Have your say: conveyancing client verification proposals

Land Registry has just published its proposed Safe Harbour Standard – a set of requirements intended to encourage digital identify verification tools in conveyancing. Suggested tools include facial recognition against a biometric passport and a UK biometric residence permit.

The traditional method of identity verification (set out in Land Registry practice guide 67) is often inconvenient for conveyancers and for clients, and even more so in the covid-19 environment. But it is, of course, necessary.

Residential conveyancing is a top fraud risk area in the legal sector and careful due diligence is vital before a transaction can proceed. Knowing who you are dealing with and ensuring you know the source of funds is essential to the process. And Land Registry relies on the steps lawyers take to reduce the risk of land registration fraud.

The publication follows what Land Registry identified as widespread demand for “more resilient, straightforward and convenient identity verification solutions”. It says there is scope for an alternative higher standard of identity check that uses biometric and cryptographic technology.

This, it believes, would give conveyancers clarity and certainty that they have discharged their duty on identity verification in connection with land registration applications.

What’s proposed?

The draft set of requirements has been developed following various virtual events Land Registry has held with conveyancers and tech suppliers.

Under the standard, residential conveyancing practitioners who follow the prescribed steps will avoid being the subject of a claim by Land Registry against the conveyancer resulting from the registration of a fraudulent transaction on grounds that identity checks were inadequate.

So what are the requirements? There are just four under the proposed standard, with an explanation of what is acceptable to satisfy those requirements. If any of the requirements cannot be satisfied, the safe harbour standard will not be reached. The requirements are:

• Requirement 1 – Obtain evidence
• Requirement 2 – Check the evidence
• Requirement 3 – Match the evidence to the identity
• Requirement 4 – Obtain evidence to ensure the transferor, borrower or lessor is the same person as the owner

One aspect not yet covered is how to relate a digitally identified person with a company or other corporate entity that is a party to the transaction – an issue Land Registry is currently working on.

Will it be compulsory?

No, under the initial proposals meeting the standard will be optional, which means practitioners can carry on as they have been with their identity checks. But if they do, conveyancers will effectively be passing on the opportunity to be protected from a potential claim where client fraud has been uncovered following registration.

But the standard will not be a license for complacency. The proposals make clear that conveyancers who carry out the four requirements in order to achieve the Safe Harbour Standard should still remain vigilant throughout the transaction.

It’s Land Registry’s view that offering this ‘safe harbour’ will encourage the adoption of new technology that will ultimately reduce the risk of fraud and costs – and make things easier for conveyancers and for their clients. Familiarity with the usual processes relied on for many years can be comforting to the practitioners - but at what risk?

The document can be found here and feedback on the proposals is requested by Friday 11 December.