How does a SCORM 1.2 course track completion of external resources?

The other day I was having a conversation with a manager in another area of the facility concerning our customers and their inability to follow directions. I blame this problem on those who don't think before hitting the "Reply to All" or those that comply with "Please forward this to your mailing list". Rant Done ..... We need a viable solution to get our word out. 

She indicated that she has a videographer who is willing to do some work which she thought she would put links to these videos on the corporate website. Unfortunately, this will not guarantee the end user will watch them. 

My proposed solution was incorporate the videos into an e-learning course that applicants would need to complete as the first step in the application process. I understand this is far from a magic-bullet, but if it reduced the number of applications that were returned by even 10% that is significant in our office.

I have several e-learning courses that contain videos. These courses are on a server owned by another agency. Delivery of those videos to the end user has been a little sketchy. Three percent of users indicated they had some sort of an issue watching the embedded videos. I would like to reduce that to zero but I am not sure that is practical. I have been considering the use of YouTube as a video host.

My question is a follows: How does the SCORM 1.2 package recognize and record that I have watched the entire video or, at least most of it? Is it based on code received from the video service server, or is it based on what I would put in the timeline? Or is there some other method I'm not thinking of?

I am using Captivate 9, and the LMS is one of the State Train.Org derivatives. 

I was told that we will be making the jump from 1.2 to Tin-Can early next year.

Thanks, Tim