Law Association of Trinidad and Tobago FRAUD IN

Law Association of Trinidad and Tobago FRAUD IN

Law Association of Trinidad and Tobago FRAUD IN REAL ESTATE TRANSACTIONS INVOLVING IDENTITY THEFT Presented by Ashmead Ali 30th October, 2018 1 Introduction 2 OUTLINE Responsibilities and Liabilities of Attorneys acting for Vendors and/or Buyers in matters involving fraud through the context of four

areas of law: Misrepresentation/ Deceit Breach of Warranty of Authority Breach of Contract/Negligence Breach of Trust 3 Fraudulent Misrepresentation Fraudulent Misrepresentation- i.e. cases where: A vendor shows a particular property to a buyer but by the actual agreement for sale and conveyance, he sells and conveys another property which he owns; A vendor who intends to acquire a property enters into an

agreement to sell this property before he acquires the title but does not disclose this; A vendor impersonates the true owner of a property (Fraud Involving Identity Theft). N.B. When someone purchases property from a fraudster, invariably the purchaser and/or his mortgagee bears the loss. 4 Fraudulent Misrepresentation The law on this issue is clear. As noted in Gibsons Conveyancing 12 th Edition, pg. 100: Misrepresentation inducing contract. A statement of fact as true which really is not true, is a misrepresentation. Fraudulent Misrepresentation. If the false statement is made fraudulently, it has

always enabled the party deceived to claim damages in tort for deceit, or to rescind, even after execution of the conveyance. Fraud is proved whenever it is shown that a false representation has been made knowingly, or without belief in its truth, or recklessly without caring whether it be true or false. 5 Misrepresentation Act, Chap 82:35 Section 3. (1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground

to believe and did believe up to the time the contract was made that the facts represented were true. 6 Criminal Offences Act, Chap 11:01 Deceit Section 3: Any person who falsely and deceitfully personates any person, or the heir, executor, administrator, wife, widow, next of kin or relation of any person, with intent fraudulently to obtain any land, estate, chattel, money, valuable security or property, is liable to imprisonment for five years; but nothing in this section shall prevent any person from being proceeded against and punished under any other Act or at common law in respect of any offence punishable as well under this section as under any other Act or at common law. See other statutes : section 4 . 2 (b) of the Forgery Act Ch 11:13;

section 83 of the Conveyancing and Law of Property Act Ch 56:01 and section 154 of the Real Property Act Ch 56:02 7 Misrepresentation/Deceit Where, in the negotiation of any contract by an agent, the agent while acting within the scope of his authority is guilty, whether or not the principal is privy thereto , of fraud or of concealment of essential facts which ought to be disclosed to the other contracting party , the contract is voidable, and the other party thereto may rescind it and recover any benefit which has passed thereunder to the principal . Where the other party elects to affirm the contract or has lost the right to rescind , he may bring a claim for deceit if the agent has induced the contract by fraud , or sue for breach of warranty if the

representation constituted a warranty . Halsbury's Laws of England > Agency (Volume 1 (2017)) > 6. Relations between Principal and Third Persons > (2) Contractual Relations > (iv) Fraud, Misrepresentation or Concealment > 136. Fraud etc of principal or agent. 8 Duties of Attorneys acting for Vendors & Purchasers: The responsibility of attorneys in relation to the subject was considered in Purrunsing v A'Court & Co (A Firm) [2016] EWHC 789 (Ch) (Purrunsing). P & P Property Ltd v Owen White & Catlin LLP and another [2016] EWHC 2276 (Ch) (P&P) 1st instance. Dreamvar (UK) Limited v Mishcon De Reya (a firm) and Mary Monson Solicitors Limited [2016] EWHC 3316 (Ch) (Dreamvar) 1st instance.

P&P and Dreamvar formed conjoined appeals that raised common issues about the liability of attorneys in cases involving fraud in: P&P Property Limited v Owen White & Catlin LLP and Dreamvar (UK) Limited v Mishcon de Reya [2018] EWCA Civ. 1082 Appeal) (the 9 The facts of Purrunsing v A'Court & Co (A Firm) [2016] EWHC 789 (Ch) . In Purrunsing a fraudster impersonated the owner of a property and sold the property to a purchaser.

