VOI. Verification of identity. Contents. Commentaries. Connect. bylawyers.com.au. mentorbylawyers

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1 Commentaries VOI Verification of identity Contents IN BRIEF... 2 REASONABLE STEPS... 3 VERIFICATION OF IDENTITY STANDARD... 4 Face-to-face regime... 4 Further checks... 4 Categories of identification documents... 4 * The Identifier Declaration... 6 ELECTRONIC SETTLEMENTS AND LAND TITLE LODGEMENTS... 8 Who can use the system... 8 How it works... 9 Client identification... 9 Who has to be identified Identity agents Client authorisation Retention of identity documents Overseas clients GLOSSARY IN BRIEF Connect bylawyers.com.au mentorbylawyers

2 In brief Legal representatives are required to identify their clients in a number of circumstances: 1. Generally Although there are no formal requirements, as a matter of good practice new clients may be identified, for example by sighting a driver licence or another common document. 2. Stamping When stamping a document, many revenue offices require evidence of the parties date of birth or for a company, their ACN. If stamping is done electronically the parties details are entered in the assessment and the client identification documents must be retained for audit purposes. 3. Paper transactions - Instruments for registration A mortgagee is generally considered to have taken the required reasonable steps to identify a mortgagor if they have followed the procedure set out in the Verification of Identity Standard. An eligible witness to the execution of an instrument for registration must be at least 18 years of age, not a party to the document and must have known the person executing the document for at least 12 months or have taken reasonable steps to identify them which, in practice, is taking the steps set out in the Verification of Identity Standard. 4. Handing over titles Again reasonable steps are required failing which the Verification of Identity Standard should be followed. 5. PEXA Again reasonable steps are required failing which the Verification of Identity Standard should be followed. 2 P a g e

3 Reasonable steps It is to be appreciated that verification of identity requirements are often satisfied by the taking of reasonable steps which are not specified and rely upon common law principles. Reasonable steps may include factors such as the length of time the practitioner has known the person or whether they have acted for the person on previous occasions or if they are well known and easily recognisable. There is clearly a glaring contradiction between what many would consider reasonable such as knowing someone for several years and yet the standard requires renewal of certification after two years. It seems likely that in practice most practitioners will simply comply with the standard and avoid making a decision as to what constitutes reasonable steps. 3 P a g e

4 Verification of Identity Standard Face-to-face regime Verification of identity must be conducted during a face-to-face in-person interview between the verifier and the person being identified. Where documents containing photographs are produced by the person being identified, the verifier must be satisfied that the person being identified is a reasonable likeness - for example, the shape of his or her mouth, nose, eyes and the position of his or her cheek bones - to the person depicted in those photographs. Further checks Further steps need to be taken if the verifier knows or ought reasonably to know that any identity document produced is not genuine, that any photograph is not a reasonable likeness, that the person being identified does not appear to be the person to which the documents relate or if it would otherwise be reasonable to do so. Categories of identification documents Identification documents are sorted into categories with category 1 being the preferred category. If the document requirements of category 1 cannot be met the subscriber or the subscriber agent can then consider the requirements of category 2. If these cannot be met they can then consider the requirements of category 3 and so forth. A subscriber is a person authorised under a participation agreement to use an electronic lodgement network to complete conveyancing transactions on behalf of another person or on their own behalf, usually a solicitor or conveyancer. The identity documents must be: original; current; and sighted by the subscriber or their agent. 4 P a g e

5 Category Minimum document requirements Australian citizens or residents 1 Australian passport or foreign passport plus Australian drivers licence or Photo Card 2 Australian passport or foreign passport plus full birth certificate, citizenship certificate or descent certificate plus Medicare, Centrelink or Department of Veterans Affairs card 3 Australian drivers licence or Photo Card plus full birth certificate, citizenship certificate or descent certificate plus Medicare, Centrelink or Department of Veterans Affairs card 4 (a) Australian passport or foreign passport plus another form of government issued photographic identity document (b) Australian passport or foreign passport plus full birth certificate plus another form of government issued identity document 5 (a) Identifier declaration* plus full birth certificate, citizenship certificate or descent certificate plus Medicare, Centrelink or Department of Veterans Affairs card (b) Identifier declaration* by a person specified in Verification of Identity Standard paragraph 4.4(e) plus Medicare, Centrelink or Department of Veterans Affairs card For persons who are not Australian citizens or residents 6 (a) Foreign passport plus another form of government issued photographic identity document (b) Foreign passport plus full birth certificate plus another form of government issued identity document 5 P a g e

