Why we ask for ID

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Is it all becoming r-ID-iculous?

PassportWe’ve all been there. We think that we can nip off and sort something out at lunchtime but our plans to have a quick coffee in Pret are scuppered by the words “Sorry, you’ll need to come back with some ID”. So why is it that we as a nation (and particularly we as solicitors) are so obsessed with ID? There are two reasons.

The first reason is that most of us do not really fancy going to prison. I could wax lyrical about having hot meals provided and about the phone not ringing, but the truth is that I would miss my dog terribly and would not find the experience very much fun. However, failure to have systems in place to verify the identity of our clients is a criminal offence under the various acts and regulations relating to money laundering and the penalties are severe.

Entire books have been written about money laundering legislation. You have the Proceeds of Crime Act, the Money Laundering Regulations and a raft of anti-terrorism legislation which is all aimed at making sure that we don’t allow you to introduce funds into “the system” unless we know who you are and where the money has come from.

So it goes beyond us insisting that you come in to the office with two forms of ID if you want to sell a house. You will need to jump through the same hoops if you want to open a bank account or if you want to put your house on the market with an estate agent. Soon, both lettings and sale agents will need to carry out anti-money laundering checks on sellers and buyers, and on tenants and landlords – that’s the 4th Money Laundering Directive for you.

Don’t be fooled into thinking that you can just rock up with your passport and coffee-stained bank statement (dated within the last three months, of course). Expect to be asked about why it is that you are able to afford a flat in Wimbledon when you are not, with the greatest respect, the great-nephew of the seventh Earl of Shrewsbury. Expect to be asked to show your bank statements or a photo-copy of that winning lottery ticket.

As solicitors, we are all in the same boat and will try and make the process as straightforward as possible, but not many of us want to spend the next ten years in Belmarsh so please don’t be offended if we ask why you’ve got 3 million Swiss Francs spread over eight different accounts.

The second, perhaps more obvious reason, is that we rely on our ID procedures to avoid fraud.

Back in the day, if you wanted to sell your property your solicitor would need either the Land Certificate or the Charge Certificate produced by the Land Registry. If you lost one of these a ten year stretch in Belmarsh may be preferable to the inconvenience of getting a duplicate.

Today, the Land Registry do not produce Land or Charge Certificates. Instead we all rely on the computerised records that they hold (and which can be accessed by any member of public with internet access and £3 to spare). This makes impersonating the owner of a property surprisingly easy, and every year millions of pounds are lost through property fraud perpetrated in this way.

Unfortunately, obtaining ID is only part of the solution. Anyone determined enough to carry out a £10m property fraud is probably going to have the wherewithal to obtain some fake ID documents, and this is why particularly sellers of properties should expect to be quizzed in great detail about the property that they are selling and to prove ownership other than by simply showing ID to suggest that they are the same person as named on the title.

We know even the most straightforward ID verification procedures are a pain, and we’re sorry. But as anti-money laundering regulations get stricter, and as methods of carrying out property fraud get more sophisticated, please bear with us whilst we carry out our checks.

 

This article originally appeared in the Wimbledon Time and Leisure magazine in April 2017.TandLThumbnail