Hazards to avoid on your way to safe harbour
VOI requires a safety-first approach. Through our extensive engagement with lawyers and conveyancers, we've identified 6 recurring risk areas for AICSA Members to avoid to ensure smooth sailing to VOI safe harbour.
- No firm-wide policy
A written policy on your firm’s approach should be a central pillar of your VOI compliance strategy. This policy will provide guidance and direction to all staff on how your firm and Identity Agents appointed by your firm will identify your clients for land dealings.
Professional Indemnity Insurers have noted that the existence and consistent application of a documented policy for handling VOI will be a relevant consideration if any fraud claims arise. Similar guidance has been provided by AIC & AICSA to members as part of its member education.
- Client pressures to make exceptions
Adhering to your VOI policy should become a standard part of your firm’s conveyancing workflow. Bending on your VOI policy when the client shows urgency, raises unavailability as an excuse or otherwise applies pressure may seem to be helping your client at the time. However, the ramifications to your firm if a fraud claim arises can be extremely serious.
There are likely to be instances where you have an existing relationship of trust with a known client, based on prior dealings, when it may be reasonable for you to take a lower risk-based approach to their VOI.
- Inadequate or insecure record retention
It's critical to satisfy the 7 year record keeping obligations outlined under the VOI Rules, should your firms "reasonable steps" taken to identify a client ever be challenged or audited.
Best practice record retention covers elements such as:
- who has access to this personal information
- IT backups procedures
- removal of paper by digitisation where possible
- fireproofing of any paper storage
Storing paper copies of ID documents, single server storage or relying on unsecured email may leave you without evidence of VOI or expose your client’s personal information to a privacy breach.
ZipID’s Agency and App solutions retain a fully secure archive of complete VOI evidence for the required period of 9 years (7 years plus the 2 year re-use period) at no additional cost to you or your client.
- Offshore clients
Failing to take reasonable steps may be exploited by fraudulent foreign parties or parties claiming to be offshore. For many firms who have clients who are either resident offshore or are Australians travelling overseas, this presents a practical challenge.
Guidance on best practice for verifying clients who are overseas has been provided in the very helpful Guidance Note 2 prepared by ARNECC, available on ARNECC’s website.
- Failing to verify the client’s right to deal
It remains your responsibility to check the person whose identity has been verified also has the requisite right to deal (e.g. under Power of Attorney, Company Directors or Trustees).
For instance, checks should be made by you to ensure that the transaction is permitted under the Power of Attorney by sighting the grant document.
Similarly, when verifying Company Directors, it is prudent to conduct ASIC checks to confirm they are recorded as a current Director. Where the Company Seal is being used, the Company’s Constitution may be checked to confirm the authorisation to use the Company Seal.
- Departing from the safe harbour Standard
When the VOI Standard set out in Schedule 1 of the Rules is applied by you or your appointed Identity Agent, you are deemed to be in the "safe harbour". This status protects your firm against any challenges or claims unless you were on notice of any special individual circumstances giving rise to concern which may require taking additional reasonable steps (e.g. sighting additional documents).
It's crucial that if you apply some other form of "reasonable steps" that depart from the safe harbour Standard you turn your mind to the most prudent and practical steps you can take in the individual circumstances to be confidently assured of your client’s identity.
ZipID’s specialised VOI solutions have been developed by a team of lawyers, identity fraud experts and software developers working in close consultation with ARNECC and peak professional industry bodies. Our solutions deliver safety, reliability and efficiency enabling firms to approach VOI with confidence and to deliver convenient and cost-effective client service.