ARNECC requirements for Verification of Identity and Client Authorisation

The Model Participation Rules developed by the Australian Registrars’ National Electronic Conveyancing Council (ARNECC) set out strict obligations for lawyers and conveyancers in handling property transactions. Part of these obligations relate to the correct onboarding of the client. Practitioners should tackle verification of identity (VOI), Client Authorisation and right to deal upfront and as part of the initial client intake.

The failure to obtain all the required information and documentation relating to the client and their proposed transaction can have severe consequences for the matter and the practitioner.

When preparing any property transaction, the first step is to verify the client’s identity. The ARNECC rules explicitly require a subscriber to “take reasonable steps to verify the identity” of clients, mortgagors and signers.

Practitioners must be satisfied that the person is who they claim to be. This reduces the risk of identity fraud and the registration of fraudulent transactions. In undertaking VOI, consider the following tips:

• Verify early: Do VOI immediately after initial instructions. This helps spot problems, such as an inconsistency between the client’s name on the certificate of title and in their VOI documents, before settlement.

• Check existing VOIs: If you have previously verified a client’s identity you can rely on this for up to two years, provided you take reasonable steps to ensure that you are dealing with the same person who was previously identified.

• Face-to-face safe harbour: Under ARNECC’s Verification of Identity Standard, the “safe harbour” process is a face-to-face meeting in which the Identity Verifier personally sights original ID documents. [See ARNECC Model Participation Rules, version 7 sect. 8 item 2, p52]

• Reasonable steps: If you cannot meet the “safe harbour” obligations you can do VOI based on the taking of “reasonable steps.” ARNECC publishes guidance notes on what constitutes reasonable steps. You should check the latest version for assistance on what steps you should take in the circumstances of your matter. [See ARNECC Model Operating Requirements Guidance Notes, version 7 Guidance Note #2 Verification of Identity]

Before you sign and lodge any electronic property instrument on the client’s behalf, you must have a valid Client Authorisation in place. This is an ARNECC-prescribed form that lets a practitioner act as the client’s representative to lodge documents in the Electronic Lodgement Network (ELN) on behalf of the client. By itself, the Client Authorisation is not a power of attorney (POA), but it operates similarly (for the purposes of e-conveyancing).

It is vital to complete the Client Authorisation carefully:

• Latest form: Use the up-to-date ARNECC Client Authorisation form. They are available on the ARNECC website.

• Correct signatories: Make sure the right person(s) sign on behalf of the client. If the client is an individual, the client (or their attorney) signs. If the client is a company, the directors sign (or the attorney on its behalf) with their capacity noted. If the client is a trust or super fund, the trustee(s) must sign. If signing under POA, the attorney signs. Each signature block should show the signatory’s full name and role (director, attorney and so on).

• Authority capacity: Double-check the signatory’s authority. For a company client, for example, confirm the signatories match the current ASIC-appointed directors and that the transaction is within their power – you may need to inspect the company constitution or minutes of board meetings. If an attorney signs, obtain a certified copy of the POA and confirm it is valid – not expired, no incapacitation and covers the type of conveyancing deal. You must also ensure that the POA authorises the transaction.

• Form features: The authorisation form lets clients grant authority in three ways – for a single instrument, for a batch of instruments or as a standing authority (continuing until revoked). Use the appropriate sections. For example, where multiple filings are to be done (such as transfer plus mortgage), a batch or standing authority can be efficient, but ensure the instrument types and property details are described accurately.

• Retention: Keep the executed authorisation with the file. ARNECC guidance notes that the signed form must be retained as evidence of authority for any audit.

Never sign and lodge an electronic property transaction without a valid Client Authorisation.

In addition to verifying the client’s identity and authority, practitioners must also check that the client has the legal right to transact on the property.

ARNECC defines “right to deal” as the entitlement of a person to be a party to a conveyancing transaction. In practice, this is a due-diligence check – evidence linking the client to the property rights and transaction involved is needed.

For straightforward cases, this might be simple. For example, if the client is the vendor and an individual, it might be possible to simply confirm that their name on the title matches their ID. Or, if the client is the purchaser, check that the contract name aligns with their ID.

However, many matters are more complex. Below are some examples of common scenarios and tips to ensure the right to deal is clear:

• Corporate clients: Search ASIC to verify the company exists and is active, and to identify current office holders. Make sure it is not under external administration or deregistered. If instructions come through an officer (such as the company secretary or lawyer), review the company’s constitution or board resolutions to confirm that the deal is authorised. If someone signs under a corporate power of attorney, check the POA’s validity and scope.

• Trusts: If the transaction involves a trust, identify the trust and look at the trust deed and any variations. Confirm who the current trustees are and that the deed empowers the trustees to deal with the applicable property transaction.

• Mortgagees (lenders): When acting for a lender, examine the loan or advance documents. Ensure the lender is indeed the secured party and the mortgage they propose is contemplated by the loan agreement.

• Attorneys and agents: If the client is acting under a POA, ensure the attorney’s authority covers the type of conveyancing being done. Obtain the original or certified copy of the POA and verify it is still in force – that is, not revoked or expired. Check whether multiple attorneys must act jointly or can act independently. (If the POA requires joint action, ensure that all the joint attorneys sign a Client Authorisation form, permitting the relevant property transaction.)

• Special representatives: If dealing with a trustee in bankruptcy or liquidator, confirm the appointment and that the appointment document authorises the specific property transaction. If the client is acting under a court order, ensure the order or grant explicitly covers the transaction.

In all cases, document the supporting evidence. ARNECC guidance advises keeping all relevant papers – search results, corporate extracts, trust deeds, POAs and so on – in case of a compliance audit.

Every firm should make ARNECC’s Model Participation Rules and Land Use Victoria’s requirements part of their standard practice. Keep checklists handy, train your staff and review the latest ARNECC guidance notes. Do not view these rules as a mere formality – they are mandatory. Take them seriously, double-check the details and keep all the necessary evidence.