Background check: a practical guide to reducing hiring risks

A background check is the process of verifying the history and information of individuals, companies, assets, real estate, or vehicles. It serves as a critical tool for validating identity and uncovering potential risks before a relationship is formalized.

Whether you are hiring new employees, establishing B2B partnerships, or negotiating assets, verifying the history of the parties involved is fundamental to corporate security.

The concept of the background check gained prominence in the 20th century, specifically in the United States. It emerged from a government necessity to implement strategies to strengthen anti-corruption operations.

At the time, the public sector faced criminal scandals and fraud that compromised its credibility. In response, the government began conducting broader and more detailed background screenings on employees and candidates, ensuring alignment with ethical standards and compliance.

With these rigorous processes proving effective, background checking became a recognized standard practice, adopted not only by the public sector but widely across the private sector.

Despite its market prevalence, many leaders still have questions about the process. We created this article as a complete guide to everything you need to know. Read on.

What is a background check?

A background check is the process of verifying the integrity and suitability of individuals and legal entities. It involves the analysis of criminal records, financial history, reputation, and legal standing to mitigate risks and ensure regulatory compliance.

Contrary to common belief, background checks are not limited to pre-employment screening. They are a vital verification tool for understanding the history and relevant data of any person, company, or even assets with whom your organization intends to do business.

Read also:How to check criminal records by Tax ID or Name

In this sense, background checks become a core component of both risk management and financial strategy. By evaluating people and companies prior to engagement, your organization drastically reduces negative financial impacts.

Is Background Screening Legal in Brazil?

Yes, checking antecedents is a completely legal process in Brazil, provided it is conducted within appropriate guidelines and in compliance with current legislation, such as the LGPD (General Data Protection Law). To ensure the inquiry is secure and compliant, it is crucial to follow best practices during the consultation.

Furthermore, there are industries where background checks are not just a process, but a regulatory requirement. This is the case for sectors such as banking, finance, and education, which are governed by stricter legislation regarding duty of care and safety.

Learn more:What the law says about criminal record requirements

3 Key Scenarios Where Background Checks Are Essential

As noted, screening can verify people, companies, or assets. By analyzing the integrity of each potential partnership, the process helps your company identify potential “red flags” in the verified party’s history, allowing you to project risks and vulnerabilities before formalizing the relationship.

1. Employee and Candidate Screening

Before onboarding talent, it is vital to verify criminal history, employment litigation history, and validate professional and educational credentials. This prevents resume fraud and misconduct, ensuring your team is composed of qualified and trustworthy individuals.

2. Vendor Homologation (KYS)

Companies that provide services or supply products may carry hidden risks, such as illegal practices, slave-like labor accusations, or financial insolvency. Background checking allows you to evaluate supplier integrity, protecting your operation and supply chain reputation (Know Your Supplier).

3. Due Diligence for Business Partners

Before signing strategic partnerships or executing M&A (Mergers & Acquisitions), knowing the history of the entities involved is non-negotiable. Background checks support secure decision-making, preventing fraud, successor liability, and future legal disputes.

The Relationship Between Background Checks and Compliance

More than an operational step, background checks for compliance play a strategic preventive role by identifying potential legal, reputational, or financial risks.

Through this lens, companies utilizing these processes act proactively, avoiding fraud, conflicts of interest, and violations of internal or external regulations (such as the FCPA or Brazilian Anti-Corruption Law).

Key benefits include:

• Reinforced Corporate Governance: Ensures hires and partnerships align with internal policies and regulations.
• Increased Transparency: Provides verified data to back secure decisions.
• Reduced Legal Risks: Supports compliance with labor laws and industry regulations.
• Reputation Protection: Prevents association with entities involved in illicit activities.

6 Methods for Conducting a Background Check

Screening can be performed via 6 different methods, each with varying levels of depth and reliability.

Common methods include retrieving criminal certificates directly from official bodies; searching Official Gazettes (Diários Oficiais) for lawsuits and sanctions; and investigations conducted by private investigators or lawyers for complex analysis.

However, manual searches (often done irregularly at police stations) are inefficient, insecure, and can expose companies to liability. The most efficient and compliant method is the use of automated platforms for real-time consultation.

How Automated Background Checks Work

n the automated background check platform model, a structured process ensures the verification is comprehensive, secure, and reliable.

1. Input Data: You provide the target’s information—Name or CPF (Individual Tax ID) for people; Company Name or CNPJ (Corporate Tax ID) for businesses; or license plates for vehicles.
2. Multi-Source Search: The system queries over 200 national and international sources simultaneously (Justice Tribunals, Federal Revenue, Watchlists).
3. Data Return: The platform aggregates data on financial status, employment history, criminal records, and labor debts in minutes.
4. Risk Assessment & Decision: The system provides a risk status, allowing you to make an informed decision on hiring or negotiating.

Main Types of Background Checks

Criminal Record Checks

The primary type of screening, used to identify criminal proceedings. It clarifies if an individual has a history of misconduct, providing context to mitigate legal and safety risks.

ID and Registration Status (CPF/CNPJ)

Through searches in official government databases and private bureaus, you can access registration information for individuals (documents, address history, decease status). For B2B, you can and should consult corporate registration status before signing contracts.

Professional License Verification

Verifying professional board registrations prevents fraud by ensuring a professional is licensed to practice. Examples include the OAB (Bar Association), CRM (Medical Council), and CREA (Engineering Board).

Litigation and Financial History

Using legal expertise, we track lawsuits involving individuals or companies, including labor (employment) disputes and civil litigation. Regarding finance, financial checks evaluate debts, protests, and credit scores for financial transparency.

Adverse Media Screening

Using the subject’s name, adverse media checks identify negative mentions in news outlets. Results typically include sentiment analysis: Positive, Neutral, or Negative.

Restrictive Lists (Watchlists)

This screens against national and international restrictive lists. It identifies if a person or entity is on sanctions lists (like OFAC) or is a Politically Exposed Person (PEP), crucial for AML (Anti-Money Laundering) compliance.

Education and Employment Verification

Used to confirm the experiences and degrees presented by a candidate. Read more in our guide: “Diploma Consultation via CPF: A Quick Guide”.

Vehicle Checks

Verifies vehicle history, including ownership records, outstanding fines, previous accidents, and financial liens that could impact the asset’s legality.

Background Checks in Brazil: Our Solution

Our solution offers 100% automated background verification for people and companies in Brazil.

Via our platform, using basic data like a CPF or CNPJ, you can identify risks across criminal, financial, labor, and legal spheres. In minutes, we generate complete, detailed, and structured reports.

This process streamlines decision-making, ensures compliance with local laws (like LGPD), and guarantees a transparent, secure process for your partners and employees.

Contact our team of specialists to learn how to bring security, transparency, and scalability to your business.

Frequently Asked Questions (FAQ)

Is a background check legal? Yes, background checks are legal and highly recommended. In sectors like finance and education, they are often a regulatory requirement.

What is the purpose of a background check? It serves to support strategic decisions, ensuring legal security, transparency, and compliance. It is widely used in recruitment, supplier due diligence, and commercial partnerships.

What information is verified? Checks can include criminal records, lawsuits, professional history, financial records, restrictive lists (watchlists), and public information from official databases.

What is the difference between manual and automated checks? Manual checks are time-consuming and prone to human error, as they require individual queries to fragmented sources. Automated checks integrate data from hundreds of sources in minutes, standardizing reports and ensuring auditability.