Protection and Fraud Prevention 

A significant concern for companies, both global and local, is caring for handling personal data. Emerging data protection laws in some Latin American countries have significantly reduced gaps in their regulations relative to global standards. Indeed, there may still be peculiarities in the application of data protection regulations in each state, and it is crucial to know what those are. Yet, the most sensitive issues are already largely standardized and aligned with GDPR.

As an example, Brazil will put into effect a new data protection law in August 2020. The European GDPR has been the benchmark for this law, which incorporates the GDPR’s most essential concepts. However, Brazilian law contains particular scenarios that are important to understand. Latin America has advanced significantly in recent years in data protection, and the fines for breaches of privacy -such as those that are part of Brazil’s new law- could cause a considerable dent in a company’s finances and reputation.

Background screeners who take care to comply with the law will be more competitive when it comes to obtaining contracts with local and global companies. Compliance areas will need to be especially vigilant in monitoring their nearshore operations.

Companies are also concerned about their level of prevention in corruption matters. The recently published Global Corruption Barometer-Latin America and the Caribbean 2019, from Transparency International, shows that bribery and other corrupt practices in the region, far from decreasing, have instead increased. Bribery, embezzlement, or influence peddling is the order of the day in Latin America, especially in the interaction between the public and private sectors.

Foreign companies, particularly those from the United States, require a reliable background screening program that mitigates the risk of hiring employees or contractors with the type of background that could harm the company. They need to find those whose duty of care will protect the company from hefty fines for lack of prevention, both in the country of operation and the state of origin.

Key Factors to Consider

To finish, here are three factors to consider regarding compliance and background checks in Latin America:

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  1. Strengthening the employee and supplier selection process in nearshores reduces the risk of fraud and negligence in handling sensitive personal data. Experience shows that internal staff commits the highest levels of fraud in major industries.
  2. Outsourcing the background checks process for job applicants can streamline a company’s operations, safeguard against malpractices, and reinforce compliance. The company can retain its own compliance standards but not taint the process.
  3. Most Latin American countries have already standardized their data protection regulations. Soon Brazil’s GDPR will go into effect. Even if the standard is aligned with GDPR, nearshore companies and their background check providers must understand the application of the laws and its intricacies in each country.

David Robillard

David Robillard is President of MultiLatin Background Screening and has more than 20 years of experience advising boards of directors and senior management on integrity and corporate reputational risk issues in Latin America. David is Chairman of the Latin American Task Force for the (NAPBS) - National Association of Professional Background Screeners. You can contact David at

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