Ensuring KYC norms are being adhered to and AML controls are strengthened is gathering momentum across the globe. While banks in India up their ante to address the stink being raised by the revealing reports of Cobrapost, the global landscape is equally scathed with Federal Reserve [UK] and Administración Federal de Ingresos Públicos (AFIP), the Argentinian federal tax agency raising concerns on the functioning and controls at Citibank and HSBC respectively. Serious Fraud Investigation Office [SFIO] in the process of setting up a forensic audit laboratory along with revamping its Market Research & Analysis Unit to enable it to function as an intelligence unit. SFIO also has the powers to recommend prosecution in white collar crimes.

1. Ensuring KYC norms are being adhered to and AML
controls are strengthened is gathering momentum
across the globe. While banks in India up their ante to
address the stink being raised by the revealing reports
of Cobrapost, the global landscape is equally scathed
with Federal Reserve [UK] and Administración Federal
de Ingresos Públicos (AFIP), the Argentinian federal tax
agency raising concerns on the functioning and controls
at Citibank and HSBC respectively.
Serious Fraud Investigation Office [SFIO] in the process
of setting up a forensic audit laboratory along with
revamping its Market Research & Analysis Unit to
enable it to function as an intelligence unit. SFIO also
has the powers to recommend prosecution in white
collar crimes.
In this edition we have Mr S. Varadarajan, Executive President – Human Resource of Tata Teleservices
Limited sharing his views on the evolution of and impact of Screening on the hiring processes in his organization and
the Industry. He also speaks on the role of regulatory bodies in ensuring they are synchronized with the industry needs
especially in the regularization of education institutions.
Screening the CXOs has been a largely muted subject and most organizations overlook its import. It is indeed a point
we would like you to ponder on and share your views with us. There are enough instances of frauds committed at the
senior-most levels and the impact it can have on the credibility and existence of the organization.
The case of how a law graduate resorted to multiple forgeries to procure a plum law position, which eventually resulted
in her facing a trial in the New York court makes for an interesting read and clearly depicts the risks of not verifying
before trusting a probable hire.
We continue with sharing our data analysis on trends we see in the screening we conduct across industry sectors and
best practices we are certain will help you strengthen your hiring processes.
Your feedback on the newsletter will help us continue improving it to make it a worthwhile read.
Monthly Newsletter
Volume VIII Issue 2
Editorial
Content
1. News
2. Legal Update
3. ClientSpeak
4. A Point to Ponder
5. Screening Trends
6. Best Practices in Screening
7. Case Studies
8. Products and Services

2. Stirrings within the Nation
Mumbai Company cons HSBC of Rs 330 crore
The Economic Offence Wing (EOW) of Mumbai police have registered a Rs 330 crore cheating and forgery case
against a city-based company and its representatives for duping HSBC by securing investment with fake promises.
The company claimed to have entered into a contract with BBC to upgrade their entire library from 2-D to 3-D.
Investment was sought to purchase technical equipment and programs for upgradation. The bank representative’s
meeting was arranged with an executive who purportedly claimed that he was representing BBC. The bank later
verified with the BBC and found that they had not awarded any contract to the accused. The bank also found that
the BBC representative met with them was a con and all the submitted documents were forged. The bank then filed
the case with EOW.
SFIO plans early warning system to detect fraud
SFIO is expected to prepare a comprehensive framework for fraud prediction model by June this year. The aim is
to “develop an Early Warning System for detection of and to undertake investigation of serious frauds through the
SFIO,” according to an internal Ministry document. The IT infrastructure for the proposed system is expected to be
ready by the end of this year, while the pilot testing is anticipated to begin in September. In addition, SFIO would
be setting up a forensic audit laboratory along with revamping its Market Research & Analysis Unit to enable it to
function as an intelligence unit. SFIO has the powers to recommend prosecution in white collar crimes.
The new Companies Bill, awaiting approval from the Rajya Sabha, would provide statutory powers to the agency
that would help in bolstering its investigation and other capabilities. Forty two cases have been referred to SFIO in
the current financial year and probe has been completed in 15 of them.
Global Ripples
Citigroup told to improve money laundering controls
The Federal Reserve has ordered Citigroup to strengthen its controls against money-laundering, pointing to
problems in subsidiaries including the US unit of Citi’s Mexican bank, Banamex. In a consent order released by
the Fed and signed by the bank, Citigroup pledged to take extensive actions to better comply with the US Bank
Secrecy Act on preventing money-laundering. The consent order did not provide any details on what problems
were unearthed by regulators except stating Citigroup “lacked effective systems of governance and internal controls
to adequately oversee the activities” of the subsidiaries with respect to the BSA and anti-money laundering rules.
The apparent problems involved Citigroup’s key operating subsidiary Citibank, and Banamex USA, the US arm
of leading Mexican bank Banco Nacional de Mexico, also controlled by Citigroup. They also involved other group
subsidiaries in international banking. The consent order lays out a detailed schedule of actions Citigroup and the
subsidiaries must take to tighten its compliance, and reporting requirements on those actions. The order came
without any prior testimony or legal hearings or findings, and said it did not constitute an admission or denial by
Citigroup of any allegation that had come before the Fed.
News
1
Continued...

