Qualified electronic signatures as a key to innovation and security for European Notaries
This White Paper addresses the digital transformation of notarization. Notaries in the European Union have been making a technological bet for decades, implementing new technologies in their daily activities. They were one of the first authorities to use electronic signatures in the granting of public deeds and in their communication with other public and/or private actors. Within this process, there is a trend towards the celebration of notarial acts remotely, for example, Directive (EU) No. 2019/1151, which will allow the Digitization of European companies, provides for the online creation of some corporate models. Similarly, some European laws already contemplate the conduct of legal businesses completely remotely by electronic means. In the near future, secure identification of customers and the issuance of high-security standards electronic signatures will be a key piece of the new reality. Next, the trends in digitization and technological innovations that will lead the digital transformation of notarial activity are analyzed.
THE ROLE OF NOTARIES IN THE EUROPEAN UNION
Notaries play an important role in the legal reality of the 22 Member States whose legal system is based on Latin civil law. Among other functions, they are responsible for advising and drafting official documents, guaranteeing their legality and authenticity. Notarial documents share in many aspects the same value as a judgment, that is, public documents cannot be contested, except through judicial procedures. Therefore, given the importance of certain legal businesses, the different European laws establish the obligation for notaries to participate to ensure legal security and participant interests. They are competent in areas of law as diverse as marriage contracts, corporate statutes, wills, real estate transactions, etc.
Similarly, they are one of the key players in the fight against money laundering. This phenomenon is constantly evolving and finds new resources in increasing financial globalization and the evolution of technology, becoming a real challenge for the authorities. In Europe, the prominence of notaries is greater in real estate transactions and corporate acts because they are two of the most important channels for money laundering operations. For this reason, they must implement the FATF Recommendations and Anti-Money Laundering (AML) European legislation, as well as have the obligation to inform the authorities of any suspicious operation or financial transaction. By way of example, in the period 2005-2018, Spanish notaries had notified more than 5,000 transactions in which they had detected signs of money laundering crimes and had responded to more than 160,000 requests for information from the authorities.
DIGITALIZATION LEVEL OF THE EUROPEAN NOTARY
Notaries in the European Union have not been oblivious to the evolution of technology and its impact on society. European notaries were among the pioneers in conducting electronic legal transactions. The qualified electronic signature has become an essential tool for working and communicating with clients and other administrations. Only this type of signature guarantees a sufficiently high-level of electronic documents authenticity and integrity, appropriate to the needs of notaries. At the European level, within the Council of Notaries Public of the European Union (CNUE), projects such as the Bartolus tool have been developed to promote cooperation and cross-border verification of digital signatures. It is an online validation platform capable of dealing with the various particularities of certificates and the different electronic signature formats used by European notaries.
In the same way, digitization has been extended to public deed, being possible in electronic form, and above all, to the copies and custody of documents in accordance with international security and durability standards. The notarial document in electronic support has public faith like the paper document and is signed by the notary with his/her electronic signature. Some countries admit the deed of origin (first deed) in electronic form while others do not allow or contemplate a mixed system. In the latter case, the original deed is printed, read, approved, and signed on paper. Subsequently, a digital copy is created with the qualified signature of the notary.
LEGAL NEWS: THE FUTURE OF NOTARIZATION
European legislation is being developed along the lines of allowing remote notarial acts. Currently, there is an intense cross-border activity within the European Union, for example, 2.5 million properties belong to people who live in a different State than the place where the properties are located; each year 450,000 inheritances are processed in Europe with an international component worth more than 123,000 million euros; 13% of marriages correspond to binational couples, etc. In addition, we live in an increasingly hectic society in which reducing travel and reducing time has become a priority. These data show a reality and the need to be able to operate remotely with guarantees.
In the EU, progress is being made in the following directions:
NOTARIES & CORPORATE LAW
Directive (EU) No. 2019/1151 will allow the digitization of company law. This instrument promotes digital solutions throughout the life cycle of a company. In this area, notaries provide comprehensive legal advice and carry out preventive legal control, ensuring that businesses are established effectively. At the same time, they prevent the abuse of entities for illicit purposes such as money laundering and tax evasion.
By virtue of this Directive, Member States can involve notaries in all stages of the online company creation procedure. The figure of the notary as a guarantor of legality will not be affected. Furthermore, the Directive will allow any EU Member State to establish a company in another Member State without the need for physical movement.