The sellers solicitor was unaware that the seller was not in fact the owner of the property but the solicitor did not do proper checks on the seller as required under the English Anti Money Laundering Regulations (MLRs) The buyers solicitor received unsatisfactory information from the sellers solicitors about the identity of the seller/fraudster but did not advise the buyer against proceeding until this issue was resolved The purchase money was paid by the buyer and deposited in the buyers solicitors clients account. On completion, it was paid by the buyers solicitor to the sellers solicitor into whose account it was deposited and then paid to the fraudster who disappeared. 10

The court held both the sellers solicitor and the buyers solicitor liable and P&P Property Limited v Owen White & Catlin LLP and Dreamvar (UK) Limited v Mishcon de Reya [2018] EWCA Civ. 1082 In each of two these cases a fraudster posed as the owner of a property, instructed solicitors and selling agents to act for him, exchanged contracts and completed in accordance with the Law Society Code for Completion by Post (2011) ("the Code"). 11 The facts and the decision of the Court at first

instance: P&P In P& P, the sellers solicitors, Owen White & Caitlin, (OWC) failed to carry out comprehensive identity checks, and there were a number of inconsistencies and discrepancies in the information provided to OWC as required by the MLRs (e.g. various signatures were inconsistent; the fraudster gave different addresses to OWC. ) P&P made an offer to purchase the property which the fraudster accepted. P&P's solicitors agreed for the purchase monies to be held by OWC as agent for the vendor. OWC never met the vendor/fraudster, however, they signed the contract on his behalf. Subsequently at the time of completion, OWC emailed a copy of 12 a local the transfer and transfer documents and asked the seller to sign at

solicitor to witness his signature. The facts and the decision of the Court at first instance: P&P After discovery of the fraud, P&P brought claims against OWC relying on breach of warranty of authority, breach of undertaking, negligence and breach of trust. P&P alleged that both OWC and Winkworth (the estate agents) held themselves out as having the authority of the true owner, and were negligent in not carrying out adequate identity checks and (in the case of OWC) did not have authority to disburse the purchase monies to their client other than on completion of a genuine sale.

At first instance all of the claims of P&P were dismissed and P&P 13 appealed the decision to the Court of Appeal. The facts and the decision of the Court at first instance: Dreamvar In Dreamvar the buyer was informed by estate agents Douglas & Gordon ("D&G") that a client was looking for a quick sale of a property. Dreamvar instructed Mishcon de Raya ("Mishcon") to act on the purchase, acknowledging that there would not be time to carry out all of the necessary searches. D&G sent a memorandum to Maishcon naming the vendor and stating that his solicitors were Mary Monson Solicitors Limited ("MMS").

MMS never met the vendor i.e. the fraudster and took no proper steps to verify his identity. They sent the contract to the vendor for signing. It was agreed that completion would take place in accordance with the Code paragraph 3 and that MMS would send the purchase monies to 14 another firm of solicitors for the vendor The facts and the decision of the Court at first instance: Dreamvar Following discovery of the fraud, Dreamvar brought proceedings against its own solicitors, Mishcon, for negligence and breach of trust and MMS (the vendors solictors ) for breach of warranty of authority, breach of undertaking and breach of trust.

At first instance the judge dismissed the claim against Mishcon for negligence but found that it had acted in breach of trust by releasing the money and denied it relief under s.61 of the Trustee Act 1925 ("TA 1925"). (TT: Trustee Ordinance Ch 8 No. 3 at section 62.) 15 The decision of the Court of Appeal: P&P Property Limited v Owen White & Catlin LLP and Dreamvar (UK) Limited v Mishcon de Reya [2018] EWCA Civ. 1082 The COA held that OWC in P&P was not liable for breach of warranty of authority or negligent, but that OWC in P&P and MMS in Dreamvar (the vendors solicitors) had acted in breach of trust.