3. 2
Argentina Accuses Local HSBC Unit of Facilitating Money Laundering, Tax Evasion
Ricardo Echegaray, director of federal tax agency Afip, said a six-month probe uncovered evidence of tax evasion
for ARS224 million and money laundering for ARS392 million. He said charges were filed in early February. Mr.
Echegaray said “there was decisive participation” of HSBC executives to hide information from Afip. HSBC Bank
Argentina SA ranks as one of Argentina’s top 10 banks by deposits and assets. Afip is also investigating other
banks and a brokerage firm for possibly using phantom accounts and bogus tax receipts for tax evasion and money
laundering, Mr. Echegaray said at a press conference. Argentina isn’t the only country where HSBC has come under
scrutiny from regulators in recent months. In December, U.S. authorities announced a $1.9 billion fine against
HSBC Holdings for failed anti-money laundering controls they said allowed drug proceeds and transactions from
sanctioned nations to enter the U.S. financial system. Neither HSBC nor any of its executives were charged with
criminal conduct in that case.
Employers Must Use Revised Form I-9, Employment Eligibility Verification
USCIS will no longer accept previous versions of Form I-9
U.S. Citizenship and Immigration Services (USCIS) reminds employers that beginning May 7, 2013, they must
use the revised Form I-9, Employment Eligibility Verification (Revision 03/08/13)N for all new hires and re-
verifications. All employers are required to complete and retain a Form I-9 for each employee hired to work in the
United States.
The revision date of the new Form I-9 is printed on the lower left corner of the form. Employers should not complete
a new Form I-9 for existing employees, however, if a properly completed Form I-9 is already on file.
The revised forms are available online at www.uscis.gov/I-9.
Employers should use the implementation of the new form as an opportunity to ensure that company policies
and procedures are current and compliant. Best practices include a written policy regarding Form I-9 rules and
procedures, yearly audits and training, and appointing an I-9 czar for your company. I-9 inspections by the
government are at an all-time high. Neglecting to fill out I-9 forms or filling out I-9 forms incorrectly can result in
fines of up to $1,100 for every incorrect form.
Centralized KYC Registry for customers across different Financial Institutions
RBI issues guidelines to issue Unique Customer Identification Code for NBFC Customers in India (UCIC) to adhere
to the Know Your Customer (KYC) norms; Anti-Money Laundering (AML) standards and Combating of Financing
of Terrorism (CFT). This guideline applies to all Non-Deposit taking NBFCs with assets of Rs 25 cr and above and
to All Deposit taking NBFCs.
The increasing complexity and volume of financial transactions necessitate that customers do not have multiple
identities within a Financial Institution or across the financial system. In this regard, a Working Group constituted
by the Government of India has proposed the introduction of unique identifiers for customers across different
Financial Institutions for setting up a centralized KYC Registry.
Legal Updates

