VERIFICATION OF IDENTITY – WHAT IS REQUIRED?

It has always been important to know who your client is.  Now, with the mandating of econveyancing, it is critical that practitioners take care to identify their clients and to ensure that their clients have the right to deal with the property.  Verification of Identity (VOI) helps protect the Register and reduces the risk of identity fraud.

We are very concerned that there has been an increase in professional indemnity insurance claims for failure to undertake VOI correctly.  It is critical that practitioners take their VOI obligations seriously.  The Model Participation Rules, published by ARNECC, require practitioners to take reasonable steps to identify a client.  Practitioners are also required to certify in the relevant instrument that they have taken reasonable steps.  It is important to keep good notes of your verification process.

The following information comes from Guidance Note #2 – Verification of Identity here MPR-Guidance-Note2-Verification-of-Identity-Updated.pdf .

5.1 What are reasonable steps? ‘”Reasonable steps” is a commonly used legal concept.  When applied to Subscribers and mortgagees, it means the taking of such steps as an ordinary prudent Subscriber or mortgagee would have taken in the circumstances and in the ordinary course of his or her business.  Whether reasonable steps were taken will be a question of fact depending on the circumstances of the individual case.  Ultimately, this would be determined by a Court on an objective basis.” …

There is a VOI Standard which is “one set of reasonable steps” and this standard is set out in Schedule 8 of the MPRs. ” The Standard is not mandatory.  However, if it is properly carried out, the Subscriber will be deemed to have taken reasonable steps to verify identity.”

However, consider 5.3 When can an agent be used? … “A Subscriber who intends to rely on verification of identity undertaken by an agent on its behalf should take steps to confirm that the agent has conducted the verification of identity in accordance with the Subscriber’s directions, and with the appropriate level of care and attention.”

In relation to Identity Agents, note that “ARNECC does not regulate or approve Identity Agents nor in any way assess their reputation or competence or approve the way they provide their services, including whether their services comply with the above mentioned Rules and Requirements.”  You can read this here.

It is clear that you need to actively consider the verification process and look carefully at VOIs completed by agents.  The ultimate responsibility for VOI is yours. In 5.7 it is noted that “where there is a dispute the Subscriber will be required to prove that the Verification of Identity Standard was properly carried out for it to be deemed reasonable steps.”

5.7.2.1 Face-to-face verification states that “to comply with the Verification of Identity Standard the person undertaking the verification (Identity Verifier) must conduct a face-to-face in-person interview with the person to be identified”

5.7.2 also discusses the identification document categories, verification of identity of bodies corporate, verification of identity of attorneys and the evidence required from an Identity A gent.

This Guidance Note contains several fact situations which may help you to decide what to do in unusual cases.  It is a worthwhile read.

Question 13 discusses the use of video technology and states “where the standard is not being used a Subscriber may consider that the use of video technology, such as Skype or FaceTime, is useful in the particular circumstances.  However, its use should be considered by the Subscriber who will have to justify that, in the circumstances of the particular VOI, use of video technology and any other measures used, constitute the taking of reasonable steps.  ARNECC notes that video technology may be manipulated or forged, therefore caution is recommended.  The use of this technology is at the discretion and risk of the Subscriber.”

The important issue to remember is that the obligation to identify a client rests ultimately with the licensed practitioner and care should be taken to ensure that, in all the circumstances, reasonable steps were taken.