Verification of identity (VOI) is a time-consuming yet essential task for law firms.
Appropriate caution protects both practitioner and client from fraud and is more important than ever. Recent cyber attacks will see vast numbers of fake Australian IDs for sale on the Dark Web, so documents received electronically or second-hand need to be treated with suspicion.1
What are the rules?
Broadly speaking, law firms must take “reasonable steps”2 to confirm client identity, but are free to choose the VOI process and tools that best suits the situation.
For those doing property work, ARNECC and the Titles Office have a VOI standard that is deemed to achieve “reasonable steps”. If that process is followed, a safe harbour is reached and the firm does not have to justify selection of the method if an incident occurs.3
A firm may also use online tools, identity agents or a combination of both to verify client ID, but only where the client is seen “in person” is safe harbour achieved.
When selecting the appropriate method, a variety of factors should be considered. These include the length of dealing with the client, type of transaction, value of money or asset changing hands, and ‘red flags’ such as an implausible story or a client who is always unavailable.
Remember that ID copies are some of the most sought-after target materials for cyber criminals, and copies should be taken, exchanged and stored securely (ideally, not left in an email box afterwards). Consider using a verification service app to capture and confirm the current status of VOI documents as an adjunct to your in-person process.
For full details of the guidance and some of the risk issues to consider see Queensland Law Society’s Verification of Identity FAQs.
Safe harbour VOI in a nutshell
All firms must take “reasonable steps” to establish the identity of clients. What is reasonable depends on the overall fraud risk. In high-risk activities (such as assets sales) VOI should be more stringent. The gold standard approach is to use ARNECC’s Verification of Identity process (‘safe harbour’). This is not compulsory but will reduce the firm’s exposure.
What does safe harbour VOI require?
In person, face-to-face meeting with all clients (either at your firm or using an accredited agent).
Client presents photo and other ID (such as passport and driver’s licence, birth certificate). Photo is compared with the person presenting it and records kept.
For more details see:
David Bowles is a Queensland Law Society ethics solicitor.
1 In addition, taking ID by email exposes your firm to a lot of liability if an email account is compromised.
2 Australian Registrars National Electronic Conveyancing Council, Model Participation Rules (7thed.) (at 9 August 2021) clause 6.3(d) & (e), Schedule 8; see also Australian Registrars National Electronic Conveyancing Council, Model Participation Rules Guidance Note 2 (at April 2021).
3 This does not confer immunity from civil liability but may be persuasive.