Lawcovernotes March 2017

Identify your clients to stop the scammers The setting: a department store. The scenario: a solicitor approaches his client, a salesperson, to sight their passport in connectionwith a property purchase. The sequel: with no photocopy made of passport details, the solicitor cannot verify the client’s identity and potentially exposes his practice to a claim. While it may seem fanciful, the above scenario is fact, not fiction. Over the years, Lawcover has been involved a number of claims which involve identity theft and fraudulent land transactions. Assuming an identity is an essential part of most of these scams and deceiving the victim about the false identity the key to their success. The 2015 Uniform Conduct, Practice and CPD Rules for Solicitors require a solicitor to verify identity when engaged to advise a proposed signatory regarding loan and security documents. For more information click here Rule 11.2 states: “The solicitor providing the advice must verify the identity of the proposed signatory using the Verification of Identity Standard contained in Schedule 8 to the Model Participation Rules determined by the Australian Registrars National Electronic Conveyancing Council as adopted and made by each jurisdiction pursuant to section 23 of the Electronic Conveyancing National Law.” The current NSW Participation Rules for Electronic Conveyancing , with which all solicitors should be familiar, include a Verification of Identity Standard at Schedule 8. For more information click here In brief, the Participation Rules require that the identity verifier should conduct verification at a face- to-face meeting with person being identified (Clause 2). When examining documents containing photographs, the verifier must be satisfied that this person is reasonably like the one depicted in the photographs. For example, the shape of their mouth, nose, eyes and the position of their cheek bones (Clause 2.2). At the face-to-face interview the verifier must ensure that the person being identified produces original documents in one of the categories in the table below, starting with Category 1 (Clause 3.1). They must be reasonably satisfied that a prior category cannot be met before progressing to a subsequent category (Clauses 3.2 and 3.3). The Participation Rules also detail requirements for identification of a body corporate, an individual as attorney and a body corporate as attorney. The verifier must: ^ ^ Sight the originals of all documents from Categories 1, 2, 3, 4, 5 or 6 produced by the person being identified ^ ^ Keep copies of all documents produced by the person being identified and any identity declarant The documents produced must be current, except for an expired Australian passport which has not been cancelled and was current within the preceding two years (Clause 3.4). The table opposite is reproduced from the Rules. 10.