OWC, MMS and Mishcon (the purchasers solicitors in Dreamvar who accepted that it acted in breach of trust but contended that it should be relieved from liability) were not granted s.61 TA 1925 relief. The COA upheld the first instance decisions that ordinarily a vendor's solicitor (and estate agent) does not owe the purchaser a duty of care when verifying the identity of his 16 Breach of Warranty of Authority 17 Breach of Warranty of Authority

The issue that arose in the COA was whether OWC in P&P and MMS in Dreamvar (the vendors solicitors) warranted the identities of their respective clients. Where any person purports to do any act or make any contract as agent on behalf of a principal, he is deemed to warrant that he has in fact authority from such principal to do the act. If these acts amount to a misrepresentation and he has no such authority he is liable to be sued for breach of warranty of authority by any third person who was induced by his conduct in purporting to act as agent to believe that he had authority to do the act or make the contract, and who, by acting upon such belief, has 18 suffered loss in consequence of the absence of authority. Halsbury's Laws of England > Agency (Volume 1 (2017)) > 7. Relations between

Breach of Warranty of Authority In the Appeal, P&P alleged that by signing the contract of sale on behalf of "the seller", and against the backdrop of the requirements of the MLRs, OWC represented that it had authority to act on behalf of the real seller and not the fraudster This allegation was resisted by OWCa on the basis that they did not guarantee the vendor's identity The COA held that since OWC signed the contract on behalf of the vendor they warranted that they acted for the true owner. Nevertheless, it ruled that OWC would not be liable on this ground because P&P was not induced to purchase the property 19

because of the warranty. Breach of Warranty of Authority The court also considered whether the obligation of the vendor's solicitors/estate agent to check the identity of the vendor under the MLRs creates an obligation which amounts to a warranty that the agent/ solicitor is acting for the real owner of the property, as opposed to the firm's actual client, the fraudster. It was held that if all that is alleged against a solicitor is a failure to comply with the MLRs coupled with correspondence indicating that the solicitor has a client, there was no breach of warranty of authority. The MLRs is a scheme designed to stop money laundering and terrorism financing and it does not create private law rights of action.

This was also considered on the issue of negligence 20 Breach of Contract/Negligence 21 Breach of Contract/Negligence The fundamental nature of the duty of a solicitor is the duty to exercise reasonable care and skill in the course of professional activity, whatever other obligations he may have. The standard has been described as that of an ordinarily competent solicitor. He owes a duty to his client both in contract and in tort, and he may be liable

to a third person for the tort of negligence. (CORDERY on Solicitors Issue 39, 9th Edition pg. I/301-I/303). 22 Breach of Contract/Negligence: Buyers Solicitors responsibility to buyer A solicitor has a duty of care to inform of any potential risk to his client that he is aware of, even where he has not been expressly instructed in relation to the risk (Credit Lyoynnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch)). The failure to exercise this duty of care can render attorneys liable to their clients in contract and tort

23 Breach of Contract/NegligencePurrunsing In Purrunsing the Court held that the buyers solicitor was liable to the buyer for breach of contract and negligence because he failed to advise his client, the buyer, that he had information that posed a risk to the client. The buyers solicitors asked the sellers solicitors to confirm they were familiar with the sellers and would verify that they are the sellers and check ID to support same. The sellers solicitors responded in the following terms: As explained to you over the telephone, prior to being approached to act on the sale we have no personal knowledge of Mr Dawson, but we confirm that we have met him in person and have seen his passport (and retain a copy of the photo page) together with utility bills etc. showing his UK

24 address as notified to us. Breach of Contract/NegligencePurrunsing The court held that the buyers solicitor ought to have known that the answers were unsatisfactory, and ought to have told the purchaser of the unsatisfactory responses received and advised the purchaser not to proceed with the transaction until satisfactory responses had been received. 25 Breach of Contract/Negligence : Sellers Solicitors responsibility to a buyer.

