The Importance of Background Checks

Potential investors aren’t just looking for good ideas. When they lend someone their money, they’re also concerned with the person’s character.

Why character? Because a person can be brilliant, but he can also be brilliantly fraudulent. The world is, unfortunately, full of scam artists, who use their charm and intelligence to loop naïve investors into signing the checks, and then running off with them.

Aside from the scam artists, there are the criminals who use what seems like a perfectly legitimate business operation to launder the money earned from illegal activities like drug dealing or white slavery. Here, profits have nothing to do with it—it’s ethics. Would you want to be associated with a criminal? Would you want your money to go to supporting a criminal activity? And would you put your reputation at risk by being marked as an “associate” of someone who is known for breaking the law?

That is why it’s important to do a background check on anyone who has approached you to do business with him. Don’t be fooled by his charm, his credentials, or even the marvellous idea that he claims will earn you more money than you’ve ever dreamed of. A background check is still important.

Sadly, very few people do background checks, putting more attention to the business plan than the background of the person presenting it. They are distracted by the numbers, and impressed by the forecasts, which is exactly what a scam artist or criminal is trying to achieve. They are very good at this game and can fool you into thinking that everything is perfect—after all, they’re professional liars. So don’t just “trust your instincts”. Instincts are unreliable. Only a real background check, with information that has been gathered and collated, with official approval that someone is legitimate or not, can completely protect you.

You can ask for a background check from accredited organizations that keep a record of criminals from all over the world. These organizations have their databases updated by the governments and police groups, who regularly inform them of anyone who has a record of breaking the law.

Of course, many people will change their names. However, background checks can also derive their analysis from biographical information (usually found in the resume or CV) or even the photos.

You should also make it a point to ask for references. Even if the person does not have a criminal background, he may be exaggerating his skills. If he says he worked in a particular company, call up the HR department. Insist on talking to his former supervisor. You can also look into the other business he has set up. Does he have a good track record of handling money, following objectives, resolving crises and problems? This person is managing your money! You have to know that he is competent and reliable. You wouldn’t hire anyone without looking at his CV and the same holds true for those who you “hire” as the person who will be managing your investment.

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