Australia: An update to verification of identity requirements for mortgages in Queensland

Services: Financial Services
Industry Focus: Financial Services

What you need to know

  • For mortgage purposes, the verification of identity (VOI) requirements in Queensland will be updated from 1 March 2016 to align with what is essentially a unified model applied across Australia.
  • The VOI standard requires a financier or its agent to conduct a "face-to-face" in-person interview with the person being identified, who must produce the original documentation outlined in the VOI Standard to establish his or her identity.
  • Financiers must ensure they comply with the new VOI Standard in respect of identifying mortgagors if the financier wants to obtain the protection afforded by a presumption of compliance.

For mortgage purposes, the verification of identity (VOI) requirements in Queensland will be updated from 1 March 2016 to align with what is essentially a unified model applied across Australia.

As set out in our previous article, 1 the purpose of VOI is to ensure that the person executing the mortgage is the same as the person who is, or who will become, the registered proprietor of the land that is security for payment of a debt or obligation owed to a financier.

Position in Queensland

Currently in Queensland, financiers are presumed to have taken "reasonable steps" to identify mortgagors under the Land Title Act and the Land Act 2 if they comply with the identification requirements set out in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (AML/CTF Act). Essentially, those practices reflect the '100 points of identification' provisions under Commonwealth legislation governing certain financial transactions.

The recent update to Queensland's Land Title Practice Manual (LTPM) means that the current VOI requirements for paper lodgements will be replaced with the national VOI standard (VOI Standard) set out in the Model Participation Rules determined pursuant to s23 of the Electronic Conveyancing National Law (Queensland) (Participation Rules). These practices align with those obligations for financial institutions and other subscribers who undertake land titling transactions electronically under the Queensland Participation Rules.

From 1 March 2016, the VOI Standard will replace the current requirements (i.e. compliance with the AML/CTF Act) so that a financier will be deemed to have taken "reasonable steps" if it follows the VOI Standard. Financiers can apply existing procedures in respect of VOI until 1 March 2016. This is the case whether the related mortgage is proposed to be lodged before or after 1 March 2016.

VOI Standard

The VOI Standard is set out in Schedule 8 of the Participation Rules (and will be set out in Part 60-2000 of the LTPM). It requires a financier or its agent to conduct a "face-to-face" in-person interview with the person being identified, who must produce the original documentation outlined in the VOI Standard to establish his or her identity. The new "category" system is a cascading arrangement: the individual being identified must produce original documents in one of the categories in order to establish their identity. They are required to start with Category 1, before moving to the next category if documents in that category cannot be produced. The financier must be reasonably satisfied that a prior category cannot be met before moving to the next category.

Financiers must also identify individuals signing on behalf of corporate mortgagors or attorneys in accordance with the VOI Standard in a manner much like that for the VOI requirements in New South Wales, Victoria, South Australia and Western Australia. In short, that requires the financier or its agent to verify the identity of the directors or attorneys in accordance with the new "category" system referred to above.

The VOI Standard also requires that financiers take further steps to verify the identity of the individual being identified where the financier ought reasonably know that the identification documentation is not genuine or any photo identification is not a reasonable likeness to the individual.

Differences between the VOI Standard and the WA and SA requirements

The VOI Standard to be adopted in Queensland aligns closely with that in New South Wales and Victoria. However, whilst the VOI Standard is much like the VOI requirements already adopted in South Australia and Western Australia, there are two minor differences:

  • the VOI Standard does not require lodgement of a separate letter with the relevant Land Titles Office or to make a notation certifying compliance with the VOI requirements on the mortgage, and
  • the VOI Standard does not require the mortgagor to execute the mortgage in front of the verifier.

Consequences

Whilst the requirement remains for financiers to take "reasonable steps" to confirm the identity of a mortgagor, if a financier wants to obtain the protection afforded by a presumption of compliance, it should adhere to the VOI Standard.

If a financier chooses to use other methods to identify a mortgagor and an instance of fraud arises, the financier must prove that the identification method used was reasonable in the circumstances. If it cannot prove that reasonable steps were taken to verify the identity of the mortgagor, the financier will generally lose the benefit of indefeasibility of title (which follows from registration) and the mortgage will be void.

That said, fraudulent mortgages may remain enforceable in certain circumstances should the individual perpetrating the fraud be found to have used high quality forged identity documents.

Financiers will need to ensure that they have procedures and policies in place (particularly in regard to record-keeping – which now requires a written record of the steps taken in accordance with the VOI Standard) to:

  • demonstrate that they have taken proactive steps to comply with the VOI Standard, and
  • defend any claim to the contrary.

Whether or how a financier chooses to do so will involve balancing the costs of modifying its processes with the risks of noncompliance.

Conclusion

For the time being, Queensland will only require mortgagors to be verified under the VOI Standard. This will not extend to other parties signing dealings (such as transfers).

Financiers must ensure they comply with the new VOI Standard in respect of identifying mortgagors if the financier wants to obtain the protection afforded by a presumption of compliance.

Summary

Table 1 provides an updated comparison of the key differences in the jurisdictions.

Footnotes

1 Kirkup, Andreou & Luke, "An update to verification of identity requirements for mortgages in Australian jurisdictions" (2014) 30(1) Australian Banking and Finance Law Bulletin 277.
2 s11A of the Land Title Act 1994 and s288A(3) of the Land Act 1994

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions