Security Update – 11 June 2009

Plans to expand the AusCheck employee background checking scheme beyond the areas of aviation and maritime security have been criticised by privacy campaigners. The AusCheck Amendment Bill 2009, which is currently before Federal Parliament, seeks to extend the AusCheck service to a wider range of national security regulatory schemes. Another amendment in the current bill will authorise the use of biometric information to confirm the identity of an individual.

The AusCheck centralised background checking agency began operation in September 2007 and is responsible for coordinating background, criminal and security checks on applicants for Aviation Security Identification Cards (ASIC) and/or Maritime Security Identification Cards (MSIC). The service was established to primarily prevent the use of fraudulent proof of identity documents in ASIC and MSIC applications. The Attorney-General’s Department states that AusCheck was created to also ‘provide capacity to be used for other background checking purposes’ and the department claims that amendments to the act are necessary to provide more efficient background checking schemes and an improvement to national security in general. 

However, a spokesman for the Australian Privacy Foundation, Nigel Waters, has argued that the definition of ‘national security’ remains too broad to impose limits on the range of checks that could subsequently be authorised as a result of the bill’s amendments. The foundation also raised concerns about the collection of biometric information for use in the background checking scheme, with Waters stating that the amendments would allow for any biometric identifiers to be used, such as DNA, voiceprints, retina and iris scans. The government has stated that only fingerprints will be used in rare circumstances, while the Attorney-General, Robert McClelland, claimed that biometric information is necessary in some criminal history checks to help police services distinguish between people with the same or similar name or date of birth.

The Senate referred the AusCheck Amendment Bill 2009 to the Standing Committee on Legal and Constitutional Affairs on 14 May for inquiry and report, with the committee’s report due on 16 June.

International Operations Group - Analysis

There is currently a heightened risk of recruitment fraud occurring due to increasing pressures associated with the global financial crisis. Job application fraud (including the withholding of criminal convictions and the provision of false references and qualifications) is on the rise as people become increasingly desperate to find jobs. The segregation of duties is a key part of fraud control and there will be less scope for segregation with fewer people employed. Cuts to the numbers of back office staff will reduce organisational capacity to conduct adequate recruitment screening to guard against job application fraud.

The incentive for a current or prospective employee to commit fraud and espionage rises as personal finances become tighter, making cash offers for confidential information more tempting. As others lose jobs, employees will feel under increasing pressure to commit fraud to aid their own financial or job security prospects. The rationalisation to commit fraud also increases as more employees become disgruntled and morale dips due to lower-than-expected pay and bonuses. In such situations, workers can persuade themselves that they have received less than they deserve, so are entitled to extra money gained through fraudulent activities.

International Operations Group – Recommendations

The risk of job application fraud can be minimised by ensuring that recruitment checks are comprehensive (including checking an applicant’s identity, credit background, previous employment, qualifications and references). However, this type of fraud continues to be a major problem with too few organisations enforcing comprehensive recruitment checks.

With fraud levels rising, it is more important than ever that organisations have secure and robust internal controls and risk management systems. Businesses and government departments are advised to expand their teams working on fraud prevention and detection to prevent excess losses and be in a strong position for the economic recovery.

Steps in the establishment of a comprehensive anti-fraud program include reviewing current internal security procedures, conducting risk assessments, implementing fraud monitoring, detection and control procedures, and promoting an anti-fraud stance. Once a fraud system has been installed, it is vital that it is regularly reviewed and maintained to ensure that it remains effective.

International Operations Group – Services

International Operations Group provides intelligence and security support for corporate and individual clients across the globe. Our team includes experienced specialists in fraud detection, fraud recovery and fraud risk management. Please email intel@interopsgroup.com for further information.

For more information on our fee-based intelligence updates or bespoke reporting, please email Rob Stevenson - rob@interopsgroup.com. Rob can also be telephoned on +61 [0] 420 244 909.