THE INCREASING THREAT OF IDENTITY CRIME

For conveyancers, lawyers, real estate agents and other business professionals.

A guide to the VOI landscape

Identity crime is happening in Australia today. In fact, according to the Australian Federal Police, it is one of the most common crimes affecting the Australian community, costing upwards of $1.6 billion dollars annually.

Whilst many organisations have fraud detection processes and systems in place, experienced fraudsters can still exploit the information that is shared between businesses to commit fraud.

An increasing threat

eBook takeaways:

1. Learn about the current VOI legislation in Australia.2. Read about real-life cases of identity fraud.3. Know which common red flags your clients should

look out for.4. Uphold your due diligence responsibility.5. VOI FAQ’s.6. VOI checklist.

Only 56% of professionals are very confident that their current VOI process ensures they’re taking reasonable steps to verify identity - 2018 InfoTrack VOI survey

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Australia’s current VOI legislation

What can criminals do if they steal your client’s identity?

Legislation surrounding VOI differs by state in Australia. In NSW, SA, QLD, WA and VIC there are VOI requirements set in place that apply to solicitors and conveyancers. Under these requirements, the identity of an individual should be verified in all conveyancing transactions, so that lawyers and conveyancers know that the individual has authority to deal with the land.

NT, TAS and ACT don’t currently have formal VOI requirements in place but VOI is considered prudent practice for professionals across Australia. VOI is a vital part of due diligence that will help protect your business from fraud.

• Apply for financial services in your client’s name.

• Run up debts in your client’s name.

• Register a vehicle in your client’s name.

• Apply for identity documents (Drivers licence and/or passport) in your client’s name.

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50%

40%

15%

50% find some of the VOI requirements onerous.

40% have had clients raise objections over VOI requirements.

15% have concerns over thesecurity of their VOI data.

New South Wales Victoria Queensland9 November 2015 & 1 May 2016The amended Verification of Identity Standard as set out in Schedule 8 of the NSW Participation Rules took effect on 9 November 2015.The new Conveyancing Rules have been in effect from 1 May 2016.

9 November 2015Requirements for paper and electronic conveyancing were aligned through determination of Version 1 of Registrar’s Requirements for Paper Conveyancing and Version 3 of the Operating Requirements and Participation Rules. Formalised VOI requirements apply to all paper conveyancing transactions as of 9 November 2015.

1 March 2016The Land Title Practice Manual was updated to align with obligations under the Electronic Conveyancing National Law in the Queensland Operating Requirements and Participation Rules.All mortgagees, whether participating in paper or electronic conveyancing must take reasonable steps to confirm the identity of a mortgagor.

*All stats from 2018 InfoTrack VOI survey

What can happen if a VOI isn’t conducted?

In July 2014, a Canberra property owner discovered that her property had been sold while she was living abroad in South Africa. It’s understood that the owner became aware of her property’s sale after contacting her property manager to query why she’d not been receiving rental payments.

During the court procedure that followed, it was noted that neither the real estate or solicitor conducted sufficient checks to confirm the instructions were being provided by fraudsters, rather than the true owner.

You may think that identity theft will never happen to any client under your care, but any business can be a target. Below are just a few recent examples:

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The above incidents highlight just how vital practicing due diligence is in all industries, whether there are policies in place or not.

A NSW woman was left to fight to get her identity back in July 2017, after learning that her identity had been stolen by a fraudster who had applied for 18 loans in her name. Using her driver’s licence details, the criminal was able to apply for multiple loans online.

A Melbourne-based mother and son duo were left in shock after learning that the deposit they’d made on a property in August 2017 was instead given to a serial con artist for a house that wasn’t even on the market.

Con artist Michael Drljaca was found guilty of obtaining property by deception, proving that even if you trust the individual, due diligence should still be followed – a simple VOI check could have saved the mother and son pair a false house deposit.

July 2014 – Canberra property scam

July 2017 – NSW woman fights for her identity

August 2017 – Serial con artist takes house deposit and flees

53%

12%

10%

Only 53% of professionals have verified the identity of an international client.

12% of professionals have encountered a person trying to commit identity fraud.

Only 10% of respondents use a verification app for confirming the true identity of clients.

*All stats from 2018 InfoTrack VOI survey

Common red flags

Best VOI practice

There are many tell-tale signs that could suggest your clients have become a victim of identity theft, including:

• If they’ve recently lost or had important documents (passport/driver’s license etc) stolen.

• If expected mail hasn’t arrived, or no mail has been received at all.

• If items that they don’t recognise appear on their bank statements.

• If they are denied government benefits because they’re told they are already receiving them.

• They receive bills for goods or services that they haven’t asked for.

• They’ve been refused financial service, despite having a good history.

• A phone contract has been set up in their name without their knowledge.

• They’ve received contact from debt collectors for debts that aren’t theirs.

• Don’t store identity documents on-site, they could be stolen or damaged due to fire or flood.

• Put a standard procedure in place to ensure that there is a consistent process in place.

• Follow the VOI standard wherever possible; this will help you to be deemed compliant under the rules.

• If you notice anything suspicious, conduct further checks until you are satisfied.

