The way deletion in SharePoint Online/RP setup works is as follows,
Deletion of a file comprises of two processes:
- Delete the item and move it into the Recycle Bin (Request Type - Active Delete Submit)
- Download and move the binary into RecordPoint (Request Type - Active Download)
In earlier versions of R365, this 2-part process was done as follows,
- Moving the document from Active Site to SharePoint Recycle Bin was done by the user (end-user name).
- Downloading and moving the binary to RecordPoint was done by RecordPoint App ("SharePoint App" user).
The issue faced here was with deletion of large files. Sometimes the file would be deleted before it's binary was moved into RecordPoint.
To overcome this, the deletion architecture was modified such that both parts in this process will be handled by RecordPoint. When a file is deleted, as it is in the process of being moved into the Recycle Bin , RecordPoint intervenes and first gets the binary moved into RecordPoint . During this process, it also captures some metadata information of the document (the actual user's name that deleted the file) which will be available in its Audit trails in RecordPoint.
To improve the end user experience in SharePoint Online, when a user deletes a document/list item or folder/document set/document library/list:
- The item is removed from the user's view by deleting all permissions from the item such that only members with full access can view the item until the Records365 Deletion process has completed; and
- No error message is displayed when a File is deleted
After the binary has been downloaded, the process of moving this file into the Recycle Bin continues but now will be done by RecordPoint  and hence SharePoint captures this information and displays "Modified By" as "SharePoint App" (which is actually RecordPoint).
Since all of this is handled by RecordPoint you get the following message - "Deletion is handled by RecordPoint" after you hit delete on a file in Active Site. Do not attempt to delete the item a second time after receiving this message - depending on the circumstances, this deletion process can take a while to complete. So, while it's still in the queue the document will remain visible on the Active site but will be removed after the above process has finished.