Verification of Identity- What Method is Best?

Identity verification icon on shieldThe digital age has simplified many tasks, eliminating the need for face-to-face interaction. However, it has also opened up many opportunities for fraud. One source estimates that more than 1 million Australians have their identity stolen each year at a cost of about $1 billion. It’s with good reason ARNECC (Australian Registrars National Electronic Conveyancing Council) sets out a Verification of Identity(VOI) Standard in Section 8 of its Model Participation Rules. What are those standards and can technology safely take the place of face-to-face contact in this situation?

A Critical Step

ARNECC explains, “The purpose of carrying out verification of identity is to reduce the risk of identity fraud and the registration of fraudulent land transactions.” VOI protects all parties involved. In addition to the purchaser and vendor, identities should be verified for mortgagors, the persons to whom certificates of title are provided, subscriber administrators and any other signers involved. Acceptable forms of identification include a driver’s license, passport, birth, citizenship or descent certificates, and current Medicare, Centrelink or Veterans’ Affairs Cards. Also, note that a marriage certificate is required to verify name changes.

Verifying all identifications is a critical part of due diligence followed by conveyancers. Subscribers often represent clients, signing documents on their behalf. Mortgagees must sign a mortgage to indicate they hold a valid mortgage from a lender. VOI verifies three critical pieces of a transaction; verification of identity, that an individual is a legal person and that they have the right to enter into the transaction. It’s easy to see how one breach in integrity could invalidate the transaction and lead to a frustrating situation. How can you ensure VOI is correctly carried out?

“Reasonable” Not Mandatory

VOI sets out three primary requirements. First, VOI should be done during a face-to-face interview. Second, the person responsible for doing the verification must be satisfied that the person being identified has a reasonable likeness to the person depicted in the identity documents. Lastly, the identity documents must be on the approved list of acceptable documents. However, conveyancers are required to take “reasonable steps” to meet these three requirements. It is not mandatory to conduct VOI during a face-to-face meeting if it is not reasonable to do so. Often clients live in remote areas, making an in-person meeting unreasonable. In these cases, ARNECC allows for this situation in its Notes #2 saying, “where the verification is unable to be conducted face-to-face due to remoteness conducting the verification by electronic means with further steps to satisfy yourself of the person’s identity.”

Electronic VOI, the Gold Standard

In the past, when face-to-face VOI was not possible, clients had to endure the long lines and expense of getting it done at their local post office. However, mobile apps are providing an efficient and safe method of VOI. Apps, such as Apple’s IDme, allow clients to securely send photos of approved identity documents. Then, the person verifying can arrange a video call with the client, comparing their image to the photos in the documents. Lastly, the client and the VOI representative sign declarations and the app creates a VOI report.

The electronic method is actually turning into the safer method. Using a secure app and secure storage provides the security and privacy that these important documents require. Having multiple copies of IDs circulating around, in briefcases or vehicles is not secure. Many clients would be shocked to know that their broker is using photo storage on their personal device to store photos taken during these face-to-face meetings. Apps like IDme only store documents in a secure, cloud location, never on the device itself.

VOI reports can be immediately sent to the conveyancer’s cloud account and stored for years, eliminating the need to verify the same people multiple times. ARNECC‘s Notes #2 states, “Where a verification of identity has occurred within the previous two years, the person’s identity does not need to be verified again, provided the Subscriber takes reasonable steps to ensure they are dealing with the person who was previously identified.” Using a secure app would certainly constitute “reasonable steps,” making future transactions more efficient. Instead of viewing secure app VOI as an alternative, view it as your primary means of VOI. It’s the gold standard in VOI.

What About VOI for Corporations?

Electronic methods can also be used to verify the identity of corporations. In addition to a review of corporate documents, the VOI will be performed with authorised signatories of the corporate entity. If a power of attorney is in place, the VOI can be with the appointed attorney. ARNECC explains a three-step process:

  • Confirm the existence of the body corporate
  • Take reasonable steps to establish who is authorised to sign for the body corporate or witness the affixing of any seal
  • Verify the identity of the individuals signing or affixing the seal on behalf of the body corporate.

Relevant corporate and trust documents must also be provided for review to satisfy the verification process. As with individuals, electronic VOI is the best way to protect the privacy of a corporate client and securely store its documents. In corporate situations, it may even be more important to protect vital company documents.

Third-party VOI

Brokers, conveyancers, banks and other involved parties will often entrust VOI to a responsible agent. Titlexchange is an experienced conveyancer firm that specializes in electronic VOI. Give your clients the peace of mind of knowing their documents are safely stored by using our resources to ensure every transaction is backed up by a properly executed VOI.