According to this instrument, fully digital procedures have to meet the following requirements:
Admission of electronic identification of grantors who are EU citizens, in accordance with the provisions of Regulation (EU) No. 910/2014 (eIDAS).
Presentation of documents in electronic format and online payment of share capital.
Model of the online establishment instrument. It does not require physical presence before an authority in the Member State of registration (except when there are reasons to suspect that there may be misuse or alteration of identity or that the applicants do not have the necessary legal capacity or the power to represent a society).
Member States may establish additional requirements as long as they respect the principle of no need for physical presence. In this way, recital 22 of the Directive establishes the possibility of complementary electronic checksof identity, legal capacity, and legality. In these cases, videoconferencing(or other online means that offer an audiovisual connection in real-time) could be a suitable means.
The deadline for transposition of the Directive will end on July 31, 2021. Member States have the possibility to extend it for a further year if they encounter objective difficulties in its transposition.
REMOTE NOTARIAL ACTS
A trend is being observed towards the holding of notarial documents through remote electronic communication. Clients are allowed to communicate with notaries digitally or even via video conference. Legislation in some countries, such as France, provides for the possibility that the parties, each at his or her notary, meet in a session by videoconference to sign a deed as if they were in the office of the same notary. This possibility still implies a trip to the notary's office and therefore is not completely remote.
Instead, several countries such as Estonia or Latvia have already legislated towards the holding of remote appearance acts. These countries have implemented e-Notary systems, that is, notary services held remotely. Two elements are mainly regulated. On the one hand, the celebration of the notarial act is carried out remotely through a video conference system where the notary can certify the identity and the capacity, as well as advise the participants. On the other hand, the participants give their consent through the use of electronic signatures.
In these cases, both the notary and the clients (intervening parties) appear through digital means. The notary obtains the consent remotely by means of a videoconference system. He/She reads the public deed on the spot without interrupting the video. The client must have a computer or tablet with a microphone and webcam. At the end of the reading of the deed, the notary asks the grantors if they agree to sign the deed. Subsequently, the document is sent to be signed electronically by means of an electronic signature in front of the camera. Finally, the procedures will be completed with the delivery of the documents to various agencies, offices, or authorities, such as the Land Registry. The operation of these notarial processes is observed in the following image.
Remote notarial acts are becoming a reality in the practice of the Member States. Reaching a turning point in the digitization of notarial activities. However, when implementing new technologies in the area of notarization, legal certainty, and control of the legality of acts must be guaranteed. For this reason, the laws of the countries vary in the degree of implementation of this possibility of holding notarial acts remotely. Most countries still require the physical presence before the notary and the handwritten signature of the intervening parties. Although, in some exceptional circumstances, the possibility of holding acts by videoconference is being allowed to avoid unnecessary trips. The last phase in this process, which contemplates totally remote acts, is the option that some countries have chosen. However, material restrictions are foreseen (not all legal businesses can be adopted in this way) and technological (platforms approved by the authorities and secure electronic signatures are required).
DIGITAL SIGNATURES IN REMOTE NOTARIAL ACTS
The question that arises is the type of electronic signature suitable for grantors to interact in the field of notaries. Regulation No. 910/2014 recognizes three types of certificates and electronic signatures, according to their level of security: simple, advanced, and qualified. Given the relevance of the legal businesses that are carried out in front of a Notary Public, everything seems to indicate the need for qualified electronic signatures(QeS). Only the qualified electronic signature has the same legal validity as the handwritten signature.
Countries that currently offer the possibility of remote signing of notarial legal businesses have opted for this option. This is the case in Austria whose regulation establishes that any notarial document or certification can be made through remote electronic communication using a qualified electronic signature (article 36b (2) and (3) of the Notarial Code -Notariatsordnung-). In the case of Latvia, the legislation requires a secure electronic signature (article 139.12 of the Law of Notaries -Notariāta likums-). Without a doubt, this form corresponds to the qualified electronic signature that provides the highest security quotas.
Digitization brings a large number of opportunities at an economic, social level, etc. However, it involves challenges because it requires deep changes in socially established structures and habits. It also carries risks, since the new tools can be used for criminal and money laundering purposes. For this reason, the figure of the Notary Public acquires so much importance in legal traffic, as a guarantor of the legality of the acts and to prevent the use of legal businesses to launder money.
