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Location: Central Bank of Bahrain Volume 4—Investment Business > Part A > Reporting Requirements > BR CBB Reporting > Chapter BR-3 Information Gathering by the CBB
  • Chapter BR-3 Information Gathering by the CBB

    • BR-3.1 Power to Request Information

      • BR-3.1.1

        Investment firm licenseesG must provide all information that the CBB may reasonably request in order to discharge its regulatory obligations.

        Adopted: July 2007

      • BR-3.1.1A

        Investment firm licenseesG must provide all relevant information and assistance to the CBB inspectors and appointed expertsG on demand as required by Articles 111 and 114 of the CBB Law. Failure by investment firm licenseesG to cooperate fully with the CBB's inspectors or appointed expertsG , or to respond to their examination reports within the time limits specified, will be treated as demonstrating a material lack of cooperation with the CBB which will result in other enforcement measures being considered, as described elsewhere in Module EN. This rule is supported by Article 114(a) of the CBB Law.

        Adopted: July 2012

      • BR-3.1.1B

        Article 163 of the CBB Law provides for criminal sanctions where false or misleading statements are made to the CBB or any person / appointed expertG appointed by the CBB to conduct an inspection or investigation on the business of the investment firm licenseeG or the listed licensee.

        Adopted: July 2012

      • Information Requested on Behalf of other Supervisors

        • BR-3.1.2

          The CBB may ask an investment firm licenseeG to provide it with information at the request of or on behalf of other supervisors to enable them to discharge their functions properly. Those supervisors may include overseas supervisors or government agencies in Bahrain. The CBB may also, without notifying an investment firm licenseeG , pass on to those supervisors or agencies information that it already has in its possession.

          Adopted: July 2007

    • BR-3.2 Access to Premises

      • BR-3.2.1

        An investment business licenseeG must permit representatives of the CBB, or persons appointed for the purpose by the CBB to have access, with or without notice, during reasonable business hours to any of its business premises in relation to the discharge of the CBB's functions under the relevant law.

        Adopted: July 2007

      • BR-3.2.2

        An investment business licenseeG must take reasonable steps to ensure that its agents and providers under outsourcing arrangements permit such access to their business premises, to the CBB.

        Amended: October 2013
        Adopted: July 2007

      • BR-3.2.3

        An investment business licenseeG must take reasonable steps to ensure that each of its providers under material outsourcing arrangements deals in an open and cooperative way with the CBB in the discharge of its functions in relation to the investment business licenseeG .

        Adopted: July 2007

      • BR-3.2.4

        The cooperation that investment firm licenseesG are expected to procure from such providers is similar to that expected of investment firm licenseesG themselves.

        Adopted: July 2007

    • BR-3.3 Accuracy of Information

      • BR-3.3.1

        Investment firm licenseesG must take reasonable steps to ensure that all information they give to the CBB is:

        (a) Factually accurate or, in the case of estimates and judgements, fairly and properly based after appropriate enquiries have been made by the investment firm licenseeG ; and
        (b) Complete, in that it should include everything which the CBB would reasonably and ordinarily expect to have.
        Amended: July 2012
        Adopted: July 2007

      • BR-3.3.2

        If an investment firm licenseeG becomes aware, or has information that reasonably suggests that it has or may have provided the CBB with information that was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material way, it must notify the CBB immediately. The notification must include:

        (a) Details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;
        (b) An explanation why such information was or may have been provided; and
        (c) The correct information.
        Adopted: July 2007

      • BR-3.3.3

        If the information in Paragraph BR-3.3.2 cannot be submitted with the notification (because it is not immediately available), it must instead be submitted as soon as possible afterwards.

        Adopted: July 2007

    • BR-3.4 Methods of Information Gathering

      • BR-3.4.1

        The CBB uses various methods of information gathering on its own initiative which require the cooperation of investment firm licenseesG :

        (a) Representatives of the CBB may make onsite visits at the premises of the investment firm licenseeG . These visits may be made on a regular basis, or on a sample basis, for special purposes such as theme visits (looking at a particular issue across a range of investment firm licenseesG ), or when the CBB has a particular reason for visiting an investment firm licenseeG ;
        (b) Appointees of the CBB may also make onsite visits at the premises of the investment firm licenseeG . Appointees of the CBB may include persons who are not CBB staff, but who have been appointed to undertake particular monitoring activities for the CBB, such as in the case of Appointed ExpertsG (refer to Section BR-3.5).
        (c) The CBB may request the investment firm licenseeG to attend meetings at the CBB's premises or elsewhere;
        (d) The CBB may seek information or request documents by telephone, at meetings or in writing, including electronic communication;
        (e) The CBB may require investment firm licenseesG to submit various documents or notifications, as per Chapter BR-2, in the ordinary course of their business such as financial reports or on the happening of a particular event in relation to the investment firm licenseeG such as a change in control.
        Amended: July 2012
        Amended: October 2011
        Adopted: July 2007