In normal conveyancing transactions attorneys who are acting for a seller do not in general owe to the would-be buyer a duty of care when answering inquiries before contract or the like. (Gran Gelato v Richcliff [1992] Ch 560). 26 Breach of Contract/Negligence Special Cases where this general rule does not apply and a duty of care will be owed by the sellers attorneys to the buyer: Where the solicitors stepped outside their role as solicitors for their client and accepted a direct responsibility to the lender. (Gran Gelato v Richcliff

[1992] Ch 560); A vendors attorney will be held to owe a duty of care to the purchaser where there are special circumstances which result in him accepting a direct responsibility to the purchaser to take reasonable care to ascertain the identity of the vendor or to 27 Breach of Contract/Negligence Re: Negligence In the Appeal of P&P and Dreamvar, the COA considered whether solicitors acting for a vendor owed a duty to a purchaser to ensure that their client was the true owner of the property. Patten L.J. noted at paragraph [65] that from the mechanics of residential

conveyances (in England) the vendors solicitors have access to the vendor and are required to carry out identity checks (under the MLRs) whereas the purchasers solicitors do not and are not. The Court considered the following factors: (a) there was no actual assumption of responsibility to the purchaser; and (b) the MLRs do not create private law rights of action. [ Para 78 of the Appeal ] 28 He concluded that it would not be fair, just and reasonable to treat the vendors solicitors as having assumed responsibility to the purchasers for the Breach of Trust

29 Breach of Trust- Purrunsing M. Shahid Fighting Words Law Society Gazette (9th June, 2017): As previously stated, in Purrunsingthe buyers solicitor paid the purchase moneys to the sellers solicitor who were unaware that the seller was not in fact the true owner of a propertyand purchase monies were transferred. Both sets of solicitors in the transaction were found to be in breach of trust: the duty not to release purchase monies before legal completion is an absolute one, and as the relevant 30 property transfer deed was forged, legal completion had not in fact taken place

Breach of Trust When a solicitor engaged in real estate transactions holds money for a purchaser of property, he is regarded as a trustee and as such will have the fiduciary obligations associated with a trustee.(Purrunsing); If he pays out the purchase money to a fraudster who is impersonating the true owner of the property this would amount to a breach of trust and he may be liable for the loss suffered by the purchaser; The solicitor would not necessarily be liable to his client (the purchaser) because the s.61 of the TA 1925 gives the court a discretion to grant the relief where he has acted honestly and reasonably and ought fairly to be excused for the breach of trust.

(TT: Trustee Ordinance Ch. 8 No.3 at section 62 ) 31 Breach of Trust- Purrunsing As stated by the judge in Purrunsing at paragraph 38(i): The reasonableness test that is applied to a solicitor who parts with completion monies without obtaining completion is necessarily a high one because of the need to interpret s.61 consistently with equitys high expectation of a trustee discharging fiduciary obligations It is therefore one which requires the solicitor concerned to have acted with exemplary professional care and efficiency and to be careful, conscientious and thoroughthough the test remains

one of reasonableness not perfection 32 Breach of Trust- Purrunsing Both firms sought relief under s 61 of the TA 1925 [s.62 of T&Ts Trustees Ordinance], and both firms were denied such relief. There was no allegation or evidence of dishonesty by the solicitors. However, the fact that the sellers solicitor failed to carry out MLRs checks in accordance with reasonable practice; and the fact that the buyers solicitor failed to report gaps and discrepancies in the information provided by and about the purported seller and about the property, meant that neither solicitor had acted reasonably. Both sets of solicitors were found to bear equal responsibility for the

loss suffered by the buyer in accordance with the English legislation relating to Contribution; Section 1 of the Civil Liability Contribution Act 1978; TT: S26 of the Supreme Court of 33 Judicature Act of Trinidad and Tobago Breach of Trust The Appeal in P&P and Dreamvar The conjoined appeal in P&P and Dreamvar was heard by Gloster V.P., Patten and Floyd LJJ [See slide 9 for the citation of the decision] Both P&P and Dreamvar concerned the use, and interpretation, of the Code in defining trust obligations on the vendor's solicitors. Patten LJ started from the well-established starting point that purchase monies are held, by the purchaser's solicitor, on trust for the purchaser pending completion; Target Holdings v

