Verification of Identity: when do mortgagees need to make further enquiries?

Verification of Identity (VOI) is now an entrenched practice in property transactions across all Australian jurisdictions. The obligation imposed on mortgagees is to take “reasonable steps” to identify the person signing the land registry document and to establish their right to deal with the property. This article will aim to remove some of the confusion about the VOI process as well as raise some considerations for mortgagees as to when they may be required to make further enquiries as to a mortgagor’s identity.

What are “Reasonable Steps”?

The reasonable steps requirement provides a degree of flexibility for identifier agents to use their professional judgment on what is necessary to identify an individual in any particular circumstance. For instance, an identity verifier may require less identification than the VOI Standard if they consider that reasonable given a history of transactions with the person to be identified.

The “safe harbour” provisions contained in the VOI Standard published by the Australian Registrars National Electronic Conveyancing Council (ARNECC) Participation Rules also offer guidance.  

Reasonable Steps in the Verification of Identity Standard

To show they have taken reasonable steps, an identity verifier should comply with ARNECC’s VOI Standard.  The requirements of the VOI Standard are twofold:

1. A face-to-face interview with the person to be identified; and
2. Examination of original identity documents produced by the person to be identified.

The minimum number and type of identity documents that must be produced to constitute reasonable steps under the VOI Standard are provided in six categories.  Starting with the first category, if a person cannot provide all the documents in the first category, they must then attempt to provide the documents listed in the second category.

For a person providing documents within Category 1, the relevant requirements are: (1) an Australian or foreign passport; (2) an Australian drivers licence or proof of age card; and (3) a change of name or marriage certificate if necessary.

For a person providing documents within Category 2, the relevant requirements are (1) an Australian or foreign passport; (2) a full birth certificate, citizenship certificate or descent certificate; (3) a Medicare or Centrelink or Department of Veterans’ Affairs card; and (4) a change of name or marriage certificate if necessary.

For further categories, please consult the ARNECC website here.

Making Further Enquiries

While the two-step process above will usually constitute reasonable steps, there are circumstances in which a verifier must make further enquiries.  Pursuant to the Model Participation Rules Guidance Note 2, it is necessary to make further enquiries where:

1. An identity document is not genuine;
2. A photograph is not a reasonable likeness;
3. The person does not appear to be the person in the identity documents; or
4. It would otherwise be reasonable to do so.

There are no rules that stipulate when it would “otherwise be reasonable to do so”.  It is dependent on the circumstances and nature of the transaction and the parties.  For example, further enquiries might be required when the person:

1. offers a limited explanation for their lack of identity documents;
2. is unaware of the history of the property (i.e. how the property came to be in their name), and cannot provide a reasonable explanation for this lack of knowledge;
3. pressures for settlement to occur more quickly than usual.

Conclusion

The VOI Standard is not necessarily a straight-forward approach to identity verification.  Circumstances may arise during the identity verification process or later during the transaction that require further identity verification enquiries.  However, mortgagees who abide by the VOI Standards avoid potential penalties and fulfil a condition of obtaining indefeasible title.

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This publication is provided for your general information and interest only. It is not intended to be comprehensive, and does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.