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Location: Central Bank of Bahrain Volume 1—Conventional Banks > Part A > High Level Standards > LR Licensing Requirements > LR-1A Approved Persons > LR-1A.1 CBB Notification and Approval
  • LR-1A.1 CBB Notification and Approval

    • General Requirement

      • LR-1A.1.1

        Conventional bank licenseesG must obtain the CBB's prior written approval for any person wishing to undertake a controlled functionG in a conventional bank licenseeG . The approval from the CBB must be obtained by the CBB prior to their appointment (subject to the variations contained in Rule LR-1A.1.3).

        Amended: January 2016
        Added: October 2010

      • LR-1A.1.2

        Controlled functionsG are those functions occupied by board members and persons in executive positions and include:

        (a) Board Member;
        (b) Chief ExecutiveG or General ManagerG and their Deputies;
        (c) Chief Financial Officer and/or Financial Controller;
        (d) Head of Risk Management;
        (e) Head of Internal Audit;
        (f) Head of Shari'a Review;
        (g) Compliance Officer;
        (h) Money Laundering Reporting Officer;
        (i) Deputy Money Laundering Reporting Officer; and
        (j) Heads of other Functions.
        Amended: January 2016
        Amended: October 2013
        Added: October 2010

      • LR-1A.1.3

        Prior approval is required for all controlled functionsG in relation to Bahrain operations. Controlled functionsG (g) and (h) may be combined, however (see also FC-4.1, regarding the MLRO function).

        Amended: January 2014
        Amended: October 2013
        Amended: January 2013
        Added: October 2010

    • Basis for Approval

      • LR-1A.1.4

        Approval under Rule LR-1A.1.1 is only granted by the CBB, if it is satisfied that the person is fit and proper to hold the particular position in the licensee concerned. 'Fit and proper' is determined by the CBB on a case-by-case basis. The definition of 'fit and proper' and associated guidance is provided in Sections LR-1A.2 and LR-1A.3 respectively.

        Added: October 2010

    • Definitions

      • LR-1A.1.5

        Board members collectively are responsible for the business performance and strategy of the conventional bank licenseeG , as outlined in more details in Section HC-1.2.

        Amended: October 2013
        Added: October 2010

      • LR-1A.1.6

        When taken as a whole, the board of directorsG of a conventional bank licenseeG must be able to demonstrate that it has the necessary skills and expertise, as outlined in Paragraph HC-1.2.10.

        Amended: October 2013
        Added: October 2010

      • LR-1A.1.7

        The Chief ExecutiveG or General ManagerG means a person who is responsible for the conduct of the licensee (regardless of actual title). The Chief ExecutiveG or General ManagerG must be resident in Bahrain. The scope of authority of the CEOG and his deputies is outlined in more detail in Subparagraph HC-6.3.2 (a).

        Amended: July 2017
        Amended: October 2013
        Added: October 2010

      • LR-1A.1.8

        The head of risk management is responsible for the management and control of all risk exposures arising from the activities of the conventional bank licenseeG .

        Amended: October 2013
        Added: October 2010

      • LR-1A.1.9

        The head of internal audit is responsible for providing independent and objective review on the adequacy and effectiveness of the holistic internal control environment within the conventional bank licenseeG . The duties of the head of internal audit are outlined in more detail in Subparagraph HC-6.3.2 (d).

        Amended: October 2013
        Added: October 2010

      • LR-1A.1.9A

        The head of Shari'a review in a conventional bank licenseeG , dealing with Islamic products and services, is responsible for the examination of the extent of a conventional bank licensee'sG compliance, in all its activities, with the Shari'a. This examination includes contracts, agreements, policies, products, transactions memorandum and articles of association, financial statements, reports (especially internal audit and central bank inspection), circulars, etc. The objective of the Shari'a review is to ensure that the activities carried out by a conventional bank licenseeG do not contravene the Shari'a.

