The Importance of Identity Verification in Legal Transactions

One of the most important early steps in a legal transaction is completing your identity verification. But why is your solicitor being so adamant about this being completed?

Fraud

The most important reason is fraud. Legal transactions, especially relating to property, are becoming more and more targeted by fraudsters. In September 2023 a dispute over a property on the Gold Coast went to the Supreme Court, largely stemming from a mortgage that was fraudulently signed by someone purporting to be the property owner[1]. The solicitor who claimed to witness the signature received a suspended prison sentence for allowing this fraud to be perpetrated, and not taking the appropriate steps to verify the signing person’s identity.

[1] Issa v Owens & Ors [2023] QSC 004

Since then, solicitors have ensured their procedures are tightened to ensure they do not unwittingly participate in similar fraud. By ensuring the identity of a client is verified, and someone is who they say they are, solicitors protect the client themselves from someone purporting to be them (i.e., committing identity theft), and protect themselves from claims by victims of fraud who may allege that the solicitor did not verify the identity of their client with enough scrutiny to eliminate potential fraudsters.

Electronic Transactions

Another factor compounding this is the increasing prevalence of transactions that occur entirely online. The availability of electronic signing means that many meetings with solicitors now no longer need to occur, and the solicitor and client can exchange signatures online electronically. While this increases convenience for the parties, it opens the door for interception and fraud. Emails can be intercepted and hijacked, and someone can pretend to be someone they are not. Ensuring you have verified the identity of a party you are interacting with over email significantly reduces the probability that the person at the other end is not the person they claim to be.

Verification of Identity Standard

The identity verification standards for conveyancing and property transactions are some of the strictest, as properties are often the most valuable assets a person owns, and with the arrival of mandatory e-conveyancing, they are more subject to electronic fraud.

The Verification of Identity (‘VOI’) standard imposed by ARNECC (‘Australian Registrars National Electronic Conveyancing Council’) requires solicitors to verify the identity of their clients by witnessing and obtaining a copy of the client’s documents. Exactly which documents are required depends on the nature of the transaction and the documents the person has. For example, not everyone will have a passport or a driver’s licence. In those cases, a Medicare card and birth certificate, and other form of government-issued photo ID, may be substituted instead.