4. 3
S. Varadarajan (Raja)
Executive President – Human Resource
Tata Teleservices Limited
Spearhead for the Human Resource function and responsible for HR Strategy, Organization Design, L&D, Cross Culture
building, Remuneration Practices, Performance Management and Leadership Capability Development at Tata Teleser-
vices, India’s fastest growing Telecom Service Provider, Raja has been awarded with the Seasoned HR Professional
Award for 2012 from NHRDN and President’s award in 2010 for his contribution to NHRDN. Raja was also awarded for
his thought leadership and contribution to the field of HR at the World HR Congress in 2009.
We are happy to share his views on the importance and impact of Background Screening for the hiring process in general
and for Tata Teleservices in particular:
Candidate screening is practically “the first step towards strengthening organizational governance”.
In a company like Tatas we focus a lot on ensuring the maintenance of the ethical fabric of the organization. In the
present day context, with more focus on sharpening the Governance system of the organization, “candidate screening”
practically becomes the first step towards strengthening organizational governance. The process of ensuring and driving
legal and ethical behavior, accountability for management’s actions, transparency of operations, fiscal accountability
etc start with having responsible and ethical people at all levels of the organization and thus not having rigor in the
screening of candidates who are to become employees has immense ramifications. This is especially so in the context of
globalization liabilities arising thereof such that any failure in this process can potentially be linked to the organization
having to shut down its operations.
Screening Industry has evolved.
The industry has certainly evolved both in terms of size as well with respect to quality of delivery. The evolution has been
for the better. With more and more service oriented companies increasing their presence in India this has led to a rise
in having this process outsourced based on the advantage of leveraging such core competency and also the economies
of scale. With database getting built and process improvements made over time, the quality of this service in terms of
improved TAT, accuracy of information etc also improved.
Screening has reduced risk and increased productivity.
This process has definitely strengthened our hiring process in line with the requirements of ISO27001. The screening
of candidates ensures that we are at a lesser risk w.r.t possible issues that may arise if one were to hire employees with
dubious background. More importantly it has created awareness both within and outside the organization that we take
this process seriously and are well aligned with the ethos and code of conduct of the organization in spirit and practice.
This in turn has resulted in increased productivity as we are likely to be having lesser cases unethical practices.
ClientSpeak
Continued...

5. 4
Candidate Identity, Address Verification and Education are of utmost importance.
In my view checking on a candidate’s basic verification with respect to identity and address is of utmost importance
given the current circumstances. Secondly, while education check may not be criteria for many while selecting a candi-
date, it does give valuable insights on the character of a person. If one was to forge or falsify on something as basic as this
then it is likely he/she may embrace unethical practices more easily. Lastly it is important a police or court verification
be done as it further helps you to ring fence the overall screening process. This is especially so where organizations are
required to be compliant with stringent global requirements.
Regulatory Bodies and Industry Patronage of Education Institutions should complement not compete.
The regulatory body derives its authority from the law of the land. In my view we need to respect the law at all times.
While industry patronage augments the institutions but it would be equally important to them for being recognized by
the applicable regulators. The debate should focus around challenges or the way forward on getting such institutions
recognized or having the regulator revisit the recognition norms rather than choose one over other. They should be com-
plimenting and not competing with one another.
Centralised Records Database is the future of screening.
I do foresee that screening records may get centralized very much like the CRISIL database, and be accessible at a cost.
However there could be many nuances that may need to be ironed out first. I also think that such screening process will
become necessary not only for full time roles but also for temporary or part time roles. An extension is that this data base
can also be used for reference checks as well as analyzing attrition trends in the organization/industry.
Long-Term Cost Benefit and Quality should decide outsourcing of screening process.
I think that if this process fits into the core competencies of the organization then it’s absolutely fine to have an in-house
screening process, else they would do better to evaluate a long term cost benefit analysis as well as a quality check vis-à-
vis involving a specialized third party who are well versed and qualified to carry out these checks.