Redferns [1996] A.C. 421 at 436B C. Completion in this context was defined by the Court of Appeal in Lloyds TSB Bank v Markandan [2012] EWCA Civ 65 34 (Markandan Completion) as the exchange of genuine money for genuine documents. Breach of Trust The Appeal In considering the Code, the COA examined whether the word completion could mean that release of the monies to the fraudulent vendor by his solicitor could be a breach of trust by the purchaser's solicitor, but not the vendor's solicitor. Under Paragraph 3 of the Code, the sellers solicitor acts as the buyers

solicitors agent without fee or disbursement pending completion upon receipt of purchase money from the buyers solicitor 35 Breach of Trust The Appeal. The Court held: to treat completion under the Code as simply the receipt of money into the vendors solicitors account, rather than Markandan Completion, is irreconcilable with how the Code was intended to operate and deprives the Code of all meaning: paragraph 3 cannot be construed as releasing or excluding any liability on the part of the vendor's solicitor for breach of trust still less as giving him authority to release the purchase monies in the absence of a genuine completion of the sale.

Both OWC and MMS (vendors solicitors in P&P and Dreamvar respectively) were therefore held to be in breach of trust (Mishcon 36 the purchasers solicitors in Dreamvar had already conceded that they were in breach of trust) Breach of Trust The Appeal. It is of interest that in T&T, we do not have a Code like in England, however, Patten LJ pointed out that but for the Code, there is no doubt that the vendors solicitor receives the money knowing that it belongs to the purchaser until completion and therefore the solicitor would hold the money on trust and not be authorized to release the payment of the money to the vendor save for a Markandan Completion. (i.e. a genuine completion)

See Paragraph 91 of the Appeal. P&P Property Limited v Owen White & Catlin LLP Dreamvar (UK) Limited37v Mishcon de Reya [2016] EWCA Civ. 1082, May 2018,, Article written by Nicole Sandells QC and Nicholas Broomfield of 4 New Square on 23rd Breach of Trust: Relief under s 61 of the TA 1925 ( Trustee Ordinance Ch. 8 No.3 at Following the Court of Appeal's conclusions about breach of trust, OWC section 62 ) ( vendors solicitors in P&P) and Mishcon (purchasers solicitors in Dreamvar) sought to rely on s.61 TA 1925 to relieve them of liability.

The court ruled unanimously that OWC had not acted reasonably due to its failure to carry out a number of basic MLRs checks and did not as such meet the threshold criteria for s. 61 relief. As for the purchasers solicitors, Mishcon, relief was refused by a majority (Gloster LJ dissenting), even though the honest and reasonable hurdles appeared to be jumped and MMS was already on the hook. MMS' liability(sellers solicitor in Dreamvar) was not a reason to grant relief to Mishcon, and that s.61 TA 1925 should not be used as a means of distributing liability between trustees; any such distribution should be achieved through 38 contribution proceedings. Breach of Trust: The Appeal.

Relief Some further comments: Following the first instance decision in Dreamvar where Mishcon was denied relief under s61 of TA 1925 although the court found that it did not act negligently, there was great concern amongst conveyancing solicitors who felt that the decision was unfair and the Law Society intervened in the Appeal. In refusing relief to Mishcon, the first instance judge had regard to the consequences of Mischons breach of trust on Dreamvar (the buyer) which he described as disastrous. The company was small. It had lost the purchase price, had no insurance against fraud and was left with creditors of more than 1.2 million. The judge stated that Mishcons client the buyer had no recourse to the 39

