Certifying identity verification
As part of the wider regulatory framework associated with the Anti-Money Laundering and Countering of Financing Terrorism Act 2009 (AML/CFT Act), lawyers need to be aware of the requirements and ramifications stemming from the Identity Verification Code of Practice 2011 (the Code). Although lawyers are not yet covered under the AML/CFT Act, they should comply with the requirements of the Code when certifying identity verification.
New Code of Practice
From 30 June 2013 the Code came into effect, having been gazetted on 1 September 2011 under s64 of the AML/CFT Act. The code was issued by the three supervisory bodies under the AML/CFT legislation: Department of Internal Affairs, Financial Markets Authority and Reserve Bank of New Zealand.
The Code can be located at www.fma.govt.nz/keep-updated/reports-and-papers/identity-verification-code-of-practice-2011.
Codes of practice are intended to provide a statement of practice to assist reporting entities to comply with certain AML/CFT Act obligations. They come under subpart 5 of the AML/CFT Act and set out suggested best practice for meeting all necessary obligations.
Compliance with a code of practice is not mandatory. However, if a reporting entity opts out of a code of practice then it must still comply with the relevant statutory obligation by some other equally effective means. The reporting entity must provide written notification to its AML/CFT Act supervisor that it has opted out of compliance with a code of practice and intends to satisfy its obligations by some other equally effective means. Lawyers are not yet reporting entities.
Powers of Attorney
Every sole practitioner and sole director of an incorporated law firm is required, pursuant to s44 of the Lawyers and Conveyancers Act 2006 (LCA), to comply with Schedule 1 of the LCA. This requires granting a power of attorney in favour of a barrister or solicitor entitled to practise on his or her own account (an attorney) and an alternate, to conduct the sole practice, or act as the board of the incorporated firm, should certain circumstances as set out in the Schedule arise.
The power of attorney document enables the attorney to conduct the donor’s practice, operate the trust account, dispose of the donor’s practice (in certain situations) and do all things necessary or incidental to the above. What are some of the key matters to be considered before accepting an attorneyship?
- does the attorney have experience of the donor’s area of practice?
- realistically, could the attorney cope being called upon to act with no or little warning in a worst case scenario?
- is the donor’s place of business in reasonable proximity to the attorney’s office?
If so, then enquire into whether the donor has adequate PI insurance and whether the attorney’s PI insurance covers the attorney acting in this capacity.
In order to further assess the risk or appointment the attorney should consider:
- asking the donor to disclose his/her past and present complaints/disciplinary matters;
- asking the donor to disclose past trust account inspection reports;
- possibly checking through a sample of client files to ensure there is adequate reporting to clients and all correspondence is filed in an orderly manner;
- his/her level of comfort with the manner in which the donor operates the business and related matters; and
- discretely ascertaining the personal health of the donor (not easy).
Lawyers who are sole practitioners are encouraged to establish reciprocal attorney arrangements. Lawyers are reminded to review these arrangements to ensure that they have not become over committed in the unlikely event of being called upon to act.
For more information, see Sole Practice Power of Attorney Guidelines.
The Code is prescriptive over the certification of identity verification documents. Verification of identity can be carried out using copies of documents that are certified by a trusted referee, as opposed to securing the original documentation itself.
Under the Code, lawyers are specifically included on the list of trusted referees that may undertake the certification of identity verification. Lawyers who are undertake this work need to be cognisant of the following:
The Code requires a trusted referee to sight the original documentary identification, make a statement to the effect that the documents provided are a true copy and represent the identity of the named individual.
Certification must include the name, occupation and signature of the trusted referee and the date of certification. This date must be within the three months preceding the presentation of the copied documents to a reporting entity.
When lawyers are certifying documentation, they must state their name, date and a specific statement that the documents represent the identity of the person. This differs from how lawyers have traditionally certified documentation, being that the document is a true copy of the original. The traditional “true copy” wording is not consistent with the requirements of the code of practice. Compliance with the Code in this respect is neither onerous nor difficult, but does require careful attention to the detail.
If anyone has further questions or requires any assistance please contact the Law Society’s Inspectorate through the Financial Assurance Manager firstname.lastname@example.org phone (04) 463 2936.
Last updated on the 17th March 2016