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Location: Central Bank of Bahrain Volume 4—Investment Business > Part A > Enforcement & Redress > EN Enforcement > EN-3 Formal Warnings
  • EN-3 Formal Warnings

    • EN-3.1 CBB Legal Source

      • EN-3.1.1

        Article 38 of the CBB Law empowers the CBB to issue formal warnings to investment firm licenseesG or individuals. The CBB will issue such warnings where it reasonably believes that these are required to achieve its statutory objectives.

        Adopted: January 2007

    • EN-3.2 CBB Policy

      • EN-3.2.1

        Formal warnings are clearly identified as such and represent the CBB's first level formal enforcement measure. They are intended to clearly set out the CBB's concerns to a licensee or individual regarding an issue, and should be viewed by the recipient with the appropriate degree of seriousness.

        Amended: January 2007

      • EN-3.2.2

        As indicated in Paragraph EN-B.2.7, the CBB will usually discuss concerns it may have prior to resorting to a formal enforcement measure, especially where a significant element of judgement is required in assessing compliance with a regulatory requirement.

        Amended: January 2007

      • EN-3.2.3

        Where such discussions fail to resolve matters to the CBB's satisfaction, then it may issue a formal warning. Failure to respond adequately to a formal warning will lead the CBB to consider more severe enforcement measures. However, more severe measures do not require the prior issuance of a formal warning — depending on its assessment of the circumstances, the CBB may decide to have immediate recourse to other measures. Similarly, there may be circumstances where the CBB issues a formal warning without prior discussion with the licensee or individual concerned: this would usually be the case where a clear-cut compliance failing has occurred.

        Amended: January 2007

      • EN-3.2.4

        When considering whether to issue a formal warning, the criteria taken into consideration by the CBB therefore include the following:

        (a) The seriousness of the actual or potential contravention, in relation to the requirement(s) concerned and the risks posed to customersG , market participants and other stakeholders;
        (b) In the case of an actual contravention, its duration and/or frequency of the contravention; the extent to which it reflects more widespread weaknesses in controls and/or management; and the extent to which it was attributable to deliberate or reckless behaviour; and
        (c) The extent to which the CBB's supervisory objectives would be better served by issuance of a formal warning as opposed to another type of regulatory action.
        Amended: January 2007

    • EN-3.3 Procedure

      • EN-3.3.1

        Proposals to issue formal warnings are carefully considered against the criteria listed in Paragraph EN-3.2.4. They require approval of a Director or more senior CBB official, and include the statement "This is a formal warning as defined in Chapter EN-3 of Volume 4 of the CBB Rulebook".

        Amended: January 2007

      • EN-3.3.2

        Depending on the issue in question, recipients of a formal warning may be required to respond to the contents of the notice. Where a formal warning is served prior to imposing any penalties or administrative proceedings, Articles 125(c) and 126 of the CBB Law provide the recipients the right to object or challenge the formal warning.

        Amended: January 2007

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