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Who are you? Prove it

Who are you? Prove it

By Simon Libbis and Prue Long

Caveats Conveyancing Duties Real Property 

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Conveyancing clients need to sign documents. In the electronic world practitioners will check and certify the identity  of clients, thus needing  a detailed knowledge  of the requirements.  

In the October 2013 edition of the LIJ1 Murray McCutcheon wrote “Farewell to paper: Electronic conveyancing to go national”. It highlighted the main differences between paper conveyancing and the procedures required by an electronic system. The obligation to verify the identity of participants in the transaction is a significant departure from the existing process.

The purpose of this article is to inform practitioners about the verification of identity regime for conveyancing and its practical implications.

Existing identification regime

Verification of Identity or “VoI” is not a new concept in Australian law. VoI obligations are already imposed on a range of professionals and businesses including, for example, under the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (AML/CTF Act).

Among other things, the AML/CTF Act requires that a reporting entity2 verify the identity of customers before providing “designated services”.3 A reporting entity may also be required to carry out customer due diligence.4 “Reporting entities” include the financial and gambling sectors.

Reporting entities are required to have an AML/CTF program which sets out customer identification procedures. Specific requirements are set out in the AML/CTF Rules, and programs will vary depending on risk classification and whether the customer is an individual or a non-natural person (e.g. company, association etc.).5 In 2007 the Government announced it would amend the AML/CTF Act to specify new “designated services” which could trigger obligations for:

  • real estate agents in relation to buying and selling real estate
  • lawyers, notaries and other independent legal professionals and accountants when preparing and carrying out certain transactions.

There is no clear indication of when this will occur.

E-conveyancing legal framework

In the article mentioned above6 Murray McCutcheon explained the legal framework developed for electronic conveyancing in Australia. It includes the:

  • Electronic Conveyancing National Law (ECNL)7
  • Model Operating Requirements (MORs)8
  • Model Participation Rules (MPRs).9

They are the primary source of practitioners' obligations when using the Electronic Lodgement Network or “ELN” and set out the VoI obligations. They are not, however, set in concrete and may change from time to time. The Australian Registrars National Electronic Conveyancing Council (ARNECC) can review and modify the MORs and MPRs. It is, therefore, important to check the current version on the ARNECC website.

VoI is not just about identifying clients. To use the ELN you need to be identified by the Electronic Lodgement Network Operator or “ELNO”, an organisation that has been authorised to lodge dealings electronically with the Land Registry. The method of electronic lodgement involves the use of a Digital Signing Certificate (DSC). To obtain one of these you have to go through the dual identification process for your business and the individual signer. Any other person who will be using the DSC must also be identified.

Gaining access to the system

Clause 14 of the MORs sets out who can use the ELN. They are referred to as “subscribers”. To become a subscriber you must have your identity verified. This is done by the ELNO in much the same way that you will need to identify your clients, which is explained below.

Other obligations on subscribers include:

  • having an ABN10
  • being of good character11
  • appropriate fidelity and professional indemnity insurance12
  • entitlement to act for parties in a conveyancing transaction.13

Fortunately, having a current practising certificate satisfies the last three points.

So once you have been identified and provided evidence of your professional indemnity insurance, practising certificate and ABN you are eligible to become a subscriber.

Signing electronically

Clause 7.5.2 of the MPRs requires a subscriber to have a valid DSC. The MORs set out the requirements in relation to these. Under cl 7.6.2 the ELNO must ensure that the DSC meets the standards set by the Commonwealth Government Gatekeeper Strategy.14 It must also identify the subscriber and its ABN along with the identity of any person who will be using the DSC to sign.

In practice, what this means is that when you apply for a DSC you must provide evidence of the identity of your business and have the individual who is responsible for the use of the DSC go through the VoI process. That person may then allow others to sign with the DSC provided they too have had their identification verified.

Identifying clients

Once you have been through all the identification hoops to become a subscriber and obtain a DSC you can use the ELN. This carries with it obligations to identify the parties you represent.

