If someone is hiding his past, a sin, etc....what would make the CO think that such a person would honestly answer a question?
I think it provides a legal out for those asking the questions and who they represent. Two elders would be present when the questions are asked. It's not so much about protecting the congregation, although, that is a plus if it is accomplished. Rather, first and foremost, the organization is protected. ('We tried to find out, and this is what he told us . . . and we have the witnesses to prove it.' )
Like JGnat said above, if they really wanted to know about a person's past, a background check would be done.