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Location: Central Bank of Bahrain Volume 4—Investment Business > Part A > Enforcement & Redress > EN Enforcement > EN-5 Financial Penalties
  • EN-5 Financial Penalties

    • EN-5.1 Legal Source

      • EN-5.1.1

        Article 129 of the CBB Law, provides the CBB the power to impose financial penalties on licensees or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law. Their use is generally limited to situations where major breaches of regulatory requirements have taken place and a licensee has failed to respond in an acceptable manner to the concerns expressed by the CBB. Financial penalties may be preceded by the issuance of a written formal warning and/or Direction.

        Amended: April 2016
        Amended: October 2012
        Adopted: January 2007

    • EN-5.2 CBB Policy

      • EN-5.2.1

        The level of financial penalty applied is determined by the nature of the contravention and the amount of additional supervisory attention and resources taken up by a licensee's or persons' referred to in paragraph (b) of Article (68 bis 1) of the CBB Law behaviour and by limits set in the CBB Law. The CBB intends that the impact of a penalty should derive more from its signalling effect than from the actual amount of money involved.

        Amended: April 2016
        Amended: January 2007

      • EN-5.2.2

        In accordance with Article 132 of the CBB Law, the CBB may publicise the issuance of a financial penalty notice, by way of its website or through other means, where there is a strong case that doing so would help achieve the CBB's supervisory objectives.

        Amended: January 2007

      • EN-5.2.3

        In assessing whether to serve a financial penalty notice, the CBB takes into account the following criteria:

        (a) The seriousness of the contravention, in relation to the requirement(s) concerned;
        (b) The duration and/or frequency of the contravention, and the extent to which it reflects more widespread weaknesses in controls and/or management;
        (c) The extent to which the contravention was deliberate or reckless;
        (d) The licensee's past compliance record and conduct following the contravention; and
        (e) The scope of any other action taken by the CBB or other regulators against the licensee, in response to the compliance failures in question.
        Amended: January 2007

      • EN-5.2.4

        Part 11 of the CBB Law outlines instances where financial penalties may be imposed. Examples of the types of compliance failings that may lead to the serving of a financial penalty notice include (but are not limited to):

        (a) Failures to address persistent delays and/or significant inaccuracies in regulatory reporting to the CBB;
        (b) Repeated failures to respond to formal requests for information from the CBB, within the deadlines set;
        (c) The submission of information to the CBB known to be false or misleading; and
        (d) Major failures in maintaining adequate systems and controls in accordance with CBB's requirements, subjecting investors and other customersG to significant risk of financial loss.
        Amended: January 2007

      • EN-5.2.5

        In accordance with Article 125 of the CBB Law, a written notice of a financial penalty must be issued before imposing any financial penalty. The written notice must contain the following information:

        (a) The violations committed by the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law with respect to the CBB Law; the CBB Rulebook; any Directions, Warnings or Formal Requests for Information; or violations of the terms and conditions of the license issued to the licensee;
        (b) Evidence or proof to support the above;
        (c) The level of financial penalty to be imposed; and
        (d) The grace period to be allowed to the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law for challenging the intended penalty (which will not be less than 30 calendar days).
        Amended: April 2016
        Adopted: January 2007

      • EN-5.2.6

        The licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law may either pay the penalty or, pursuant to Article 126 of the CBB Law, may object within the period noted in Sub-Paragraph EN-5.2.5(d). In accordance with Article 127 of the CBB Law, the CBB will consider any objection and make a formal resolution within 30 calendar days of receiving the objection. Thereafter, the resolution and any accompanying penalties are final and must be paid within 30 calendar days.

        Amended: April 2016
        Adopted: January 2007

      • EN-5.2.7 [Deleted]

        Deleted: October 2009

      • EN-5.2.7

        The imposition of a financial penalty does not preclude the CBB from also using other enforcement measures to remedy the same violation (for instance, a Direction).

        Amended: October 2009
        Amended: January 2007

    • EN-5.3 Module FC (Financial Crime)

      • EN-5.3.1

        In addition to the general circumstances set out in Section EN-5.2, a financial penalty of up to BD 100,000 may be applied by the CBB in cases where a licensee fails to comply with any of the requirements in Module FC (Financial Crime). The fine shall be multiplied by the number of violations.

        Amended: April 2016
        Amended: January 2007

      • EN-5.3.2

        As with the imposition of financial penalties in response to breaches of other regulatory requirements, the CBB will apply financial penalties with respect to Module FC, based on the criteria set out in paragraph EN-5.2.3.

        Amended: January 2007

      • EN-5.3.3

        A failure to comply with the requirements in Module FC (Financial Crime) that warrants a financial penalty would not trigger also a additional financial penalty under Section EN-5.2.

        Amended: January 2007

      • EN-5.3.4

        Any financial penalties applied by the CBB as regards the implementation of its regulations set out under Module FC (Financial Crime), are without prejudice to the criminal sanctions available to the Bahraini courts under the Decree — Law No. 4 of 2001, with respect to the prevention and prohibition of the laundering of money. As with other financial penalties, the imposition of a financial penalty with regards to breaches of the regulation in Module FC (Financial Crime) does not prevent the CBB from also using other enforcement measures to remedy the same violation (for instance, a Direction).

