Investor hits out at Sharesies' identify verification process and demands money back

A Sharesies investor has been locked out of their account for not providing identity verification to a third party website. Photo / 123RF

An investor says he would never have joined the Sharesies platform had he known he would be asked to hand over personal details to a third party identification service and after being locked out of his account for months he just wants his $1000 back.

But Sharesies co-chief executive Leighton Roberts says its terms and conditions of sign-up make it clear that customers may be asked for more information at any stage and the company does this to prevent fraud and money laundering from taking place.

Justin, who only wants his first name used, and his wife signed up for Sharesies around Christmas last year so they could begin investing on behalf of their children.

Several months later they received a request for identity verification and were directed to a third party website. After the couple didn't do this within the required four weeks they were locked out of their account.

"Out of the blue, months later, we get this email and of course it is my fault and my wife's fault, we didn't reply, we didn't verify our ID within the time."

"So when we went to log into our account we were then told it was locked, and that we had to go to this verification place."

Justin said he did not feel comfortable giving over his photograph and personal details to a company which he knew nothing about and where he did not know what would happen to his personal information.

He questioned why Sharesies didn't use the Government-backed RealMe identification system.

"Surely they should look at using some other official Government-backed verification service?"

Justin claims he was told if he didn't verify himself he wouldn't be able to get access to his $1000.

"I have responded to six emails from Sharesies about them unlocking it and their reply is I have to be verified to unlock it and I said I don't want to use your services anymore I want my $1000 back."

Justin said he should have been told when he signed up and before he handed over any money that at some point he would need to use a third party company to verify his identity.

"[if they had] I wouldn't have put $1000 in - I would have said thanks and walked away.

Justin said privacy was a big concern at the moment.

"You only have to see what is happening around the internet around identities being stolen. I can understand they have got some obligations under the money laundering 2009 Act. But that should be part of the process when I sign up to them, not I sign up, you get my money and then you tell me I have got to verify who I am when you have got my money."

Sharesies co-founder and co-CEO Leighton Roberts. Photo / Supplied

Roberts said it had a risk-based system that could trigger a request for more information from a customer at any time - it was not linked to the sign-up process but was based on a range of information that it collected about its customers over time.

"There are different flags and they flag different people for different reasons based on different pieces of information we get. There are quite a few reasons and from there we decide if we need any further information.

"Most people that we ask for further information are fine."

He said in most cases it was a false positive and no financial crime was found.

"But then in other cases we pick up things that look more suspicious and as a result we end up filing that through the Financial Crime Unit."

Roberts said in Justin's case a flag was raised and the customer was asked for more information.

"This particular customer came up around some information we had. Our process is we go and ask them for more information. He was given some options. To go through ID process or send us a deposit from an account just in his name."

Roberts said the man did not need to go through an identity verification process to get his money back and it would now be offering that to Justin. "We can send the money back to the account it came from."

The reason it had not done so before now was because the customer appeared to be requesting that his account be unlocked.

Roberts confirmed it did use a third party for verification services. "It is pretty standard in the industry."

He said the company was called Verify and Justin's initial sign up data had already gone through Verify. "Our onboarding process uses that anyway.

"We keep the data we need to and we disclose that so that's things like date of birth, full name. We have to be able to prove we have matched the customer. We need enough data and controls in place to confirm that. This is standard to the industry not a Sharesies only thing."

Roberts said neither Sharesies nor Verify kept photos of people on file once they had been verified.

"We definitely, as part of our terms and conditions, say that at any time we may ask for more information."

"We do ask a lot of people for more information reasonably often. It's not always ID, it could be proof of where the money is coming from, source of funds, wealth."

It had considered using the RealMe identification service but not enough people were signed up to use it to make it viable where as most people had a passport or drivers license, he said.

More financial crime?

Roberts said an increase in the size of the Sharesies business and a focus on financial crime meant it had boosted its team handling financial crime issues from one to six people in the last year.

"It is common enough for it to be a problem for us and we have a team dedicated to it.

"There are more people pretending to be like us and that is a problem. The fact we have got a lot bigger over the last year, it was easier for us when we were smaller and we were less of a target.

"Ultimately the teams' main target is to get people comfortable and keep their money safe."