6 * The Identifier Declaration An Identifier Declaration is available where categories 1 to 4 cannot be met. An Identifier Declaration allows someone else to identify the person. When category 5(a) is used the identity declarant must be: an adult; and an individual who has known the person being identified for more than 12 months; and not a relative of the person being identified; and not a party to the conveyancing transaction the person being identified has or is entering into; and where category 5(b) is used the identity declarant must be an Australian legal practitioner, a bank manager, community leader, court officer, doctor, land council officeholder, licenced conveyancer, local government officeholder, nurse, public servant or police officer. The identifier declaration process The person being identified, the declarant and the subscriber or the subscriber agent, must all attend the same face-to-face in person interview. The subscriber or the subscriber agent must verify the identity of the declarant in accordance with the Verification of Identity Standard noted above, using categories 1 to 3 only. The Identifier Declaration is a statutory declaration completed by the declarant, which: details the declarant s name, address, occupation and date of birth; details the nature of the declarant s relationship with the person being identified; confirms that the declarant is not a relative of the person being identified; confirms that the declarant is not a party to the conveyancing transaction the person being identified has or is entering into; notes the length of time that the declarant has known the person being identified; 6 P a g e

7 provides that to the declarant s knowledge, information and belief the person being identified is who they purport to be; and Which when category 5(b) is used, provides that the declarant is an Australian legal practitioner, a bank manager, community leader, court officer, doctor, land council officeholder, licenced conveyancer, local government officeholder, nurse, public servant or police officer. Where the party being identified is A body corporate including an incorporated association An individual as attorney A body corporate as attorney including an incorporated association The identity verifier must: (a) confirm the existence and identity of the body corporate by conducting a search of the records of the Australian Securities and Investments Commission or other regulatory body with whom the body corporate is required to be registered; and (b) take reasonable steps to establish who is authorised to sign or witness the affixing of the seal on behalf of the body corporate; and (c) verify the identity of the individual or individuals signing or affixing the seal on behalf of the body corporate in accordance with this the Verification of Identity Standard. (a) confirm from the registered power of attorney the details of the attorney and the client party; and (b) take reasonable steps to establish that the conveyancing transaction is authorised by the power of attorney; and (c) verify the identity of the attorney in accordance with the Verification of Identity Standard. (a) confirm from the registered power of attorney the details of the attorney and the client party; and (b) take reasonable steps to establish that the conveyancing transaction is authorised by the power of attorney; and (c) comply with Verification of Identity Standard paragraph 5. 7 P a g e

8 Electronic settlements and land title lodgements PEXA is the only electronic lodgement network at present Electronic conveyancing is designed to be as safe as the existing paper-based conveyancing and lodgement system and eliminate the need for paper-based settlements, drawing cheques and meeting to exchange documents on settlement day. The legal framework developed for electronic conveyancing includes: Electronic Conveyancing National Law (ECNL); Model Operating Requirements (MORs); and Model Participation Rules (MPRs). The object of the law is to provide a common legal framework that enables documents in electronic form to be lodged and processed under the land titles legislation of each participating jurisdiction. This framework is then adopted and implemented by separate legislation in each State and Territory. To date all states have passed relevant legislation with the exception of Tasmania, the Northern Territory, and the Australian Capital Territory. Who can use the system The electronic lodgement network (ELN) may be used by subscribers who hold a digital signing certificate. A subscriber is also known as a representative if they are acting on behalf of a client. In order to become a subscriber one first needs to: be identified; have an ABN; be of good character; 8 P a g e

9 hold the necessary insurance; and be entitled to act for parties in conveyancing transactions. A practising certificate is considered sufficient evidence of good character. In order to apply for a digital signing certificate (DSC) one must provide evidence of their business and have the individual responsible for the use of the certificate go through a verification of identity process. That person may then allow others to sign with the digital signing certificate provided they too have had their identification verified. How it works PEXA (Property Exchange Australia) is an online settlement and lodgement system developed in collaboration with the conveyancing industry. It eliminates the need for paperbased settlements, drawing cheques and meeting to exchange documents on settlement day. In this system, vendors and purchasers engage registered subscribers to act on their behalf. Subscribers include solicitors, conveyancers, financial institutions and government bodies. The subscriber uses the online electronic system on behalf of their clients to settle land transactions - including the payment of duty to the relevant state tax or revenue office - and lodging documents electronically. Client identification Subscribers are required to take reasonable steps to verify the identity of the parties they represent. What constitutes reasonable steps may be influenced by various factors such as the length of time a subscriber has known the person or whether they have represented the person on previous occasions. Although reasonable steps are not specified and rely upon common law principles, compliance with the Verification of Identity Standard, does constitute taking reasonable steps and is likely to become common practice. A face to face meeting is required to verify the identity of parties to an electronic transaction, at which time original documents such as passports, drivers licences and any other relevant documents must be sighted. A copy of these documents must be taken and retained for at least seven years. 9 P a g e