Clause 6.5 of the MPRs requires subscribers to “take reasonable steps to verify the identity of” parties they represent. The MPRs go on to say that compliance with the Verification of Identity Standard (VIS) is deemed to constitute reasonable steps. The VIS appears as Schedule 8 to the MPRs.

There is no guidance on what “reasonable steps” are. You would need a great degree of certainty before accepting a client's identity without further checks. In practice it is most likely that the VIS procedure will be widely used. It is, therefore, important to know what it involves.

The VIS is basically the old “100 point” check that we have become used to. It requires a face to face meeting with the client. At that meeting original documents such as passports, drivers' licences and so on must be sighted and the subscriber is obliged to ensure that the photograph matches the person.

Where a client cannot produce photographic identification there is provision for a person meeting certain qualifications to make a declaration as to the client's identity.

The VIS also deals with identification in foreign countries and of corporations and attorneys.

A subscriber can appoint an agent to carry out the identification. These are referred to as “subscriber agents” in the MPRs. The agent must carry out the identification in accordance with the VIS and meet certain standards, such as having professional indemnity insurance. Before relying on the agent identity check, the subscriber must have received from the agent a declaration as to process followed and documents sighted.

There is no obligation on a subscriber to verify the identity of a client who has been through the VIS process in the previous 24 months. However, another face-to-face interview must occur where a subsequent Client Authorisation is required.

Clause 6.6 of the MPRs obliges the subscriber to retain any material supporting VoI for at least seven years after lodgment of the electronic instrument. It appears that retention of hard or soft copies of the relevant documentation will constitute sufficient compliance copies with this obligation.15

Having satisfied yourself as to the client's identity, what do you now do with that information?

Certifying identity

Clause 6.3 of the MPRs obliges subscribers to obtain a client authorisation that enables the subscriber to execute and lodge dealings on behalf of the client. This is a paper document that is physically signed by the client and the subscriber. The form appears as Schedule 4 of the MPRs.

The identity of the client must be verified at or before the signing of the client authorisation.16 The form, in fact, requires the subscriber to certify that reasonable steps have been taken to ensure that it was signed by the named person. Implicit in this is a representation that the client has been identified.

The express certification as to the identity of the client is not required until the subscriber is signing the documents that are to be lodged for registration. The way in which these documents are signed is by the subscriber ticking off a number of certifications and then applying the DSC.17 The certifications appear as Schedule 3 of the MPRs. The first certification is:

“1. The Subscriber has taken reasonable steps to verify the identity of the [transferor/transferee/mortgagee/mortgagor/caveator/applicant].”

It is at this stage of the transaction that the subscriber makes the representation to the other parties and to the Registrar of Titles that the client has been identified. This carries with it a responsibility and potential liability if that representation subsequently turns out to be incorrect.

Responsibility for certification

It should be obvious that certification of the identity should not be made in circumstances where there is any doubt. Using the VIS appears to provide the highest level of protection. It does not, however, entirely exempt subscribers from liability.

Clause 10 of the VIS requires further identity checks to be carried out in some circumstances. These include where the subscriber “knows or ought reasonably to know” that the identity documents are not genuine or if photographs on them are “not a reasonable likeness” of the client. So there is more to it than just going through the process. Subscribers are required to exercise judgment as to the quality of the evidence provided.

There are organisations that provide identification services. It is likely that they, and possibly others, will offer to act as subscriber agents and apply the VIS process for subscribers. While this will greatly assist those not wishing to become involved in identifying clients, it does not absolve them from liability. The subscriber makes the certification as to identity and ultimately bears responsibility for its correctness. It will, therefore, be important to check the credentials and insurance cover of identification service providers.

Further identity checks are also required “if it would otherwise be reasonable to do so”.18 This is probably intended to cover unforeseen circumstances that give rise to doubt about identity. Hopefully this overarching obligation will not result in attempts to affix liability for losses suffered as a consequence of incorrect identification to subscribers who have honestly and diligently identified their client.

