The “Mischon de Reya” case (MDR) as it is often referred to is, at the time of writing, just the latest in a number of cases of a purchaser being duped into buying a property from an individual posing as the owner.
Identity fraud is now right up there with cybercrime in terms of the key and emerging risk that law firms face today and whilst the decision in the case is under Appeal it simply isn’t an option for firms to await the outcome of the Appeal before deciding whether their policies, procedures and practices are sufficiently robust to prevent them becoming the next identity fraud statistic!
Burying one’s head in the sand – doesn’t mean you won’t be targeted.
Just as each human being is unique, so each client and individual transaction is unique and the dangers of becoming unwittingly involved in identity theft must be fully considered in each case to mitigate, as far as possible, this priority risk.
There’s no magic formula to apply or wand to wave to guarantee that your firm won’t be targeted – if it were that simple – then this risk would have been eliminated months, or even years ago, when the first cases started to trickle through.
There has been much discussion about what steps firms can take – and whilst the following isn’t fool proof or indeed fraudster-proof (nothing is!), the following points, should if considered, when acting as a competent conveyancer, alert you to the risks and enable you to take action:[/vc_column_text][vc_row_inner][vc_column_inner][vc_column_text]
- • You must advise your client prior to exchange of contracts about conveyancing fraud generally and within that correspondence specifically highlight any concerns you may have about the transaction, explaining the relevance and the client’s options, making recommendations and requesting written instructions from the client. In addition, and where this is the case, you should state that you are not aware that the parties are in any way connected – but that if the client believes otherwise, then they must inform you.
- • Include information on your website about identity fraud – it could deter a fraudster from instructing you!
- • Staff Training – ensure all staff are fully conversant with the circumstances in the recent cases. Do they know what the warning signs are from the MDR and other recent cases? Do they know your policy on CDD?
- • Complete CDD thoroughly and in compliance with your AML Policy. Give clients sufficient information to enable them to understand why these checks are necessary – put it in context to enable clients to appreciate that it is for their protection. Genuine clients will understand. Those that complain or refuse – may be just the clients that you don’t want to have!
- • Be alert to recently issued ID documents (ie passport / driving licence) and request further ID documents in support.
- • Be alert to the possibility of fraudulently obtained genuine (FOG) ID documents.
- • If you have concerns about ID – ask for a meeting with the client.
- • Don’t ignore a “refer” result on electronic ID checks.
- • Check proof of address documents against details in the contract, office copies and property information forms. Any discrepancies must be raised and any explanations given will need to be backed up with supporting documentation.
- • Create checklists which include the higher risk factors for vendor fraud and action to be taken, subject to your policies and procedures, where a risk or risks are identified.
Acting for Buyer / Seller
- • Report fully to your client and, if you have any concerns about the seller / property which have not been answered to your satisfaction, advise the client of your concerns, the implications and obtain their written instructions.
- • Where you have concerns or where there is a lack of documentation, you should ask the seller’s solicitor to confirm that they have completed CDD and, as part of that, have certified ID that effectively links their client to the property.
- • Ensure you have signed and fully completed instructions and that the signature on your instructions, CDD and contract papers correspond. Question any discrepancies.
- • Be alert to vendor fraud risk in all transactions; one or more of the following could mean your matter is high risk for vendor fraud. However, the list is not exhaustive.
- • Empty property.
- • High value property.
- • Where high value property – consider the age / occupation of seller and how long seller has owned property.
- • Seller resident abroad / charge on property in favour of individual living abroad.
- • Mortgage free / restriction free property.
- • Transactions where the proprietor has only recently purchased the property and it is being sold for a much higher price.
- • Quick sale required – persistent urgency or pressure to complete. Why is there such an urgency? Does the explanation given sound plausible? Are there any further investigations you can carry out to determine whether the explanation is correct?
- • Discrepancies in the property information form or seller’s lack of knowledge of the property. Ask further questions until you are satisfied with the answers received.
- • Communication with your client is by email only? You should speak to your client at critical points in the transaction. How do you know that the emails are genuinely from client and not from a fraudster?
- • Seller geographically remote to their solicitor. For buyer’s solicitor: Why? Have they met their client? Has the seller used the firm before? How was the seller introduced to the firm? Are the firm specialist conveyancers? For seller’s solicitor: How did seller hear about you? Why did they choose you – don’t be afraid to ask? Has seller used your firm before? If the client says yes and it’s an introduction, check with the introducer, if you are still concerned. Have you met your client?
- • Check the validity of introducers. Is it a new introducer? Can you place reliance on their judgment or are they involved in the fraud?
- • Don’t succumb to pressure and be tempted to accept information for a quick completion – that’s the purpose of the pressure!
- • Encourage all clients, upon successful completion, to register with the Property Alert Service for free notifications if certain activities occur on a registered property. Explain to your clients why this is important.