10 There is no obligation to verify someone s identity if they have been identified within the previous 24 months. Who has to be identified Every party to a real property transaction must be identified, including witnesses and legal representatives. Clients collecting a certificate of title from safe custody must also be identified. Identity agents It is always preferable to verify a client s identity in person, however occasionally a face-toface interview is not possible and in these circumstances an identity agent may be used. An identity agent is a person the subscriber or representative reasonably believes is reputable, competent and insured and is authorised by the subscriber or representative to conduct verification of identity on their behalf. Identity agents can include solicitors and licensed conveyancers provided they meet the above criteria, as well as commercial entities offering identity agent services such as Australia Post. It is important to obtain the copies of the documents used to verify the identity of a person or an identity declarant from the identity agent. The copies must be signed, dated and endorsed as a true copy of the originals by the identity agent. An identity agent must also provide an identity agent certification as set out in the Participation Rules. Client authorisation Once a client has been identified, the client must then authorise the subscriber to act on their behalf in the execution and lodgement of dealings. A client authorisation form must be completed and retained for this purpose. A client authorisation form can be found in the relevant conveyancing guide. 10 P a g e

11 Retention of identity documents Documentary evidence of identity must be retained for at least seven years from the date of lodgement of a dealing, whether an electronic or paper transaction. Compliance for paper transactions is slowly coming into force around the country. Overseas clients A client or mortgagor located overseas will need to have their identity verified and signature witnessed by an employee at an Australian Embassy, High Commission or Consular Office. Clients must make an appointment to attend the nearest office and advise the subscriber of the details. The subscriber will then prepare a Client Authorisation or mortgage and the approved Australian Embassy/High Commission/Consulate Identity Witnessing Certification. These documents are to be sent to the client with written instructions advising of the process and what original and current identification documents are to be produced at the nominated Australian Embassy or Consular Office. Once the consular office is satisfied that reasonable likeness is confirmed, they will prepare and endorse copies of all original identification documents produced by the client or mortgagor and ask the client or mortgagor to sign the Client Authorisation or mortgage. They will then complete, sign, date and endorse the Witnessing Certification for the client or mortgagor. All of the documentation will then be given back to the client who will send it on to the subscriber. If the subscriber or mortgagee has any reason to doubt the authenticity of any of the documents received from the client or mortgagor, copies of the Australian Consular Office endorsements and Witnessing Certification can be referred to the Department of Foreign Affairs and Trade (DFAT) by for confirmation that the signatures and stamps appearing on the documents are that of a DFAT officer. 11 P a g e

12 Glossary in brief Subscriber Representative Identity Agent Verifying identity Client authorisation A person who is authorised under a participation agreement to use an electronic lodgement network to complete conveyancing transactions on behalf of another person or on their own behalf. A subscriber who acts on behalf of a client. An identity agent is a person the subscriber or representative reasonably believes is reputable, competent and insured and is authorised by them to conduct verification of identity on their behalf. Identity agents can include solicitors and licensed conveyancers provided they meet the above criteria, as well as commercial entities offering identity agent services such as Australia Post The verification of identity requirements are satisfied by taking reasonable steps - which are not specified and rely upon common law principles. However, compliance with the Verification of Identity Standard constitutes taking reasonable steps. A document by which a party to a transaction authorises a subscriber to act on their behalf in relation to an electronic settlement and or lodgement. Parties to be identified Conveyancing Instrument Transfer (including a transfer under a power of sale) Mortgage Transmission application Application to register a death Application for a substitute certificate of title /Crown lease When a request to retain the old manual title is made by a person not a party to any of the transactions listed above Any instrument or document listed above Person Being Identified The transferor and the transferee The mortgagor The executor or the administrator The survivor The applicant - unless the applicant is a mortgagee The registered proprietor Any person (other than a representative or mortgagee) to whom a duplicate certificate of title is given 12 P a g e