        Added: October 2013

    • Compliance Officer

      • LR-1A.1.10

        All banks must appoint a senior member of staff with responsibility for the management of compliance risk as their Compliance Officer/Manager.

        Added: October 2010

      • LR-1A.1.11

        The compliance function must be independent (i.e. it must not be placed in a position where its other duties or responsibilities may cause a conflict of interest with its compliance risk management responsibilities). Therefore the compliance function must be separate from the internal audit function. The compliance officer or manager may however, perform other limited related compliance roles (e.g. the MLRO or legal advisor), subject to the CBB's prior approval.

        Added: October 2010

      • LR-1A.1.12

        The compliance function must have adequate resources to carry out its functions effectively.

        Amended: January 2016
        Added: October 2010

      • LR-1A.1.13

        The bank must also outline how the compliance function fits into the bank's senior management reporting structure, and must give details of relevant reporting lines within the bank.

        Amended: January 2016
        Added: October 2010

      • LR-1A.1.14

        In the case of locally incorporated banks, the compliance officer/manager must have access to the Board of Directors in addition to the senior management.

        Added: October 2010

      • LR-1A.1.15

        Heads of other functions, where risk acquisition or control is involved, are responsible for tracking specific functional performance goals in addition to identifying, managing, and reporting critical organisational issues upstream. Certain functions require dealing directly with clients while others do not. Both categories of functions, however, require specific qualifications and experience to meet the objectives as well as compliance requirements of the conventional bank licenseeG .

        Amended: October 2013
        Added: October 2010

      • LR-1A.1.16

        Where a firm is in doubt as to whether a function should be considered a controlled functionG it must discuss the case with the CBB.

        Added: October 2010

    • Prior Approval Requirements and Process

      • LR-1A.1.17

        Conventional bank licenseesG must obtain CBB's prior written before a person is formally appointed to a controlled functionG ; the request for CBB approval must be made by submitting to the CBB a duly completed Form 3 (Application for Approved Person status) and Curriculum Vitae after verifying that all the information contained in Form 3, including previous experience, is accurate. Form 3 is available under Volume 1 Part B Authorisation Forms of the CBB Rulebook.

        Amended: January 2016
        Amended: January 2014
        Added: October 2010

      • LR-1A.1.18

        When the request for approved personG status forms part of a license application, the Form 3 must be marked for the attention of the Director, Licensing Directorate. When the submission to undertake a controlled functionG is in relation to an existing conventional bank licenseeG , the Form 3 must be marked for the attention of either the Director, Retail Banks Supervision or the Director, Wholesale Banks Supervision, as appropriate. In the case of the MLRO or DMLRO, Form 3 should be marked for the attention of the Director, Compliance Directorate.

        Amended: April 2018
        Amended: January 2016
        Added: October 2010

      • LR-1A.1.18A

        When submitting Form 3, conventional bank licenseesG must ensure that the Form 3 is:

        (a) Submitted to the CBB with a covering letter signed by an authorised representative of the conventional bank licenseeG , seeking approval for the proposed controlled functionG ;
        (b) Submitted in original form;
        (c) Submitted with a certified copy of the applicant's passport, original or certified copies of educational and professional qualification certificates (and translation if not in Arabic or English) and the Curriculum Vitae; and
        (d) Signed by an authorised representative of the conventional bank licenseeG and all pages stamped on with the conventional bank licensee'sG seal.
        Added: January 2016

      • LR-1A.1.18B

        Conventional bank licenseesG seeking to appoint Board Directors must seek CBB approval for all the candidates to be put forward for election/approval at a shareholders' meeting, in advance of the agenda being issued to shareholders. CBB approval of the candidates does not in any way limit shareholders' rights to refuse those put forward for election/approval.

        Added: January 2016

      • LR-1A-1.18C

        For existing conventional bank licenseesG applying for the appointment of a Board DirectorG or the Chief ExecutiveG /General ManagerG , the authorised representative should be the Chairman of the Board or a DirectorG signing on behalf of the Board. For all other controlled functionsG , the authorised representative should be the Chief ExecutiveG /General ManagerG , or a suitably senior representative of the bank.

