CASS 15 Annex 2 Guidance notes for acknowledgement letters

This annex contains guidance on the use of the template acknowledgement letter in CASS 15 Annex 1.

Under CASS 15.7.3R and CASS 15.7.4R, safeguarding institutions are required to request duly signed and countersigned acknowledgement letters for their relevant funds bank accounts and relevant assets accounts.

For each account a safeguarding institution is required to complete, sign and send to the approved bank or authorised custodian (‘the counterparty’) an acknowledgement letter identifying that account in the form set out in CASS 15 Annex 1 (Safeguarding account acknowledgement letter template).

When completing an acknowledgement letter using the appropriate template, a safeguarding institution is reminded that it must not amend any of the text which is not in square brackets (acknowledgement letter fixed text). A safeguarding institution should also not amend the non-italicised text that is in square brackets. It may remove or include square bracketed text from the letter, or replace bracketed and italicised text with the required information, in either case as appropriate. The notes below give further guidance on this.

A safeguarding institution is reminded that for each relevant funds bank account or relevant assets account it needs to request an acknowledgement letter. As a result, it is important that it is clear to which account or accounts each acknowledgement letter relates. As a result, the template in CASS 15 Annex 1 requires that the acknowledgement letter includes the full title and at least one unique identifier, such as a sort code and account number, deposit number or reference code, for each account.

The title and unique identifiers included in an acknowledgement letter for an account should be the same as those reflected in both the records of the safeguarding institution and the relevant counterparty, as appropriate, for that account. Where a counterparty’s systems are not able to reflect the full title of an account, that title may be abbreviated to accommodate that system, provided that:

1. (1) the account may continue to be appropriately identified in line with the requirements of CASS 15 (for example, ‘account’ may be shortened to ‘acct’ etc); and

2. (2) when completing an acknowledgement letter, such letter must include both the long and short versions of the account title

A safeguarding institution should ensure that all relevant account information is contained in the space provided in the body of the acknowledgement letter. Nothing should be appended to an acknowledgement letter.

In the space provided in the template letter for setting out the account title and unique identifiers for each relevant account, a safeguarding institution may include the required information in the format of the following table:

1. Where an acknowledgement letter is intended to cover a range of accounts, some of which may not exist as at the date the acknowledgement letter is countersigned by the counterparty, a safeguarding institution should set out in the space provided in the body of the acknowledgement letter that it is intended to apply to all present and future accounts which:

2. (1) are titled in a specified way; and

3. (2) which possess a common unique identifier or which may be clearly identified by a range of unique identifiers (eg, all accounts numbered between XXXX1111 and ZZZZ9999).

For example, in the space provided in the template letter in CASS 15 Annex 1 which allows a safeguarding institution to include the account title and a unique identifier for each relevant account, a safeguarding institution should include a statement to the following effect:

A safeguarding institution should ensure that each acknowledgement letter is signed and countersigned by all relevant parties and individuals (including where more than one signatory is required).

An acknowledgement letter that is signed or countersigned electronically should not, for that reason alone, result in a breach of the rules in CASS 15.7. However, where electronic signatures are used, a safeguarding institution should consider whether, taking into account the governing law and choice of competent jurisdiction, it needs to ensure that the electronic signature and the certification by any person of such signature would be admissible as evidence in any legal proceedings in the relevant jurisdiction in relation to any question as to the authenticity or integrity of the signature or any associated communication.

A safeguarding institution should use at least the same level of care and diligence when completing an acknowledgement letter as it would in managing its own commercial agreements.

A safeguarding institution should ensure that each acknowledgement letter is legible (eg, any handwritten details should be easy to read), produced on the safeguarding institution's own letter-headed paper, dated and addressed to the correct legal entity (eg, where the counterparty belongs to a group of companies).

A safeguarding institution should also ensure each acknowledgement letter includes all the required information (such as account names and numbers, the parties’ full names, addresses and contact information, and each signatory’s printed name and title).

A safeguarding institution should similarly ensure that no square brackets remain in the text of each acknowledgement letter (eg, after having removed or included square bracketed text, as appropriate, or having replaced square bracketed and italicised text with the required information as indicated in the template in CASS 15 Annex 1) and that each page of the letter is numbered.

A safeguarding institution should complete an acknowledgement letter so that no part of the letter can be easily altered (eg, the letter should be signed in ink rather than pencil).

In respect of the acknowledgement letter's governing law and choice of competent jurisdiction (see paragraphs (12) and (13) of the template acknowledgement letter in CASS 15 Annex 1), a safeguarding institution should agree with the counterparty and reflect in the letter that the laws of a particular jurisdiction will govern the acknowledgement letter and that the courts of that same jurisdiction will have jurisdiction to settle any disputes arising out of, or in connection with, the acknowledgement letter, its subject matter or formation.

If a safeguarding institution does not, in any acknowledgement letter, utilise the governing law and choice of competent jurisdiction that is the same as either or both:

1. (1) the laws of the jurisdiction under which either the safeguarding institution or the counterparty are organised; or

2. (2) as is found in the underlying agreement/s (eg, banking services agreement) with the relevant counterparty,

the institution should consider whether it is at risk of breaching CASS 15.6.1R or CASS 15.6.3R.

A safeguarding institution is required under CASS 15.7.9 to use reasonable endeavours to ensure that any individual that has countersigned an acknowledgement letter returned to the safeguarding institution was authorised to countersign the letter on behalf of the relevant counterparty.

If an individual that has countersigned an acknowledgement letter does not provide the safeguarding institution with sufficient evidence of their authority to do so, the safeguarding institution is expected to make appropriate enquiries to satisfy itself of that individual's authority.

Evidence of an individual's authority to countersign an acknowledgement letter may include a copy of the counterparty’s list of authorised signatories, a duly executed power of attorney, use of a company seal or bank stamp, and/or material verifying the title or position of the individual countersigning the acknowledgement letter.

A safeguarding institution should ensure it obtains at least the same level of assurance over the authority of an individual to countersign the acknowledgement letter as the safeguarding institution would seek when managing its own commercial arrangements.

If a safeguarding institution uses a third party administrator (TPA) to carry out the administrative tasks of drafting, sending and processing an acknowledgement letter, the text ‘[Signed by [Name of Third Party Administrator] on behalf of [safeguarding institution]]’ should be inserted to confirm that the acknowledgement letter was signed by the TPA on behalf of the safeguarding institution.

In these circumstances, the safeguarding institution should first provide the TPA with the requisite authority (such as a power of attorney) before the TPA will be able to sign the acknowledgement letter on the safeguarding institution's behalf. A safeguarding institution should also ensure that the acknowledgement letter continues to be drafted on letter-headed paper belonging to the safeguarding institution.

A safeguarding institution must ensure that each of its accounts is designated in accordance with regulation 21(3)(a) of the Electronic Money Regulations and regulation 23(7)(a) of the Payment Services Regulations.

All references to the term ‘Relevant Funds Bank Account[s]’or ‘Relevant Assets Account[s]’ in an acknowledgement letter should also be made consistently in either the singular or plural, as appropriate.