      • BR-3.4.2

        When seeking meetings with an investment firm licenseeG or access to the licensee's premises, the CBB or the CBB appointee needs to have access to an investment firm licensee'sG documents and personnel. Such requests will be made during reasonable business hours and with proper notice. There may be instances where the CBB may seek access to the licensee's premises without prior notice. While such visits are not common, the prospect of unannounced visits is intended to encourage investment firm licenseesG to comply at all times with the requirements and standards imposed by the CBB as per legislation and Volume 4 of the CBB Rulebook.

        Amended: July 2012
        Adopted: July 2007

      • BR-3.4.3

        The CBB considers that an investment firm licenseeG should:

        (a) Make itself readily available for meetings with representatives or appointees of the CBB;
        (b) Give representatives or appointees of the CBB reasonable access to any records, files, tapes or computer systems, which are within the investment firm licensee'sG possession or control, and provide any facilities which the representatives or appointees may reasonably request;
        (c) Produce to representatives or appointees of the CBB specified documents, files, tapes, computer data or other material in the investment firm licensee'sG possession or control as may be reasonably requested;
        (d) Print information in the investment firm licensee'sG possession or control which is held on computer or otherwise convert it into a readily legible document or any other record which the CBB may reasonably request;
        (e) Permit representatives or appointees of the CBB to copy documents of other material on the premises of the investment firm licenseeG at the investment firm licensee'sG expense and to remove copies and hold them elsewhere, or provide any copies, as may be reasonably requested; and
        (f) Answer truthfully, fully and promptly all questions which representatives or appointees of the CBB reasonably put to it.
        Amended: July 2012
        Amended: July 2010
        Adopted: July 2007

      • BR-3.4.4

        The CBB considers that an investment firm licenseeG should take reasonable steps to ensure that the following persons act in the manner set out in Paragraph BR-3.4.3:

        (a) Its employees; and
        (b) Any other members of its group and their employees.
        Amended: October 2013
        Amended: July 2012
        Adopted: July 2007

      • BR-3.4.5

        In gathering information to fulfill its supervisory duties, the CBB acts in a professional manner and with due regard to maintaining confidential information obtained during the course of its information gathering activities.

        Adopted: July 2007

    • BR-3.5 Role of the Appointed Expert

      • Introduction

        • BR-3.5.1

          The content of this Chapter is applicable to all investment firm licenseesG and appointed expertsG .

          Adopted: October 2011

        • BR-3.5.2

          The purpose of the contents of this Chapter is to set out the roles and responsibilities of appointed expertsG when appointed pursuant to Article 114 or 121 of the CBB Law (see EN-2.1.1). These Articles empower the CBB to assign some of its officials or others to inspect or conduct investigations of investment firm licenseesG .

          Adopted: October 2011

        • BR-3.5.3

          The CBB uses its own inspectors to undertake on-site examinations of licenseesG as an integral part of its regular supervisory efforts. In addition, the CBB may commission reports on matters relating to the business of licenseesG in order to help it assess their compliance with CBB requirements. Inspections may be carried out either by the CBB's own officials, by duly qualified appointed expertsG appointed for the purpose by the CBB, or a combination of the two.

          Adopted: October 2011

        • BR-3.5.4

          The CBB will not, as a matter of general policy, publicise the appointment of an appointed expertG , although it reserves the right to do so where this would help achieve its supervisory objectives. Both the appointed expertG and the CBB are bound to confidentiality provisions restricting the disclosure of confidential information with regards to any such information obtained in the course of the investigation.

          Adopted: October 2011

        • BR-3.5.5

          Unless the CBB otherwise permits, appointed expertsG should not be the same firm appointed as external auditor of the investment firm licenseeG .

          Adopted: October 2011

        • BR-3.5.6

          Appointed expertsG will be appointed in writing, through an appointment letter, by the CBB. In each case, the CBB will decide on the range, scope and frequency of work to be carried out by appointed expertsG .

          Adopted: October 2011

        • BR-3.5.7

          All proposals to appoint appointed expertsG require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with the appointed expertsG concerned. A separate letter is sent to the licenseeG , notifying them of the appointment. At the CBB's discretion, a trilateral meetingG may be held at any point, involving the CBB and representatives of the licenseeG and the appointed expertsG , to discuss any aspect of the investigation.