fraudster and that Mishcon was best placed to bear responsibility for the loss. Breach of Trust: The Appeal -Relief The idea that Mishcon was better able than its client to bear the loss also factored in the majority decision of the COA although, as noted, MMS would also be on the hook through contribution proceedings. Patten LJ quoted the following statement by the first instance judge; Para 110. "187. As for MdR's (Mishcon) position, it is common ground that it is insured for events such as this, and that its insurance cover is sufficient to cover in full the loss suffered, should it not be excused from liability. In terms of balancing the relative effects or consequences of the breach of trust, it is apparent that MdR (with or without insurance) is far better able to meet or absorb it [the loss] than Dreamvar. What can be derived from these decisions is that even if a purchasers attorney has no direct contact with a fraudulent vendor and is not 40

negligent he can still be denied relief when there is a breach of trust Local Practice:Trust England: it is common that the buyers solicitors would hold the funds in their clients account and at completion pay them to the vendors solicitors who would then hold the funds in their clients account before disbursing to the vendor. In both cases therefore, the solicitors were clearly trustees. T&T: the current practice is usually different so that (with some exceptions, the purchase money (or loan money) is not held by the attorneys but rather paid by the buyer or his lender directly to the vendor (or his mortgagee where appropriate) attorneys would not usually be trustees in the manner described in the English cases. However, in many instances the purchaser or his bank would send a

cheque for the purchase money to the purchasers attorney who would pass it to the vendors attorney at the time of completion. In my view, our courts are likely to hold that this process would result in the Duties of Attorneys acting for Vendors & Purchasers: As noted in these English cases on real estate fraud involving identity theft, the Courts looked to the observance by solicitors of the English Proceeds of Crime Act and associated anti-money laundering regulations (which are designed to combat money laundering and terrorism financing) as a key factor in determining whether solicitors have acted reasonably, and, as a consequence, ought possibly to be excused for their breach of trust.

Attorneys in Trinidad and Tobago are required to observe similar standards under our Proceeds of Crime Act Chapter 11:27 (POCA) and Anti Money Laundering guidelines issued by the Financial Intelligence Unit. As noted in these cases, the Court held that the solicitors did not act reasonably because they failed to adopt a risk based approach to client due diligence as required by the MLRs (i.e. their POCA). 42 Guidelines for combatting Real Estate Fraud In Purrunsing, the court noted the following ought to have been considered: no instructions were sought by the sellers solicitor as to why his residential address supplied was not the same address as the sale property; no documentation was asked for or supplied showing the link

between the fraudster and the property including utility bills. the fraudster denied that any building work had been carried out at the property during his period of ownership, and this was inconsistent with the Local Search result; and the fraudster had aborted an earlier potential sale when he had been pressed for information about his employer. 43 Guidelines for combatting Real Estate Fraud In P&P, the court noted the following ought to have been The vendor only producedconsidered one utility bill .

The MLRs search came back as Referred because it was not possible to uniquely identify the applicant at his address or verify his date of birth from the available databases. The solicitor made no further attempts to verify the vendors identity and accepted him as a client Bank statements provided were not complete copies. The signature on forms did not correspond with that on the vendors passport One form confirmed that the vendor did not live at the property but the attorney made no further enquiries as to where he did live when he was in the UK. 44

Guidelines for combatting Real Estate Fraud In Dreamvar, the court noted the following ought to have been considered The vendors solicitor had not received proof of ID or formal instructions for the sale yet the transaction commenced. The proprietorship register gave the address of the property as the vendors address but in the draft contract a different address was given by the vendor. The vendor submitted a drivers licence issued shortly before the transaction and it did not specify his address. He produced a TV licence which was not suitable for verification of UK based clients but no other steps were ever taken to verify the vendors

identity and no one from his solicitors firm ever met him. After asking for details of the bank account to which the purchase monies 45 should be transferred, the vendor asked his solicitors to transfer the monies to another firm of solicitors also acting for the vendor. GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Identification Purchasers attorneys should make personal contact with the vendors attorneys to confirm they act for the vendor.

Vendors attorneys should insist on meeting the vendors in person except where due to special circumstances this is not possible Where attorneys and purchasers meet the vendor, they should observe his demeanour to ascertain whether there is any thing in the behavior that arouses suspicion 46 GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Purchasers and their attorneys should verify the bona fides of vendors (and real estate agents) who offer to sell them real estate. They should ask them to produce two forms of government issued picture IDs, one of which should be a National ID Card or Passport.

