Could an Improved Background Verifications Process make for a Scam Free India?

Huh…the title of this article does sound a little absurd, well at least that is what I initially thought. But humor me for a while and read on as I try to put together pieces of this complicated argument.

India has been bogged from times immemorial with scams of varying proportions – be it the Haridas Mundhra scam, the first big financial scandal of free India, to the more recent 2G scam. The story underlining every scam has been the same – excessive greed of a few people and their belief that they can game the Indian system. Given the rate at which new scams are coming to light, gaming the Indian system seems to have become the national pastime.  Is a better system the nirvana for a scam free India? If yes, what are the changes that need to be made and how does background check fit into all this? To answer these questions we will have to understand the ingredients that go into the making of this heady cocktail and devise controls to impede a hangover.

The magnitude of a scam has always been directly proportional to the financial, political clout and connections that the scammer wields. A good scam is a long term game e.g. Madoff investment scandal is spread through word of mouth, and usually plays on the ignorance and greed of the scammee by promising returns that are disproportionately higher than those of the market.

In today’s ecommerce economy there exists a need to convert black money into white. Cash no longer reigns supreme; almost every online, bank transaction is tied to a person’s PAN card number. To legitimize the money earned via these endeavors (scams), it is percolated within family members, invested in real estate through bogus companies setup on family member names and used to purchase gold.

A scam starts because the activity of a certain individual goes unchecked for too long and is made successful by the lack of a centralized information system that can document a person’s personal and professional earnings. In past storing, handling and centralizing the financial records of a billion plus people would have been an arduous task but this feat is achievable today. This centralized information system would be a social media of sorts, that connects people via their financial activities.

The idea is to connect people with each other based on their personal, professional and financial relations. Any erratic change in the financial activities of one individual results in a red flag for all the people within his immediate network and will lead to scrutiny of all their financial records. At this point an offline background verification company can be hired to drill deeper and discover any additional information that can assist in understanding this irregularity better.

This system can be made truly infallible by connecting all the dots with a common identifier. I recognize the UID in its full and true implementation as that common connecter between all financial transactions. To make this system truly robust and international a stipulation that requires all international financial institution’s to request the UID for all transactions, should be tabled. This international transaction information along with the UID needs to be fed into the centralized information system. Hence providing for total assimilation and integration of all financial transactions.

There is need for our government to enforce stricter employment rules including a thorough background verification process for hiring new recruits to any political party. To maintain transparency the services of a third party background verification check company should be availed and the finding for each individual needs to be published online for the general public to view. This initial offline background check will act as a benchmark to compare all future activities.

The above is my attempt to provide a structure for a semi-automated process which is continuously aided by a thorough and ongoing background check. I understand that the process defined by me is in its simplest of form and require a detailed document for real implementation. However all ideas start with a concept and ultimately reach their destined goal.

Please feel free to provide your comments on this article and help us evolve it further.

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