The Online ID Check Process

The law demands that solicitors, conveyancing professionals, banks, building societies and mortgage brokers obtain satisfactory evidence of the identity of their clients in order to satisfy Money Laundering Regulations. To this end, there is an increasing demand for methods of online ID check

When purchasing a property, the risk of fraud is high because large sums of money are being transferred between parties who have never met. The key concern for legal professionals is to find out who their client is and where their money has come from.

All conveyancing solicitors, whether they are online or from a more traditional high street firm, have certain ‘know your client’ obligations and an online ID check is no different. These basically require the conveyancer to establish and verify their client’s identity via either online or paper checks of passports and driving licences. And if you are selling a property you do not live in, you will often be asked to give some kind of identification linking you to the property for sale.

With an estimated £3 billion in mortgage fraud occurring in 2017, the challenges faced are clear. Particularly when individual solicitors are liable for getting their ID wrong in the event of a fraud claim. This is why each legal firm has its own set of rules and procedures, with some being more risk averse than others. In November 2021, it was reported that a legal services firm that had failed to undertake sufficient identity checks on conveyancing transactions was fined £14,000 by the Solicitors Regulation Authority.

The coronavirus pandemic has contributed in its own way, with many firms transitioning to remote working, social distancing measures making client due diligence exercises more complicated, and a turbulent economy all providing a greater incentive to fraudsters. This highlighted the need for a more secure, efficient and convenient means of identifying parties to a property transaction. As a result, legal firms are doing more than ever to ensure their systems are robust and fit for purpose.

HM Land Registry announced a new set of requirements last week to encourage digital identity checks in the conveyancing process, driving the industry towards a clear set of standards in digital ID. It is hoped these changes will help modernise what has long been a cumbersome and clunky process.

The new digital ID standard is effective immediately and based on the guidelines set out in the government’s Good Practice Guide (GPG) 45, which sets a high threshold for conveyancing companies. From now on, E-ID providers will be required to utilise a range of different technologies, including biometric facial recognition, near field communication (NFC), and for certain types of property transactions, the ability to collect evidence of proof of address.

Manual identity checks can take up to two weeks, contributing to the ever-increasing length of buying and selling a home. Whereas digital identity checks can be carried out in a matter of minutes. But this is not simply about improving customer experience. Central to this new digital standard is the issue of identity fraud, which is likely to significantly reduce the risk of this happening. Firms meeting the new standards will be offered a safe harbour by HM Land Registry, meaning they will not be pursued in any claims resulting from the registration of a fraudulent transaction.

This has long been an area of concern for legal firms and their compliance teams. Conveyancing has been seen as an attractive target for fraudsters and firms often fall foul of their regulatory obligations through no fault of their own.

The published standards are not mandatory, and other existing methods of verifying identity will always be available. Although they remain an optional standard, it is hoped most conveyancers will look to meet the requirements set out and benefit from the protection it offers.

On 20^th January, the Legal Services Affinity Group updated its anti-money laundering guidance to provide further information on the use of electronic verification and identification tools. There is not expected to be an immediate uptake of digital identity tools because of the likelihood that many of them will not yet be able to meet the technological requirements. Nevertheless, online conveyancing companies have quickly seen the value and purpose of the requirements and support the new standards.

What will your conveyancer need for an Online ID Check?

There are two things that need to be verified: proof of your identify and proof of your address. Common acceptable forms of photo ID are:

• Photographic driving licence (the paper version is not acceptable)
• A current passport (an expired passport is not accepted)

Online verification procedures usually attract a fee. However, if you consider the cost of sending your original passport through the post using special delivery, or the chance it will be lost or damaged, most clients prefer using the online verification system. Fees tend to be nominal in any event.

You will need to provide your conveyancer with two separate forms of evidence to prove your address. Common acceptable forms of proof of your home address include:

• Photographic driving licence or the paper version. If you have used your driving licence as proof of your identity, then you will not be able to use it again to prove your address. You will need to provide another form.
• Gas, water, electricity or council tax bill (no more than 12 months old)
• A bank statement which shows your home address (an online statement is acceptable providing it gives your address).
• A letter from HM Revenue & Customs (HMRC).

How does this work with online checks?

Conveyancers use an online checking service where they obtain evidence of your ID and then check this via an online database. You will need to provide your full name and address, passport number, national insurance number, and the address you are registered at (if different from your current address) on the electoral register.

The online ID check reviews your name linked to the given address. If this passes, your conveyancer should be satisfied. However, if it fails, you should expect to have to provide original documents or even have to visit your conveyancer in person. You are likely to fail an ID check if:

• You have not lived in your current address for longer than a year
• You are not on the electoral register
• You do not pay UK tax
• You live overseas

An online ID checking service cannot be used if:

• You are not resident in England and Wales
• You live overseas

Getting your ID verified at the earliest possible point is a fundamental requirement of the conveyancing process. Your conveyancer cannot begin to act for you until they know who you are. If you get your ID ready and ask your conveyancer about the ID procedure as soon as possible, it helps to save time and kick starts the conveyancing process.