59% of professionals still store their VOI data in-house, leaving sensitive data vulnerable to theft and damage. - 2018 InfoTrack VOI survey

To ensure that you are following the best VOI practice possible, consider the following:

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FAQ’s

Q. Who can undertake a VOI?A. Anyone can use the Verification of Identity Standard. This is a business decision for you to make as it is your obligation to take reasonable steps to verify identity. How you undertake VOI is up to you, however for it to be deemed reasonable steps the VOI Standard must be properly carried out by a Subscriber, Mortgagee or Identity Agent.

Q. Must the Verification of Identity Standard be used to verify the identity of clients and mortgagors?A. It is not a requirement to use the Verification of Identity Standard to verify the identity of clients and mortgagors. The requirement is for you to take reasonable steps to verify client’s or mortgagor’s identities. What those steps are in each circumstance is for you to decide. You can take your own reasonable steps or use the Verification of Identity Standard.

Q. Do VOI requirements apply to existing clients?A. If you have verified the identity of your client within the previous two years and ensured that you are dealing with the same person whose identity you have verified, there is no need to re-verify. After two years, it is up to you whether you choose to assess what is reasonable in the circumstances.

Q. What should I do if I suspect the identity documents provided aren’t genuine or do not represent a reasonable likeliness to the person being verified?A. When doubt arises or should reasonably have arisen in relation to a transaction and/or a client’s or mortgagor’s identity, you should seek further evidence or make further enquiries. If after having done so you are still not satisfied, then you should decline to act further in the transaction.

Q. What are the requirements for retention of evidence supporting verification of identity?A. Evidence must be retained by the conveyancer, lawyer, or mortgagee for seven years from the date of lodgement. If a non-represented party is a party to a conveyancing transaction, that party will also be required to retain supporting evidence for seven years from the date of lodgement of the instrument they signed. If the Verification of Identity Standard was used, this evidence must demonstrate that the procedure for the standard was followed. If alternative reasonable steps were used to verify identity, the evidence must show what those steps were.

Q. What do I do for clients overseas?A. When a client is overseas, you need to decide what steps to take to verify the person’s identity having regard to the available services and options under the circumstances. One available option is to utilise the services of an Australian Embassy, High Commission or Consulate coupled with necessary further steps for the Subscriber or mortgagee to be reasonably confident in the person’s identity.

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The importance of due diligenceVOI client checklist

Despite VOI legislation not yet being compulsory for all business types in Australia, conducting these searches is good business practice. While traditionally verifying an individual’s identity is a laborious, paper-heavy task, there are now tools available that make this process easier, less time consuming and secure.

Having a robust VOI process in place demonstrates that your business manages risk and gives you a competitive advantage when negotiating deals with shareholders and other business partners. Collecting and verifying information on your customers, or ‘Knowing Your Customer’ is crucial in providing a trusted service. It’s about knowing the people you are going into business with – can you trust this person?

As Australian businesses are increasingly entering into global emerging markets, the threats are becoming more considerable, therefore, it’s important that businesses have a strategy in place to mitigate risk. Implementing a standardised process is vital to ensure that you’re getting the right information from a trusted source.

Category Minimum Document Requirements

For persons who are Australian citizens or residents

1 An Australian passport or a foreign passportplus an Australian driver’s licence or Photo Card.plus change of name or marriage cer cate if necessary.

2 An Australian passport or a foreign passportplus full birth certificate or citzenship certificate or descent certificate. plus Medicare or Centrelink or Department of Veterans’ A airs card. plus change of name or marriage certificate if necessary.

3 Australian driver’s licence or Photo Cardplus full birth certificate or citizenship certificate or descent certificate. plus Medicare or Centrelink or Department of Veterans’ Affairs card. plus change of name or marriage certificate if necessary.

4 a) Australian Passport or foreign passportplus another form of government issued photographic identity document.plus change of name or marriage certificate if necessary.b) Australian Passport or foreign passportplus full birth certificate.plus another form of government issued iden ty document. plus change of name or marriage certificate if necessary.

5 a) Identfier Declarationplus full birth certificate or citizenship certificate or descent certificate. plus Medicare or Centrelink or Department of Veterans’ Affairs card. plus change of name or marriage certificate if necessary.b) Identifier Declaration by a Person specified in Verification of Identity Standard paragraph 4.4(e)plus Medicare or Centrelink or Department of Veterans’ Affairs card.plus change of name or marriage certificate if necessary.

For persons who are not Australian citizens or residents

6 a) Foreign passportplus another form of government issued photographic identity Document.plus change of name or marriage cer cate if necessary.b) Foreign passportplus full birth certificate.plus another form of government issued identity Document. plus change of name or marriage certificate if necessary. 6

If you’re looking for more resources on VOI, download a complimentary VOI pack including helpful documents and rules for each state.

Want to learn how you can improve your due diligence with an easier way to perform verification of identity checks that comply with Land Registry requirements?

Book a demo to see how our VOI app IDfy can simplify your VOI process.

What can IDfy do for your business?

Save time by eliminating the need to photocopy, scan and

file identity documents.

Produce consistent and comprehensive VOI reports.

Enable any of your employees to easily perform VOI checks in

line with VOI Standard.

Securely store your VOI information for 9 years.

Provide peace of mind that you’ve taken ‘reasonable steps’

to verify.

Allow for VOI of remote clients through the video

calling feature.

Verification of Identity made simple.Safe.Simple.Secure