Notaries are at the forefront of electronic processing services in many States. They use their qualified electronic signatures on a daily basis and have proposed the inclusion of new technologies (such as video conferencing) for the provision of their services. The prevailing trends in this area are holding acts completely online. In the case of Company Law, as of 2021, it will be a reality in all Member States that have the obligation to transpose Directive (EU) No. 2019/1151 into their internal laws.
As has been observed, these developments require strong and secure identification systems for those involved. For this reason, both European and national regulations require in most cases the use of qualified electronic signatures. All the instruments refer to the identification and signature regulation of the eIDAS. The qualified electronic signature is the one that presents the greatest number of advantages, namely: high-level of security, authenticity, integrity, legal certainty, etc.
To adapt to this new reality it will be necessary:
- The creation of secure infrastructures that allow the holding of video conferences without interruption and the sending of the notarial deed to the intervening parties.
- Standardize the use of electronic signatures for public and private acts.
- Ease of creating and managing electronic signatures. The use of electronic signatures will increase if users consider that it is an easy-to-use tool that allows them to save on paperwork and time. For example, managing your electronic signature from a mobile device provides this feeling of convenience and versatility.
- Bet on qualified signatures. The qualified signature fits, due to its legal guarantees, the type of electronic signature that notarial acts require. Furthermore, the premise that “who can do more, can do less” cannot be forgotten. With this signature, you can carry out all the procedures that can be carried out electronically.
FACT SHEET: GERMANY
Certain legal transactions require that the statements be issued in person and in writing before a notary public. The notary prepares the notarial deed, which is read, approved, and signed by the parties personally in the presence of the notary. Currently, an online notarial act, for example via videoconference, is not allowed.
Notarial acts without the physical presence of either party can become a reality concerning the establishment of companies. In the context of the transposition of Directive (EU) No. 2019/1151, the design and procedure are under discussion. An online notarization process could be carried out by videoconference using an identity card with an electronic identification function and a qualified electronic signature. However, the exact procedure has not yet been regulated.
FACT SHEET: FRANCE
The notarial act can be constituted and signed electronically, provided that the legislation is complied with and that it is obtained from a qualified electronic signature. Article 1366 of the French Civil Code establishes that electronic writing has the same probative force as writing on paper.
More than 70% of the acts received by notaries in France are executed without paper. Since 2018, notaries have developed videoconferences on their computer network, in order to facilitate remote exchanges and remote signing of deeds.
Since 2018, remote acts are allowed. Each participant goes to their notary, they meet in a videoconference session to sign a deed as if they were in the office of the same notary. After COVID-19, the possibility of holding remote appearance acts has been contemplated on a temporary basis. In these cases, both the notary and the client see each other through digital media. Subsequently, the notary sends, through a platform approved by ANSSI (Agence nationale de la sécurité des systèmes d'information), the document to be signed electronically by means of a qualified signature in front of the camera.
FACT SHEET: ITALY
In Italy, notarial activity is regulated in Legge 16 febbraio 1913, n. 89, Ordinamento del notariato e degli archivi notarili.
The trend is to eliminate paper in the notarial field. Since 2013, the exclusive electronic creation of a notarial public document is possible. In electronic public documents, the parties can use their electronic signatures together with the Notary’s signature, which contains his seal, to formalize the document in person.
Unless the law provides otherwise, it could sign a notarial deed addressing two different notaries at the same time, for example, if they are in two different cities. It is carried out through the Rete Unitaria del Notariato (RUN).
FACT SHEET: SPAIN
In Spain it is possible to sign acts remotely. Spanish notaries were one of the main instigators of the EUFides project to respond to the doubts and costly trips that the acquisition of real estate entailed between citizens of some different states. For this reason, a collaboration was developed between notaries from different countries that allows an electronic transfer, guarantees the control of the identity of the signatories and the integrity of the documents without having to move from their place of residence, regardless of the location of the affected goods. However, you still have to go to the notary's office in person.
Regarding the possibility of holding totally remote acts. In the future regulation, complementary instruments (not supplementary) could be used in order to facilitate the assurance of identity by the notary as the procedures authorized by SEPBLAC.
The General Council of Notaries has proposed to the Government the modification of the Law in order to carry out notarial procedures through a computer, a mobile phone or a tablet through a videoconference. The process would be easier if the citizen has an electronic signature or DNI 3.0.
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