Why is ID so Important to my Conveyance?
Posted on 24th February 2020
The Money Laundering Regulations of 2007 together with guidelines set out by the Solicitors Regulation Authority, place specific requirements on your conveyancing solicitor in respect of verifying the identity of clients.
It is a criminal offence to impersonate another and, whilst our conveyancing solicitors are not police officers, we do have a duty to raise any suspicions to the relevant authorities, where necessary.
With conveyancing transactions, whether you are purchasing a property, or receiving sale proceeds following the sale of a property, we are often dealing with large sums of money. As such, it is imperative that your conveyancing solicitor carries out the necessary checks. At MG Legal, we have specific procedures that are followed, dependent on the type of transaction:
Verification of Identity:
- This is our ‘one size fits all’ form, in which we ask clients for two forms of identification, as standard. We ask for one photographic form of ID, such as a passport or driving licence, and one form of proof of residence documentation, such as a bank statement or utility bill, dated within the last three months.
- We require sight of the original documents to confirm that they are, in fact, a legitimate document. We then take copies of the same, and certify that they are, firstly, a true copy of the original, and, in photographic formats, that they are a true likeness of the individual. This is the reason why our solicitors need to see clients in person and, where acting for joint parties, require sight of both clients, in order to confirm this.
Purchase Transaction Specifics:
- Our solicitors in Preston then have purchase specific checks that are carried out, in addition to the standard identity check.
- When purchasing a property, clients are asked to confirm the source of funds being used to facilitate the transaction, within our ‘Proof of Funds Form’. Whether the same be mortgage funds, savings or gifts, as examples, we need to know.
- For example, if the funds are being gifted, our conveyancing solicitors are required to carry out additional identity checks on those supplying the gift, in order to confirm the funds have been acquired legitimately, and not through any proceeds of crime.
- Bankruptcy searches are also carried out on the purchaser(s) and, where necessary, anybody providing a gift. This is particularly important where there is a mortgage lender involved as, should the bankruptcy search reveal entries, the lender is to be informed. They may then require further evidence to be satisfied that, in the event of default on payment, their security over the property is still going to be protected.
- When enquiring as to the source of funds, our conveyancing solicitors will always ask for documentary evidence for as to where the funds originate. In some cases, where multiple transfers between accounts have been made, it may be necessary for more than one document to be provided, in order that your solicitor be satisfied as to the chain of funds.
Sale Transaction Specifics:
- When selling a property, our solicitors in Preston would always request the above, however, where the seller does not currently reside at the property, there are additional requirements. We would require specific evidence that actually links the seller to the property, this may come via a council tax bill, for example.
- Our initial client care documentation provides a section in which our clients can confirm bank details, for any funds that are due back to them. In the event of doing so, when sending sale proceeds to clients, for example, our solicitors in Preston carry out further checks to ensure the details are correct. This would involve requesting further confirmation of the details, in writing, to ensure the same had not changed during the course of the matter. In addition, our team would always telephone call the client for further confirmation that the details are accurate.
- If there is more than one seller, our conveyancing solicitors would ensure any sale proceeds were sent back to a joint account. In the event that the same are to be sent to a single account, we would obtain consent from both parties to proceed.
The Solicitors Regulation Authority guidance stresses the importance of carrying out such checks and one recent case has only reinforced this issue.
One Newcastle solicitor, whom was head of conveyancing at the firm, has been found to be found in breach of such regulations and in serious misconduct. The solicitor has been fined a hefty £24,000.00 as a result of failings to carry out basic identification checks.
The solicitor was acting on behalf of two parties (Mr & Mrs X), whom jointly owned a property together, in a loan application. Following procedure, he asked the clients to attend the office together, however, Mr X advised that Mrs X was unable to attend, due to being at their child’s sport’s day. When the solicitor reiterated that he needed to see both parties, Mr X later attended with an imposter. As the solicitor did not carry out any due diligence, in respect of verifying identity, on the parties, the imposter was able to impersonate Mrs X, without providing any identification documents and advising that she did not have anything with her at the time, and would provide these later.
Despite having no identification documentation pertaining to the parties, the solicitor proceeded with signing the necessary documentation to facilitate completion of the loan application. Upon receipt of the mortgage funds from the lender, these were released by the solicitor, without further ado.
The matter was only brought to light when the real Mrs X received a demanded payment for the loan, which she knew nothing about. It was at this point that she was alerted to the fraudulent activity, and reported the same to the police.
The matter caused great stress and harm to Mrs X, and so the Solicitors Disciplinary Tribunal described the conduct as follows:
“Whilst there was no personal gain… as an experienced conveyancing solicitor the respondent’s failure to undertake some of the most fundamental and basic steps that all solicitors are legally and professionally obliged to complete represented very serious misconduct”
As you can see, the impacts of not carrying out a simple identity check can be catastrophic. Whilst the same may only seem a small factor, understand that this is part of your conveyancing solicitor’s role to ensure that you are protected, and that the transaction is legitimate.
If, therefore, you wish to instruct MG Legal to assist with your conveyancing matter, be sure to have your identification documentation at the ready, and let our expert team handle your matter from there. Get in touch today, to speak with our friendly team for a fixed-fee conveyancing quote, at firstname.lastname@example.org.
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