6. A Point to Ponder
CEO CONNECTEDNESS and CORPORATE FRAUD
“The SEC named the CEO and/or CFO for some level of involvement in 89% of the fraud cases, up from 83% of cases
in 1987-1997.“
- COSO Fraud Study 2010
“CEOs with a taste for luxury goods…aren’t more likely to commit fraud, researchers found. But fraud is more likely to
happen in the companies that they run…”
“Big-spender CEOs also tend to run companies that take bigger risks, but have poorer performance and are more likely
to go bankrupt.”
- National Bureau of Economic Research
If you want to understand fraud, you need to cast beyond rules and regulations and look to the corner office.”
- Prof. Magnan, of the John Molson School of Business at Concordia University in Montreal,
A study conducted on CEO CONNECTEDNESS AND CORPORATE FRAUDS concluded empirically that “CEO
connectedness decreases the likelihood of fraud detection, lengthens the time from fraud incidence to its detection, re-
duces the likelihood of forced CEO turnover upon discovery of fraud, and lowers the coordination costs needed to carry
out illegal activities.”
The authors of the study found through a study of 282 cases of corporate fraud during the period 1996 through 2006,
“Corporate wrongdoing often requires coordination between or acquiescence by top executives who report to CEOs on a
daily basis”. They say, “CEOs have both explicit legal authority and substantial “soft” influence within the firm to direct
corporate behaviour of which wrongdoing is but one potential outcome.”
Would you agree? Would you put your CXOs under the scanner?
Some recent instances of CEOs found fraudulent across the world. Absence of Indian instances probably reflects what
the study concluded about the lengthening the time from incidence to detection.
• Claudio Osorio, the former globe-trotting executive who headed a Fortune 500 company, faces up to 30 years in
prison after pleading guilty to stealing millions of dollars from investors in his ill-fated venture to build low-cost
housing in Haiti and other developing countries.
Source: www.miamiherald.com
• The former chief executive officer of Peoples Bank of the South, a south Mississippi bank, Larry Barnette Hill, has
been charged with fraud and money laundering.
Source: www.sfgate.com
• Highly confidential documents emanating from the office of the Microfinance And Small Loans Centre (MASLOC)
and intercepted by Modern Ghana point to a grand executive fraud involving the Chief Executive Officer Madam
Bertha Sogah alleged to be involved in a GH ₵ 500,000 deal.
Source: www.modernghana.com
• Darrell McAllister, former president and CEO of Bank of Choice, has been charged with securities fraud allegedly
having violated the registration and anti-fraud provisions of the Colorado Securities Act.
Source: www.ncbr.com
5

7. In continuation of the Discrepancy Trend Analysis, in this edition we share the check-wise discrepancy comparison
for the four industries we are tracking over FY 2010-11, 2011-12 and 2012-13. Apart from the Pharma/Biotech/Clinical
Research; the other three industry sectors have displayed a decrease in check-wise discrepancy.
Telecom displays the maximum decrease in discrepancy percentage.
Reasons for the increase in the discrepancy in the Pharma sector or the reason for decrease in the other three sectors
could be attributed to different reasons which we will be discussing in forthcoming editions.
This analysis has been done using the number of individual checks conducted per individual who was verified.
Screening Trends
6

