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Location: Central Bank of Bahrain Volume 2—Islamic Banks > Part A > High Level Standards > HC High-Level Controls > HC-2 Approved Persons Loyalty > HC-2.3 Avoidance of Conflicts of Interest
  • HC-2.3 Avoidance of Conflicts of Interest

    • HC-2.3.1

      Each approved personG must make every practicable effort to arrange his personal and business affairs to avoid a conflict of interest with the Islamic bank licenseeG .

      October 2010

    • HC-2.3.2

      The Board must establish and disseminate to its members and management, policies and procedures for the identification, reporting, disclosure, prevention, or strict limitation of potential conflicts of interest. It is senior management'sG responsibility to implement these policies. Rules concerning connected party transactions and potential conflicts of interest may be dealt with in the Code of Conduct (see HC-2.2.4). In particular, the CBB requires that any decisions to enter into transactions, under which approved personsG would have conflicts of interest that are material, should be formally and unanimously approved by the full Board. Best practice would dictate that an approved personG must:

      (a) Not enter into competition with the bank;
      (b) Not demand or accept substantial gifts from the bank for himself or connected personsG ;
      (c) Not misuse the bank's' assets;
      (d) Not use the Islamic bank licensee'sG privileged information or take advantage of business opportunities to which the Islamic bank licenseeG is entitled, for himself or his associates; and
      (e) Absent themselves from any discussions or decision-making that involves a subject where they are incapable of providing objective advice, or which involves a subject or (proposed) transaction where a conflict of interest exists.
      Amended: April 2011
      Amended: January 2011
      October 2010

    • HC-2.3.3

      Bahraini Islamic bank licenseesG must have in place a board approved policy on the employment of relatives of approved personsG and a summary of such policy must be disclosed in the annual report of the Bahraini Islamic bank licenseeG .

      Amended: July 2016
      Added: April 2016

    • HC-2.3.4

      Branches of foreign bank licenseesG must have in place a policy on the employment of relatives of approved personsG pertaining to their Bahrain operations.

      Amended: April 2019
      Added: July 2016

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