Identification documents should be checked for their date of issue which should not be a weekend day or public holiday. Unless attorneys for a vendor or purchaser know the vendor personally they should ask their respective clients to take steps to verify the identity of the vendor. 47 Verification of ID Cards and Drivers Permits. Individuals can verify the validity of DPs via the Ministry of Works website at - https:// apps.mowt.gov.tt/apps/dpv Individuals can verify the validity of ID cards via the Elections and Boundaries Commission website athttps://www.ebctt.com/identification-card/apply-fora-new-id/

48 GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Identification (continued) In the case of vendors who are companies, purchasers should have a search done of the company at the Companies Registry and ask for one or more directors to provide similar government issued IDs. Established corporate property developers and public companies may be excepted. Google Name of Vendor It is also good practice to Google the names of vendors. This can sometimes turn up information useful in identifying vendors and

their history. 49 GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT Purchasers attorneys should consider asking vendors attorneys to state what checks they have done and what evidence verifies the identity of the vendor. If a purchasers attorney receives unsatisfactory information of the identity of a vendor he should inform his client and caution the client in writing about the risk of proceeding.

Completion of transactions usually take place at the office of the vendors attorneys. Purchasers are entitled to be represented at the time of completion to witness the execution. Purchasers and attorneys should wherever possible, exercise this right. { Section 26 of the Conveyancing and Law of Property Act } 50 Vendors attorneys should not sign agreements for sale on behalf of their client unless they have written instructions to do so and know LESSONS How can attorneys mitigate against liabilities: 1. Consider avoiding acting as trustees;

2. Develop a robust Anti Money Laundering regime and apply it to verify the identity of clients; 3. Avoid acting for both vendor and purchaser in transactions unless they know both parties and other aspects of conflict of interest are observed. 4. Caution should be exercised when the vendors execute deeds involving powers of attorney abroad. Purchasers should be advised that this poses additional dangers because it may often be difficult to verify the genuineness of the persons involved ie the vendor, witness, notary or other persons performing the role of qualified functionaries. 5. Advise clients to attend execution aboard. 6. Google the name of the notary public or other official before whom the witness swears the oath of execution

51 7. Email the relevant official to confirm the execution and identification of the GUIDELINES FOR COMBATTING REAL ESTATE FRAUD INVOLVING IDENTITY THEFT As noted, attorneys engaged in real estate transactions are urged to observe the Anti-Money Laundering Guidelines of the Trinidad and Tobago Financial Intelligence Unit (FIU) and adopt a risk based customer due diligence. Due Diligence (English Money Laundering Regulations): Reg 5(a)identifying the customer and verifying the customers identity on the basis of documents, data or information obtained from a reliable and independent sourceand by Reg 5(c) as obtaining information on the purpose

and intended nature of the business relationship. Repeated: paragraphs 3.1 and 3.3 of the Financial Intelligence Units Customer Due Diligence Guide No. 1 of 2011 and they are based on the Trinidad and Tobago POCA and Financial Obligations Regulations 2010. 52 Trinidad and Tobago Anti-Money Laundering and Counter Financial Terrorism Guidelines Red Flags: Excessively obstructive or secretive client Client refuses to produce personal identification documents or only submits copies of personal identification documents. Client produces seemingly false identification or identification that appears to be counterfeited, altered or inaccurate.

Client presents confusing and inconsistent details about the transaction. Client is secretive and reluctant to meet. 53 Trinidad and Tobago Anti-Money Laundering and Counter Financial Terrorism Guidelines Red Flags: Transactions involve unusual levels of funds or cash Client seeks to conduct large transactions with cash.

Transaction seems to be inconsistent with the clients apparent financial standing or usual 54 END Material used for this paper was taken from case law, Lexis Nexis Online, the Law Society Gazette, Lexology, Halsburys Laws of England, the Financial Intelligence Unit 55

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