Application of VoI to paper-based transactions

Currently the Transfer of Land Act 1958 gives the Registrar power to require that the identity of a person be verified where the Registrar is not satisfied as to the identity of any person by or on behalf of whom an instrument was executed.19 The Transfer of Land Amendment Bill 2014, which was introduced in Parliament in early August 2014, goes much further than this and gives the Registrar broad powers in relation to placing positive VoI and client authorisation requirements on practitioners and other persons.

The Registrar's extended powers under the Bill include the power to determine:

  • the standards to which the identity and authority are to be verified
  • the classes of person in respect of whom identity and authority are to be verified
  • the classes of document in relation to which VoI and authority requirements apply
  • the classes of person who can undertake VoI and authority
  • any supporting evidence and retention requirements

In the Land Victoria Customer Information Bulletin No. 144/201420 issued on 13 August 2014, the Registrar of Titles announced that a VoI regime for paper instruments will be introduced on or after 1 July 2015. It does not specify what the VoI requirements will be but talks about an obligation to “take reasonable steps to verify the identity of each client”. It goes on to state that there will be “a verification of identity standard which, if followed, will be deemed to constitute reasonable steps”. This has a sufficiently familiar ring about it to indicate that the VoI obligations for paper dealings will be much the same as for electronic ones.

The stated purpose of introducing VoI for paper instruments is to align the process with electronic conveyancing requirements. This may be so, but it will also be effective in removing the incentive to stay with paper to avoid the obligations and liability associated with electronic transactions.

Get ready

For a variety of reasons, not all legal practitioners will embrace electronic conveyancing. For the most part, now financial institutions dictate the way in which settlements occur and land registries how lodgment is effected. As these are the organisations behind the push towards electronic conveyancing it is conceivable that soon there will be little option but to transact electronically.

Even if the option of paper conveyancing remains for some time, it seems there will be no escape from the obligation to carry out VoI for clients. With the AML/CTF Act obligations and Registrar's requirements advancing on practitioners, it will soon be an integral part of the conveyancing process. It is, therefore, important that the responsibilities are understood and appropriate procedures put in place.


Simon Libbis is an LIV accredited property law specialist and the principal of Subdivision Lawyers. He has had extensive involvement in the development of electronic land transactions. He is a member of the LIV Council and on the Executive of the Property Law Section.

Prue Long is a commercial property lawyer practising at Kalus Kenny Intelex.

Cite as: October 2014 88 (10) LIJ, p.40

1. October 2013 LIJ, p40. 

2. Definition at s5 of the AML/CTF Act. 

3. Definition at s6 of the AML/CTF Act. 

4. See s36 of the AML/CTF Act. 

5. See Anti-Money Laundering and Counter-Terrorism Rules Instrument 2007 (No.1) for further information. 

6. October 2013 LIJ, p40. 

7. The ECNL is set out in the appendix to the Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW) and has been adopted in Victoria by the Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic). 

8. A set of model operating requirements determined by ARNECC on behalf of the Registrars, which subscribers must comply with. Available at: www.arnecc.gov.au/publications/operating_requirements_by_ jurisdiction

9. A set of model rules determined by ARNECC on behalf of the Registrars, which subscribers must comply with. Available at: www.arnecc.gov.au/publications/participation_rules_by_jurisdiction

10. MPRs cl 4.1. 

11. MPRs cl 4.3.1. 

12. MPRs cl 4.4. 

13. MORs cl 14.1(d). 

14. See www.finance.gov.au/policy-guides-procurement/gatekeeper-public-key-infrastructure

15. Refer to the ECNL Schedule 1, cl 12 for definition of “document”. 

16. MPRs cl 6.5.1(d). 

17. ECNL cl 9. 

18. VIS cl 10(c). 

19. See ss27AB(1) and 27AB(2). 

20www.dtpli.vic.gov.au/__data/assets/pdf_file/0003/228738/CustomerInfoBulletin_ed144.pdf.


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