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Location: Central Bank of Bahrain Volume 5—Specialised Licensees > Common Modules (Applicable to all Specialised Licensees) > Part A > Enforcement & Redress > EN Enforcement > EN-B Scope of Application > EN-B.2 The CBB's Approach > EN-B.2.2
  • EN-B.2 The CBB's Approach

    • EN-B.2.1

      The CBB favours an open, pragmatic and collaborative relationship with authorised personsG , within the boundaries set by the CBB Law and Rulebook. Whilst the CBB wishes to avoid a legalistic and confrontational style of supervision, it believes that effective supervision requires effective and timely enforcement of its requirements. Should authorised personsG fail to cooperate, then the CBB will use the means described in this Module to achieve compliance.

      October 2010

    • EN-B.2.2

      In the CBB's view, it is generally neither practical nor effective to prescribe in detail the exact regulatory response for each and every potential contravention. There are a large number of potential contraventions. Moreover, individual circumstances are unlikely to be identical in all cases, and may warrant different responses.

      October 2010

    • EN-B.2.3

      In deciding any given supervisory response, the CBB will nonetheless consistently assess the individual circumstance of each contravention against the principles described in this Module. The CBB's overall approach is to take into account:

      (a) The seriousness of the contravention concerned (including the risks posed to customersG and other market participants);
      (b) The compliance track record of the authorised personG concerned (including the extent to which the contravention reflects systemic weaknesses or reckless behaviour); and
      (c) Which measures are most likely to achieve the desired result of remedying the contravention.
      October 2010

    • EN-B.2.4

      Such an approach reduces the risk of inappropriate enforcement actions, by allowing regulatory measures to be tailored to individual circumstances. By taking into account an authorised person'sG compliance record and attitude, it also creates positive incentives and encourages an open and collaborative approach. By assessing individual cases against the same broad principles, the CBB also aims to achieve an overall consistency in its regulatory actions.

      October 2010

    • EN-B.2.5

      Underlying the CBB's approach outlined in Paragraph EN-B.2.3 is the fundamental principle of proportionality. The enforcement measures contained in this Module are of varying severity, and will be used accordingly in keeping with the CBB's assessment of the contravention. Thus, the CBB will reserve its most serious enforcement measures – such as cancellation of license or withdrawal of "fit and proper" status – for the most serious contraventions.

      October 2010

    • EN-B.2.6

      In keeping with the proportionality principle, and to the extent consistent with the CBB's enforcement approach in Paragraph EN-B.2.3, the CBB will usually opt for the least severe of appropriate enforcement measures. In most cases, the CBB expects to use a Formal Warning before resorting to more severe measures; the need for further measures will then usually be dependent on the response of the authorised personG concerned.

      October 2010

    • EN-B.2.7

      Where a significant element of judgement is required to assess compliance with a requirement, the CBB will usually discuss the matter with the authorised personG concerned, before using one of this Module's enforcement mechanisms. This is likely to be the case, for example, with respect to requirements for adequate systems and controls. Conversely, where there are clear-cut contraventions of CBB requirements, then the CBB will usually move immediately to one or more of the enforcement mechanisms outlined in this Module. This is more likely to occur in cases where quantitative requirements – such as those relating to capital and/or large exposures – are concerned. In most such cases, though, the CBB also expects to continue an active dialogue with the authorised personG concerned, aimed at remedying the contravention.

      October 2010

    • EN-B.2.8

      Except in the limited circumstances outlined below, the CBB will usually only apply an enforcement measure after the authorised personG concerned has been given a suitable opportunity to make representations. In the case of measures described in Chapters EN-6 and EN-7, certain procedures are set out in the CBB Law.

      October 2010

    • EN-B.2.9

      In extreme circumstances, where the CBB believes that immediate action is required to prevent real damage to Bahrain's financial markets, its users or to customersG of the licenseeG concerned, it may amend or cancel a license, place a licenseeG under administration, or suspend a license (cf. Articles 48(g), 130(b) and 131 of the CBB Law).

      Added: April 2019

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