8. The first issue spoke about a comprehensive Background Screening Policy and the best practices as defined by NAPBS.
The current edition shares the risks you should be mitigating by screening your workforce and others associated with
your organisation in any capacity.
Risks to be mitigated
• Identity: Be certain of the identity of the person you are dealing with in any capacity. Government issued identity
proof is a definite check to ensure your prospective hire, vendor, customer, client or even a visitor is a genuine bona
fide identity and not an imposter.
• Accessibility: Ensure your employees current address in your records is genuine and the individual actually lives at
the address so as to be able to reach the employee in case of any emergency or requirement.
• Current Address should be an address where the individual is currently staying and has been staying there for
a minimum 6 months. If stay at the current address is less than 6 months, then the address or addresses prior
to the current address should also be verified to ensure the address is genuine and that the individual actually
stayed there.
• Criminality: A basic check to ensure the individual does not feature in any of the negative lists available in the public
domain, both Indian and global negates interaction with a person with a criminal record. Additionally, criminality
can be checked with the authorities specifically the police department for any record of any activity criminal in
nature at a verified address.
• Police Verification conducted without first confirming the authenticity of a stated address and the confirmation
of the individual residing at the confirmed address can in all probability give a result which is inaccurate.
• Fitment: Verify education, professional and technical qualifications of your workforce to be certain that the person
is qualified for the job. Verify past employments with HR and the supervisor to understand capability, attitude and
achievements.
Gaps between two employments, two educations or between the last employment and the first
employment are an important area for verification. Stated gaps should be verified to ensure no criminal
record exists during that period. Unstated gaps [gaps uncovered during the process of verification]
should also be verified similarly and should be red alerts for the individual’s integrity.
Best Practices in Screening
7

9. Ms Sengupta had her career collapse, undone by the chance discovery of a single lie that led to the discovery of many
more. A clerk stumbled upon her application file, and noticed her listed date of birth that put her age at 29. Ms. Sengupta,
in her late 40s at the time, declined to answer the many questions which were asked. Eventually, it became clear that
she had not only shaved nearly two decades off her age but that nearly everything about her work and education history
was not as she had claimed.
Soma Sengupta, an India-born daughter of an engineer, who grew up mostly in Jersey City has a very well-scripted
career. A clear indication of what a pre-hiring background check could have prevented.
The Facts:
• Graduated from Georgetown Law School in 1998
• Became a licensed lawyer in 2000 after passed the New York State bar exam.
• Began volunteer work two day a week in 2004 for the Legal Aid Society’s Prisoners’ Rights Project
The Falsifications
• Claimed had left law school before graduating and applied for a paralegal position with the Manhattan district
attorney’s office, as the office did not allow lawyers to work as paralegals.
• Claimed 1969 as year of birth, eight years earlier than the correct year of birth
• Was fired from the office in 2003, after it became known that she was, in fact, a lawyer.
• Got her supervisor to write reference letters to help her apply for several staff lawyer positions, including with the
American Civil Liberties Union in New Jersey and the Neighborhood Defender Service of Harlem.
• Claimed to be an assistant district attorney and to prosecute “gang and white-collar fraud cases,”
• Claimed to have defended “all felonies including murder and sexual offences,’ by virtue of being staff lawyer at the
Legal Aid Society
• Six years of advocacy experience in a common law system
• Graduated in the top 1% of her class at Georgetown Law
The Forgery
• Reference letter from Robert F. Drinan, a former United States representative from Masachusetts and a Georgetown
Law professor; it was dated a year after his death.
• Forged reference letters stating Ms. Sengupta was an accomplished trial lawyer.
• Fake Indian birth certificate.
• Created a fake website for a fictional law firm in the name of fictional former prosecutor
• Forged reference letter from him
• Forged a reference letter from the office of Eliot Spitzer, the then attorney general.
A comprehensive fraud, this had the Bar Standards Board of England and Wales modify the application process to now
have the” college transcripts come directly from the schools in a sealed envelope, without passing through an applicant’s
hands”.
On trial in State Supreme Court in Manhattan, Ms. Sengupta, 52, faces forgery and other charges, “the most severe of
which carries a maximum prison sentence of seven years”.
Case Study
8

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Product and Services