Since the Tranche 2 reforms brought lawyers and conveyancers into the AML/CTF regime, many firms are asking a fair question. Does an online identity check satisfy the separate, more prescriptive requirements that apply to electronic conveyancing under the ARNECC Model Participation Rules?

In our view, and based on nearly two decades working in AML/CTF compliance, the answer is yes. Done properly, it provides stronger assurance than the traditional approach.

What ARNECC actually requires

The core obligation is to take reasonable steps to verify identity, not to meet in person. Rule 6.5 of the Model Participation Rules requires a Subscriber to take reasonable steps to verify the identity of their client. There are two ways to do that:

1. Follow the Verification of Identity Standard in Schedule 8. This is the in-person route: a face-to-face interview, original documents produced in a set category order, and copies of everything retained. Following the Standard is deemed to be reasonable steps.
2. Verify identity in some other way that constitutes reasonable steps. The rules don't prescribe this method, so you need to be able to show why your approach was reasonable if asked. ARNECC's own Guidance Note confirms the Schedule 8 Standard is not mandatory.

Many firms already use remote verification under the second route. The real question isn't whether online verification is acceptable. It's which method gives you the strongest evidence that your client is who they say they are.

How VerifiMe verifies identity

VerifiMe confirms both that a document is genuine and that the person presenting it is its rightful holder. Visual inspection alone, in person or on screen, cannot reliably do either against a well-made forgery.

• Document authenticity. Each identity document is checked against the issuing government source. This confirms the document is genuine and current, and that its details match official records. The system provides a confidence rating on the strength of the ID documents provided ranging from low confidence to very high confidence.
• Biometric match. A live facial capture is matched to the photograph on the document. This step is built into every verification with the strength of the match rated as low confidence or high confidence. If a customer chooses to skip it, the firm can see this in the confidence rating returned.
• Foreign passports. For clients who hold an Australian visa, their foreign passport details are checked against Australian Government visa records. This confirms the client holds a current Australian visa linked to that passport. The passport number is captured on the verification record, and a visa grant number can be obtained directly from the client if needed. Two documents where required. Firms can configure rules to require two identity documents for conveyancing matters.
• Date of birth. DOB is extracted and verified, ready for entry into PEXA and Revenue NSW.
• AML/CTF screening. PEP and sanctions screening and a customer risk assessment are completed in the same process.
• Adverse media. A client can use this tool on all customers or as part of enhanced customer due diligence only.

Retention and privacy: evidence without exposure

VerifiMe retains the verification record and supporting evidence on the firm's behalf for seven years. This meets both the ARNECC retention requirement and AML/CTF record-keeping obligations, and the evidence is available if required for audit by the Registrar or PEXA.

We deliberately do not distribute copies of identity documents to firms. Every scanned passport or driver's licence held on a client file is a liability. It sits on the firm's systems, is exposed in any breach, and must be protected and eventually destroyed.

That risk has grown. Reporting entities are now subject to the Privacy Act for their AML/CTF activities, and recent large-scale breaches have shown how costly stored identity documents can be. VerifiMe gives firms the evidence they need, without the firm carrying that exposure itself.

One process for both obligations

An AML form completed by the client is a self-declaration, and on its own it does not satisfy customer due diligence. Under the AML/CTF Rules, firms must verify identity using reliable and independent data, screen for PEPs and sanctions, assess customer risk and monitor on an ongoing basis.

Treating conveyancing identity checks and AML/CTF due diligence as separate exercises usually means asking clients for the same information twice. It also leaves gaps between the two processes.

VerifiMe brings both together. The client completes one verification, and the firm receives the evidence it needs for electronic conveyancing and for its AML/CTF Program.

Stronger verification, less duplication

Online verification meets the ARNECC reasonable steps obligation and, done properly, gives firms stronger assurance than sighting paper documents. It also relieves them of the risk of holding identity documents themselves.

Next steps

If your practice may be regulated under the AML/CTF reforms, now is a good time to review how your settlement VOI and customer due diligence fit together. Our team can walk you through the platform and set up a two-document requirement for your conveyancing matters. Contact us at hello@verifime.com to book a short call.

This article is general information and does not constitute legal advice. Firms should confirm their approach against their own AML/CTF Program and risk assessment.