        Amended: January 2007

    • EN-5.3A Financial Penalties for Date Sensitive Requirements

      • EN-5.3A.1

        Modules AU, FC, BR and PD contain specific requirements where investment firm licenseesG must comply with, by a precise date. Where a specific due date is involved, the CBB's financial penalties are based on a per diem basis.

        Added: October 2012

      • EN-5.3A.2

        This Section applies to date sensitive requirements for:

        (a) Reporting requirements included in Module BR;
        (b) Public disclosure requirements included in Module PD;
        (c) The report of the external auditor or approved consultancy firm required as per Paragraph FC-3.3.1B(d); and
        (d) Annual licensing fees required as per Section AU-6.2.
        Amended: January 2016
        Added: October 2012

      • EN-5.3A.3

        Financial penalties related to late filing or other date sensitive requirements are calculated as per the following per diem basis:

        (a) For category 1 investment firm licenseesG , the financial penalty for late filing is BD 80 per day;
        (b) For category 2 investment firm licenseesG , the financial penalty for late filing is BD 60 per day; and
        (c) For category 3 investment firm licenseesG , the financial penalty is BD 40 per day.
        Amended: April 2017
        Added: October 2012

      • EN-5.3A.4

        In accordance with Article 129 of the CBB Law, the maximum financial penalty levied for failing to comply with date sensitive requirements is BD 100,000. The fine shall be multiplied by the number of violations. The CBB may opt to limit the amount of the financial penalty and use other enforcement measures as outlined in Module EN (Enforcement), such as imposing restrictions on an investment firm license limiting the scope of operations.

        Amended: April 2016
        Added: October 2012

      • EN-5.3A.5

        The various deadlines for submission of reports and annual fees referred to in Modules BR, FC, PD and AU are defined:

        (a) In terms of a specified number of days or months following a given date, such as the last date of a calendar quarter;
        (b) A specified number of days or months after the occurrence of a specific event; or
        (c) A specific date.
        Added: October 2012

      • EN-5.3A.6

        In imposing financial penalties for date sensitive requirements, the following criteria apply:

        (a) Where the due date falls on a holiday as designated by the CBB, the first business day following the holiday will be considered as being the due date;
        (b) Where a due date is not complied with by the end of the day on which it is due, holidays and weekend days are included in the number of days the item is considered late;
        (c) For returns and other filings, the date received is the date recorded by the CBB's systems in case of returns filed electronically;
        (d) In the case of returns filed in hard copy, the CBB stamp is the date received;
        (e) All returns are to be sent to the respective Supervision Directorate and the annual fees to the Accounts Directorate, on or before the due date, to be considered filed on time;
        (f) A day ends at midnight in the case of returns that must be filed electronically, or at the close of CBB business day, in the case returns are filed in hard copy; and
        (g) An incomplete return, where completeness is determined in relation to the requirements of the relevant instructions and Module BR, is considered 'not filed' until the CBB receives all necessary elements of the return.
        Added: October 2012

      • EN-5.3A.7

        The CBB does not require any particular method of delivery for returns and filings that are filed in hard copy. The use of the Bahrain postal services, private courier services or other methods of delivery is entirely at the discretion and risk of the licensee. For the payment of annual fees, licensees must follow the requirements of Form ALF, included under Part B of Volume 4.

        Added: October 2012

      • EN-5.3A.8

        A decision to impose a financial penalty for date sensitive requirements is unrelated to whether the CBB issues a reminder; it is the licensee's responsibility to file and disclose on time as per the requirements of Volume 4 (Investment Business) Rulebook.

        Added: October 2012

    • EN-5.4 Procedure

      • EN-5.4.1

        A written financial penalty notice will be addressed to the Chief Executive OfficerG or General ManagerG of the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law concerned. This written notification will describe the contravention concerned, the CBB's evidence supporting a financial penalty, and the factors justifying the level of penalty proposed. Only an Executive Director or more senior member of the CBB's management may sign the notification.

        Amended: April 2016
        Amended: January 2007

      • EN-5.4.2

        The licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law has 30 calendar days from the notification's date of issuance to submit any representations it wishes to make to the CBB, in writing and addressed to the issuer of the original notification. If the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law decides not to submit representations, it has 30 calendar days from the notification's date of issuance in which to pay the penalty.

        Amended: April 2016
        Amended: January 2007

      • EN-5.4.3

        Should the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law make representations challenging the proposed penalty, the CBB has 30 calendar days from the issuance of those representations in which to re-examine the facts of the case and its conclusions. If the CBB confirms application of a penalty, payment is required within 30 calendar days of a final notice being issued.

        Amended: April 2016
        Amended: January 2007

      • EN-5.4.4

        Failure to pay a penalty within the required deadlines will be considered a breach of CBB's regulatory requirements, and will also result in other measures being considered, as described elsewhere in this Module.

        Amended: January 2007

    • EN-5.5 Addressing a Compliance Failure

      • EN-5.5.1

        Payment of a financial penalty does not by itself absolve a licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law from remedying the compliance failure concerned. The CBB will expect the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law to address the contravention within a reasonable timescale, to be agreed on a case-by-case basis. Failure to do so will result in other measures being considered.

        Amended: April 2016
        Amended: January 2007

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