          Adopted: October 2011

        • BR-3.5.8

          Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the licenseeG .

          Adopted: October 2011

        • BR-3.5.9

          Appointed expertsG will report directly to and be responsible to the CBB in this context and will specify in their report any limitations placed on them in completing their work (for example due to the licensee'sG group structure). The report produced by the appointed expertsG is the property of the CBB (but is usually shared by the CBB with the firm concerned).

          Adopted: October 2011

        • BR-3.5.10

          Compliance by appointed expertsG with the contents of this Chapter will not, of itself, constitute a breach of any other duty owed by them to a particular investment firm licenseeG (i.e. create a conflict of interestG ).

          Adopted: October 2011

        • BR-3.5.11

          The CBB may appoint one or more of its officials to work on the appointed experts'G team for a particular investment firm licenseeG .

          Adopted: October 2011

      • The Required Report

        • BR-3.5.12

          The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned appointed expertsG would normally be required to report on one or more of the following aspects of a licensee'sG business:

          (a) Accounting and other records;
          (b) Internal control systems;
          (c) Returns of information provided to the CBB;
          (d) Operations of certain departments; and/or
          (e) Other matters specified by the CBB.
          Adopted: October 2011

        • BR-3.5.13

          Appointed expertsG will be required to form an opinion on whether, during the period examined, the licenseeG is in compliance with the relevant provisions of the CBB Law and the CBB's relevant requirements, as well as other requirements of Bahrain Law and, where relevant, industry best practice locally and/or internationally.

          Adopted: October 2011

        • BR-3.5.14

          The appointed experts'G report should follow the format set out in Appendix BR-1, in part B of the CBB Rulebook.

          Adopted: October 2011

        • BR-3.5.15

          Unless otherwise directed by the CBB or unless the circumstances described in Section BR-3.5.19 apply, the report must be discussed with the Board of directors and/or senior managementG in advance of it being sent to the CBB.

          Adopted: October 2011

        • BR-3.5.16

          Where the report is qualified by exceptionG , the report must clearly set out the risks which the licenseeG runs by not correcting the weakness, with an indication of the severity of the weakness should it not be corrected. Appointed expertsG will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.

          Adopted: October 2011

        • BR-3.5.17

          If the appointed expertsG conclude, after discussing the matter with the licenseeG , that they will give a negative opinion (as opposed to one qualified by exceptionG ) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.

          Adopted: October 2011

        • BR-3.5.18

          The report must be completed, dated and submitted, together with any comments by directors or management (including any proposed timeframe within which the licenseeG has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.

          Adopted: October 2011

      • Other Notifications to the CBB

        • BR-3.5.19

          Appointed expertsG must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, including the criteria for licensing a licenseeG (see Module AU), are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concerned licenseeG , or that the interests of customers are at risk because of adverse changes in the financial position or in the management or other resources of a licenseeG . Notwithstanding the above, it is primarily the licensee'sG responsibility to report such matters to the CBB.

          Adopted: October 2011

        • BR-3.5.20

          The CBB recognises that appointed expertsG cannot be expected to be aware of all circumstances which, had they known of them, would have led them to make a communication to the CBB as outlined above. It is only when appointed expertsG , in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

          Adopted: October 2011

        • BR-3.5.21

          If appointed expertsG decide to communicate directly with the CBB in the circumstances set out in Paragraph BR-3.5.19, they may wish to consider whether the matter should be reported at an appropriate senior level in the licenseeG at the same time and whether an appropriate senior representative of the licenseeG should be invited to attend the meeting with the CBB.

          Adopted: October 2011

      • Permitted Disclosure by the CBB

        • BR-3.5.22

          Information which is confidential and has been obtained under, or for the purposes of, this chapter or the CBB Law may only be disclosed by the CBB in the circumstances permitted under the Law. This will allow the CBB to disclose information to appointed expertsG to fulfil their duties. It should be noted, however, that appointed expertsG must keep this information confidential and not divulge it to a third party except with the CBB's permission and/or unless required by Bahrain Law.

          Adopted: October 2011

      • Trilateral Meeting

        • BR-3.5.23

          The CBB may, at its discretion, call for a trilateral meetingG (s) to be held between the CBB and representatives of the relevant investment firm licenseeG and the appointed expertsG . This meeting will provide an opportunity to discuss the appointed experts'G examination of, and report on, the investment firm licenseeG .

          Adopted: October 2011

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