Verification of Identity standards for NSW from January 2015
You are identifying your customer but are you verifying … that is the question!
The proposed change
The current safe harbour requirements in New South Wales to identify mortgagors will be replaced by the prescribed reasonable steps to confirm identity of mortgagors from 15 January 2015. In particular, mortgagees will be required to undertake reasonable steps or make enquiries to satisfy themselves of the mortgagor’s identity following the steps set out in the Verification of Identity (VOI) standard in Schedule 8 of the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) Model Participation Rules.
VOI requirement
The VOI standard is made up of the following requirements.
Face to face regime
The mortgagees or its agents are required to conduct face to face in person interviews with the mortgagors so as to identify and verify the identification of the mortgagors, including ensuring they are satisfied that the mortgagor is a reasonable likeness to the picture of the mortgagor on the photograph identification.
Categories of identification documents
The mortgagees or its agents must ensure that the mortgagor being identified produces original documents in one of the categories in the table below.
Should categories 1 to 3 not be met, then category 4(a) may be used. If category 4(a) cannot be met, then category 4(b) may be used. Otherwise, category 5 is only relevant for people who reside outside Australia or to those who are not Australian citizens.
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Category
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Minimum document requirements for individuals |
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1
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A current Australian Passport or foreign passport and an Australian visa or notice evidences an Australian resident visa.
Plus all of these further documents:
- a current Australian drivers licence or Photo Card issued by a Government agency
- a change of name or marriage certificate, if necessary
|
|
2
|
A current Australian Passport or foreign passport and an Australian visa or notice evidences an Australian resident visa.
Plus all of these further documents:
- full birth certificate or citizenship certificate or descent certificate
- Medicare or Centrelink or Department of Veterans’ Affairs card
- a change of name or marriage certificate, if necessary
|
|
3
|
A current Australian drivers licence or Photo Card issued by a Government agency.
Plus all of these further documents:
- full birth certificate or citizenship certificate or descent certificate
- Medicare or Centrelink or Department of Veterans’ Affairs card
- a change of name or marriage certificate, if necessary
|
|
4(a)
|
Identifier Declaration by the mortgagor as per paragraph 4 of the VOI Standards.
Plus all of these further documents:
- full birth certificate or citizenship certificate or descent certificate
- Medicare or Centrelink or Department of Veterans’ Affairs card
- a change of name or marriage certificate, if necessary
|
|
4(b)
|
Identifier Declaration by an Australian legal practitioner, bank manager, community leader, court officer, doctor, land council officeholder, licensed conveyancer, local government officeholder, nurse, public servant or police officer, as per paragraph 4 of the VOI Standards.
- Medicare or Centrelink or Department of Veterans’ Affairs card
- a change of name or marriage certificate, if necessary
|
|
5
|
A current foreign passport
Plus all of these further documents:
- another form of government issued photographic identify document
- a change of name or marriage certificate, if necessary
OR
A current foreign passport
Plus all of these further documents:
- full birth certificate
- another form of government issued photographic identify document
- a change of name or marriage certificate, if necessary
|
Where a client authorisation or execution of a mortgage is required for the following mortgagors, the mortgagee must:
| Type |
Minimum identification and verification requirements |
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Body Corporate (Inc. incorporated association)
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- Confirm existence and identity of the body corporate i.e. ASIC search or other regulatory body searched for registered information.
- Take reasonable steps to establish who is authorised to sign or witness the affixed seal of the body corporate.
- Verify the identity of the individual/s signing or affixing the seal following the VOI standards.
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Individual as Attorney
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- Confirm from the registered power of attorney the details of the attorney and the mortgagor’s details.
- Take reasonable steps to establish that the conveyancing transaction is authorised by the power of attorney.
- Verify the identity of the attorney following the VOI standards.
|
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Body Corporate as Attorney
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- Confirm from the registered power of attorney the details of the attorney and the mortgagor’s details.
- Take reasonable steps to establish that the conveyancing transaction is authorised by the power of attorney
- Verify the identity of the attorney following the VOI standards for Body Corporate.
|
Practicalities to know about
No certificate
There is no need to lodge or submit any certificate specifying that the VOI standards have been met, however it is the mortgagee’s obligation to ensure that the VOI standards are met. Mortgagees must, however, have in place internal procedures to record the VOI standards undertaken by the mortgagee and store such records for a period of seven years.
Further verification
In the event that the mortgagee (or the mortgagee’s agent) are not satisfied with the VOI of a particular mortgagor, notwithstanding the normal process has been followed, the mortgagee must undertake further steps to identify the identity of the mortgagor.
Agents
In circumstances where the mortgage engages an agent to verify the identity of mortgagors, it is important that the mortgagee ensures that the appointed agent:
- witnesses the signing of a completed client authorisation, if required;
- is reasonably believed to be reputable, competent and insured; and
- provides to the mortgagee the original verified documents together with a certification as required under the VOI standards;
Verification of identity conducted in foreign country
The VOI conducted in a foreign country must be conducted by:
- a mortgagee or its agent; and
- an Australian Consular Officer or an Australian Diplomatic Officer or a competent officer where the mortgagor is a member of the Australian Defence Force.
Note: category 4(a) and 4(b) cannot be used for VOI conducted in a foreign country.
Verification requirements not witnessing requirements
The VOI standards are in addition to the witnessing requirements as set out under the Real Property Regulation 2014 (NSW) and the Real Property Act 1900 (NSW).
What this means for you?
Risks for not verifying
Do as to lodge a mortgage for registration, it is a requirement that the mortgage identifies and verifies the mortgagor as being the same person who is or will become the registered proprietor of the land that is security for payment of the debt. Where there is non-compliance with the VOI standards by the mortgagee, the LPI may refuse or reject such resister the mortgage and cancel the recording in the register of the land that is provided as security.
These VOI processes will need to be followed stringently to minimise any such risks.
Changes to the identification process
Given the pending onerous VOI requirements on mortgagees, it is important to consider the following:
- the review of internal process and procedures to ascertain the current business practice on identifying and verifying customers;
- whether internal processes and procedures are sufficient to ensure the VOI standard is complied with; and
- implementing internal procedures and protocols to ensure that the VOI standard is met and documented.
Notwithstanding the pending VOI standards, there are some reporting entities that are required to verify and identify their customers to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and AML/CTF Rules. In those instances, we recommend that the internal processes and procedures be considered to consolidate those requirements into one streamlined process.