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It doesn't really matter how you go about doing nanny background checks, what's important is that you do them. The key one to do is the criminal record checks. Your local police detachment office might have forms that you can use, you could hire a lawyer or a detective to provide background checks.
It's tempting to just contact the references and take them at face value. After all, why bother with all of the expense and hassle of formal nanny background checks? The references supplied should be good enough, right? Not necessarily. The nanny's references should be able to tell you how well the nanny worked with their children, whether the nanny was reliable and trustworthy, and anything else you need to know directly related to the nanny's work ethic.
Nanny background checks should only be conducted after the nanny interview. Once you've decided to hire that particular nanny, let her know that the final requirement of employment is a clear background check. She'll have to sign a consent form, but once that's been signed, you're free to complete the checks. Once everything comes back clear, you'll feel much better leaving your kids with the new nanny.