Verification of identity (VOI) commenced in Victoria on 24 September 2014 and will commence in New South Wales on 1 January 2015.  As can be seen from the table in Annexure 1, best practice is for mortgagees to now VOI mortgagors in all jurisdictions.

Victoria and NSW join South Australia and Western Australia, where VOI has already been implemented.  However, the Victoria and NSW regimes will, for the time being, only require mortgagors to be VOI’d as distinct from SA and WA which require other parties signing dealings to be identified.

Victoria, NSW, and SA have adopted the identification standard in ARNECC’s Participation Rules as the safe harbour standard of VOI.  Western Australian VOI requirements are similar, but slightly different.  ARNECC is the Australian Registrars' National Electronic Conveyancing Council, working to establish the ELN (Electronic Lodgement Network, known as e-conveyancing). 

In SA and WA a certificate must be lodged with dealings specifying that VOI has been conducted on the party signing the dealing (ie the vendor, purchaser, mortgagor etc).  In Victoria and NSW no certificate is required or will be required, instead there is simply an obligation to undertake VOI.

Witnessing requirements versus VOI

The requirement to VOI a mortgagor can easily be confused with the rules regarding who must witness the mortgagor’s signature.  Witnessing requirements are specified in Annexure 2.

Mortgagees can either combine the VOI and witnessing procedure, or undertake these tasks separately.  Often mortgagees will identify mortgagors (sometimes as part of their AML/CTF process) and the witnessing of the mortgage will be a separate activity.  All three activities can be combined.

New South Wales

What’s the difference between the old witnessing requirements and the new NSW identification safe harbour VOI method?

Under the existing regulation, the witness must sight:

  1. an original of a primary photographic identification document in respect of the other person, or
  2. an original of a primary non-photographic identification document in respect of the other person and an original of a secondary identification document in respect of the other person.

The new requirements are specified in Annexure 1.

Victoria

The Transfer of Land Amendment Act 2014 (Vic) commenced on 24 September 2014.  It puts in place the framework for e-conveyancing, which is already operating to a limited extent in Victoria.  ARNECC’s VOI rules apply to electronic dealings now, and from 1 July 2015 will apply to paper and electronic dealings under proposals to align the paper and electronic processes.  However, as an interim measure, VOI will apply to Victorian paper mortgages from 24 September 2014 until alignment on 1 July 2015.

What you need to do

Lenders should update their Procedures to ensure compliance with the new Victorian and NSW VOI requirements.  The opportunity can be taken to streamline AML/CTF, VOI, and privacy consents as they are all related activities.

ANNEXURE 1 – CUSTOMER IDENTIFICATION RULES

Click here to view the table.

ARNECC’s Participation Rules and the requirements in Victoria, SA, and NSW state that a person can be identified using any reasonable method,

WA’s standard does not state that any reasonable method can be used and WA’s practice manual emphasises the need for face to face identification.  However, the MFAA was told that mortgagees can use any reasonable method to identify mortgagors.

The safe harbour system requires sighting the originals of all documents in a face to face interview, from one of the categories below.  The identifier must be satisfied that Category 1 cannot be satisfied before moving on to Category 2 (and so on).

If Categories 1 to 3 cannot be met, Category 4(a) may be used.  If Category 4(a) cannot be met, Category 4(b) may be used. 

Category 5 is only relevant for people who are not residents or citizens of Australia.

Click here to view the table.

For companies: VOI the individuals signing on behalf of the company, as well as making the usual enquiries about the structure of the company.

For attorneys: VOI the attorney as well as making the usual enquiries about the adequacy of the authorisation of the attorney.

Verification of identity conducted in a foreign country – ARNECC rules 

VOI conducted in a foreign country must be conducted by either:

  1. a Subscriber or Subscriber Agent; or
  2. an Australian Consular Officer or an Australian Diplomatic Officer; or
  3. where the Person Being Identified is a Member of the Australian Defence Force, a Competent Officer.

Category 4 cannot be used for verifications of identity conducted in a foreign country.

WA has special rules that apply when VOI is carried out overseas – refer to Landgate’s practices.

Click here to view the table.

Mortgages signed outside Australia

Mortgages executed outside Australia are subject to the same witnessing requirements in NSW, Victoria, ACT, SA, and Tasmania.  In WA, Queensland, and NT, special requirements apply.