Verification of identity—when is it required?
With the increased use of electronic communications and electronic settlement technology, especially in these COVID times, verification of identity (VOI) has become increasingly important in reducing the risk of identity theft and fraud.
Real Estate lawyers Luke Hefferan and Matt Dolan explain why and when VOI is required and discuss the VOI standards required.
What is VOI?
VOI is the process of verifying an individual is who they say they are and has the right to deal with land, or other property, either in their individual capacity or as a representative of a company.
Why is VOI required?
Lawyers and other persons witnessing documents have always been required to take steps to verify the identity of the person signing the document. However, the rise of electronic conveyancing in Australia has seen the introduction of legislation, rules, and standards designed to codify this obligation.
When is verification of identity required?
VOI is required in the following circumstances:
- land dealings generally, including electronic conveyancing, and when witnessing Queensland Land Registry documents
- the making of wills and powers of attorney
- where an asset is moving, including shares and other personal property.
Lawyers who subscribe to the electronic settlement and lodgement platform PEXA must comply with the Model Participation Rules (MPR).
For transactions involving dealings with the Titles Office (whether electronic of otherwise), each State or Territory has its own rules. However, in Queensland the Titles Office has adopted—
- the Queensland Participation Rules (based on the MPR) for documents created and lodged via the online PEXA platform, and
- a set of rules (essentially the same as the MPR) for paper documents created and lodged with the Titles Office.
Within both sets of these rules are best practice standards for verifying identity known as the VOI Standard. While compliance with the VOI Standard is not compulsory, it will best position the lawyer to meet their overriding obligation to take reasonable steps to verify identity. So, for the most part, clients can expect lawyers will require them to comply.
If the transaction requires VOI, then the lawyer or other qualified witness must take reasonable steps to verify—
- the identity of the individual, and
- the right of the individual to—
- deal with the property (if electronic conveyancing is being used), and
- sign the document (if witnessing Titles Office documents).
Step 1—Verification of identification documents
The standard documentation required for the VOI process is like the '100 point' system commonly used for banking and other identification processes. Various categories and combinations of documents may be used to prove your identity, including—
- an Australian or foreign passport
- driver licence or photo card
- birth or citizenship certificate
- Medicare card
- Centrelink or Department of Veterans' Affairs card.
The lawyer and client must arrange a face-to-face meeting where original documents must be sighted, and the lawyer or other qualified witness must—
- be reasonably satisfied the document is genuine
- be satisfied the individual has a reasonable likeness to the individual depicted in the photograph, and
- when witnessing a signature, check the signature on the identity document is consistent with the individual's signature on the document being witnessed.
Use of agents and digital technology
The requirement of a face-to-face meeting to complete the VOI may be time consuming for the client (and the lawyer) so a lawyer may engage an agent to complete the VOI. Then, the agent completes the VOI with the client and provides certification that the VOI has been completed in compliance with the lawyer's instructions.
The use of electronic videotelephony products, such as Zoom and Facetime, for completing verification of the individual and certifying original documents are not endorsed under the VOI Standard. However, there are easy-to-use digital VOI applications available which enable simple and swift VOI which a lawyer may determine satisfies their requirement to take reasonable steps to complete the VOI.
Step 2—Verification of right to deal or entitlement to sign
In addition to the verification of identity documents, the lawyer or other qualified witness should obtain supporting evidence to show the link between the individual and the party completing the proposed transaction. Supporting evidence can include—
- title search, or registration confirmation statement
- contract of sale
- rates notice
- water or electricity bill
- land tax notice
- loan documents, and
- other agreements or documents, for example bank statements, land valuation, trust deeds and variations.
Length of validity of VOI
A lawyer can rely on a previously completed VOI (for the same individual) for a period of two years.
Whilst there appear to be numerous hoops to jump through to verify an individual's identity, it is an important aspect of any transaction to ensure the risks of identity theft and fraud are minimised.
If you have questions about verification of identity our Real Estate lawyers can explain the requirements and answer any queries you may have.
The latest edition of Fundamental is available now. Download your copy.
The latest edition of Financial Services Thinking is available now. Click here for all the latest news.
With fund managers asking 'Where to now?', the latest edition of our Toolkit for Fund Managers focuses on what actions you can take to help you reset for the road ahead. Download your copy.