Part 1: Professional risk - ACSP in practice

Our risk partners Karen Eckstein Ltd give a summary on a topical issue below

ACSP in practice

Whilst most accountancy firms are aware of the new Authorised Corporate Service Provider (ACSP) regime and may have decided to register as an ACSP so that they can file documents at Companies House on behalf of their clients, we have noticed that many other professional service firms have not realised that they may be caught by the ACSP regime if they also file documents at Companies House. For example, insolvency practitioners, law firms, tax advisers, and many more may find that, if they need to file documents on behalf of their clients, for example charges, they will need to register as an ACSP.

The role of the ACSP will be, not only to file the documentation on behalf of the firm’s clients, but to undertake verification of the clients. One important change to record keeping requirements is that, for usual AML record keeping purposes, AML records are kept for 5 years after the client relationship ends. However, for ACSP purposes, the records of client verification have to be kept for 7 years from the identity verification, which means that there will need to be a change to the document retention policies and procedures to ensure that we satisfy both obligations.

And note that there is a positive duty to comply with updating requirements - for the agent - with significant consequences for the firm - see the following from the gov.uk site.

The agent must always be registered with at least one Anti-Money Laundering (AML) supervisory body.

The agent must tell us if there is a change to any of the information we hold about the agent. They must do this within 14 days.

If we request it, the agent must provide more information:

- about the agent’s filings with Companies House

- about identity checks, if the agent verifies someone’s identity for Companies House

- to prove the agent is complying with their legal responsibilities

We see a lot of advice being given to people who have registered as an ACSP or who are planning to do so, on the issue of ACSP identity verification for clients. However, as noted above, that is only one significant issue that those firms registering need to be aware of. We see a significant risk to firms, which can have a critical impact on firms who do register, if they fail to have appropriate processes in place, and if they fail to keep their own details on the register up to date.

If a firm who has registered as an ACSP doesn’t update relevant changes within the prescribed timescale (14 days), then the impact can be significant. The website says:-

The agent will be committing an offence if they do not comply with legal requirements. This means the sole trader, or all company directors (or equivalent) could receive a fine or face criminal prosecution.

We may also suspend or cease (stop) the authorised agent’s status. This would prevent the agent from being able to file or verify people’s identities for Companies House.

We’ll also publish information to show that the authorised agent has been suspended. We’ll publish the agent’s name, status and the date it was suspended.

If we need to cease an authorised agent’s status… The agent will not be able to file on behalf of clients or verify people’s identities for Companies House and we will close the agent’s online account – any users who have been added will no longer have access, publish the agent’s name and the date we ceased their status and contact anyone whose identity the agent has verified, if they need to verify again.

In summary therefore, if a firm who registers as an ACSP does not have good and robust processes for maintaining and updating the register in relation to its own details (the address and contact email details for example) then firms might suffer significant reputational damage, as well as loss of clients and potential claims - if a firm cannot file documents for a client and that client is then unable to obtain funding for example as a result, a claim for losses could follow.

Another risk relates to the process of identity verification.

One key mistake that we see many firms making is assuming that the ACSP identity verification requirement is identical to the existing AML obligations and that the existing AML checks will suffice for ACSP. The two are very different – not only because ACSP is, as we understand, from a verification point of view, a one and done process, whereas AML is an ongoing process with an additional need to monitor and risk assess.

It is important that firms understand the differences and update their policies and processes and train staff in the new regime, not merely seek to replace one with the other, to avoid exposing staff and the firm to penalties, potential offences and risk.

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Another article in the professional risk series that supports this topic can be found here:

"Part 2: The 3 ACSP verification options"