        Amended: July 2016
        Added: January 2016

      • LR-1A.1.19

        [This Paragraph was deleted in January 2016.]

        Deleted: January 2016
        Added: October 2010

      • LR-1A.1.20

        [This Paragraph was moved to Paragraph LR-1A.1.18B in January 2016.]

        Amended: January 2016
        Amended: July 2012
        Added: October 2010

    • Assessment of Application

      • LR-1A.1.20A

        The CBB shall review and assess the application for approved personG status to ensure that it satisfies all the conditions required in Paragraph LR-1A.2.6 and the criteria outlined in Paragraph LR-1A.2.7.

        Added: January 2016

      • LR-1A.1.20B

        For purposes of Paragraph LR-1A.1.20A, conventional bank licenseesG should give the CBB a reasonable amount of notice in order for an application to be reviewed. The CBB shall respond within 15 business days from the date of meeting all required conditions and regulatory requirements, including but not limited to, receiving the application complete with all the required information and documents, as well as verifying references and interviewing the applicant. The CBB will advise the conventional bank licenseeG once the application is considered complete.

        Amended: April 2016
        Added: January 2016

      • LR-1A.1.20C

        The CBB reserves the right to refuse an application for approved personG status if it does not satisfy the conditions provided for in Paragraph LR-1A.2.6 and does not satisfy the CBB criteria in Paragraph LR-1A.2.7. A notice of such refusal is issued by registered mail to the conventional bank licenseeG concerned, setting out the basis for the decision.

        Added: January 2016

    • Appeal Process

      • LR-1A.1.21

        Conventional bank licenseesG or the nominated approved personsG may, within 30 calendar days of the notification, appeal against the CBB's decision to refuse the application for approved personG status. The CBB shall decide on the appeal and notify the conventional bank licenseesG of its decision within 30 calendar days from the date of submitting the appeal.

        Amended: January 2016
        Added: October 2010

      • LR-1A.1.21A

        When notification of the CBB's decision to grant a person approved personG status is not issued within 15 business days from the date of meeting all required conditions and regulatory requirements, including but not limited to, receiving the application complete with all the required information and documents, conventional bank licenseesG or the nominated approved personG may appeal to the Executive Director, Banking Supervision of the CBB provided that the appeal is justified with supporting documents. The CBB shall decide on the appeal and notify the conventional bank licenseesG of its decision within 30 calendar days from the date of submitting the appeal.

        Added: January 2016

    • Notification Requirements and Process

      • LR-1A.1.22

        Conventional bank licenseesG must immediately notify the CBB when an approved personG , for whatever reason, ceases to hold the controlled functionG for which they have been approved (i.e. transferred to another function within the bank, or to another group entity, or else has resigned, been suspended or dismissed). The notification must include the reasons for the action taken.

        Amended: April 2014
        Added: October 2010

      • LR-1A.1.23

        [Rule moved to Paragraph BR-5.1.17 in April 2014.]

        Amended: April 2014
        Amended: April 2012
        Added: October 2010

      • LR-1A.1.24

        [This Paragraph was deleted in April 2014].

        Deleted: April 2014
        Added: October 2010

      • LR-1A.1.25

        If a controlled functionG falls vacant, the conventional bank licenseeG must appoint a permanent replacement (after obtaining CBB approval), within 120 calendar days of the vacancy occurring. Pending the appointment of a permanent replacement, the conventional bank licenseeG must make immediate interim arrangements to ensure continuity of the duties and responsibilities of the controlled functionG affected. These interim arrangements must be approved by the CBB.

        Added: October 2010

      • LR-1A-1.26

        Conventional bank licenseesG must immediately notify the CBB should they become aware of information that could reasonably be viewed as calling into question an approved person'sG compliance with CBB's 'fit and proper' requirement (see LR-1A.2).

        Added: October 2010

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