BackRich TextPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • Enforcement & Redress

    • CP Compensation

      • CP-A Introduction

        • CP-A.1 Purpose

          • Executive Summary

            • CP-A.1.1

              The purpose of this Module is to set out a summary of rules and regulations establishing a Deposits and Unrestricted Investment Accounts Protection Scheme (the 'Scheme') for compensating Eligible Depositors (as defined under Section CP-2.1) when the banks (referred to under Section CP-2.1) are unable, or are likely to be unable, to satisfy claims against them.

              October 2012

            • CP-A.1.2

              The body established to operate and administer the compensation scheme is the Deposits and Unrestricted Investment Accounts Protection Board (the 'Board'). This Module describes the rules that would allow the Board to:

              (a) Administer and implement the scheme; and
              (b) Establish rules of operation.
              October 2012

            • CP-A.1.3

              This Module also describes:

              (a) Who is eligible for receiving compensation;
              (b) How the scheme will be funded;
              (c) Who the contributing banks are; and
              (d) What are contributing banks' responsibilities regarding the implementation of the scheme.
              October 2012

          • Legal Basis

            • CP-A.1.4

              The legal basis for this Module is the Regulation issued pursuant to CBB Resolution No.(34) for the year 2010 with respect to promulgating a regulation protecting deposits and unrestricted investment accounts, which in turn was issued pursuant to Article 188 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Regulation is applicable to all retail banks, conventional and Islamic.

              October 2012

            • CP-A.1.5

              For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

              October 2012

        • CP-A.2 Key Requirements

          • CP-A.2.1

            The Board is, subject to and in accordance with the terms and conditions of the Regulation, responsible for the activities set out under Paragraph CP-1.1.4.

            October 2012

          • CP-A.2.2

            The Board will convene and be ready to carry out its duties if either of the events set out in Section CP-1.2 arise.

            October 2012

          • CP-A.2.3

            The Scheme will apply to Eligible Accounts (as defined in Paragraph CP-2.1.2) held with the Bahrain offices of retail banks which are licensed by the CBB.

            October 2012

          • CP-A.2.4

            Upon the convening of the Board in accordance with Section CP-1.2, the Board calculates the total amount of compensation to be paid under the Scheme in the case of the relevant bank, as well as the amount of compensation payable under the Scheme to each Eligible Depositor of such relevant bank.

            October 2012

          • CP-A.2.5

            Upon receipt by the Board of confirmation from the (Lead) Mandated bank that the actions referred to in Section CP-2.4 have been completed, each Eligible Depositor is sent a certificate in duplicate (included under Part B, Supplementary Information as Appendix CP-1A) by the Board informing such Eligible Depositor of the amount of compensation payable to him/her under the Scheme in respect of his/her Eligible Account(s) with the relevant bank.

            October 2012

          • CP-A.2.6

            The CBB requires all conventional retail bank licensees referring (directly or indirectly) to the protection of Deposits in related marketing materials and in general notices featured within banking halls and in account documentation, including Annual Reports, to prominently disclose the statement set out under Paragraph CP-2.5.1.

            October 2012

        • CP-A.3 Module History

          • CP-A.3.1

            This Module was first issued in July 2004 by the BMA and updated in October 2007 to reflect the transfers of responsibilities to the CBB. Following the issuance of the Resolution No.(34) in respect of protecting Deposits and Unrestricted Investment Accounts in December 2010, the Module was amended in October 2012 to be in line with the new Regulation and to include previous requirements that were in place in the originally issued Module CP. Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

            October 2012

          • CP-A.3.2

            The most recent changes made to this Module are detailed in the table below:

            Summary of Changes

            Module Ref. Change Date Description of Changes
            CP-A to CP-2 10/2012 Amendments due to the introduction of Resolution No.(34) of 2010.
            CP-2.3 04/2014 Added requirement for eligible accounts report for the deposits protection scheme.
            CP-2.1.4 10/2014 Corrected sentence structure.
                 
                 

          • Evolution of the Module

            • CP-A.3.3

              Prior to the development of the Rulebook, the CBB had issued various circulars representing regulations covering the operations and establishment of the Deposit Protection Scheme and the Deposit Protection Board. These circulars have now been consolidated into the Compensation Module. These circulars and their evolution into this Module are listed below:

              Circular Ref. Date of Issue Module Ref. Circular Subject
              OG/423/93 28 Nov 1993 CP-1–CP-2 Deposit Protection Scheme (the "Scheme")
              OG/425/94 21 Dec 1994 CP-2.4 Deposit Protection
                     
              October 2012

          • Effective Date

            • CP-A.3.4

              The contents of this Module were effective from their date of issuance.

              October 2012

            • CP-A.3.5

              Capitalised terms used in this Module shall, save as the context requires otherwise, have the meanings ascribed to them in the Regulation.

              October 2012

            • CP-A.3.6

              In the event of an inconsistency between the rules of this Module and the rules of the Regulation, the rules of the Regulation shall prevail.

              October 2012

      • CP-B Scope of Application

        • CP-B.1 Scope of Application

          • CP-B.1.1

            The contents of this Module — unless otherwise stated — apply to all conventional retail bank licensees and their retail operations in Bahrain.

            October 2012

      • CP-1 Deposits and Unrestricted Investment Accounts Protection Board

        • CP-1.1 Constitution of the Board

          • CP-1.1.1

            The contents of this Chapter set out the details of the constitution, authority and administration of the Board.

            October 2012

          • CP-1.1.2

            The Board is, subject to and in accordance with the terms and conditions of the Regulation, responsible for the protection of Eligible Accounts, including determining:

            (a) What contributions conventional retail bank licensees should make to the Conventional Fund;
            (b) The amount of compensation to be paid out to Eligible Depositors; and
            (d) Any additional rules under which the Board will operate.
            October 2012

          • CP-1.1.3

            The Board consists of eleven persons appointed by the Governor of the CBB, whose period of membership must be for a three-year renewable period:

            (a) Two representatives of the CBB, one of whom should be Chairman and the other the Deputy Chairman of the Board;
            (b) Four representatives of retail banks in Bahrain, who should be appointed by the Governor;
            (c) Two representatives of Government, the first representing the Ministry of Finance, the second representing the Ministry of Industry and Commerce, both should be nominated by their respective Ministers; and
            (d) Three independent persons, not from the above categories, appointed by the Governor.
            October 2012

          • CP-1.1.4

            The Board administers the two Funds established in accordance with Article 13 of the Regulation, and is responsible for all decision-making and accounting treatment in respect of the two Funds. No liability attaches to the CBB as a result of the Board managing the two Funds.

            October 2012

        • CP-1.2 Convening of the Board

          • CP-1.2.1

            The Board must be convened and must commence its responsibilities by following the compensation process for the Eligible Depositors upon:

            (a) Any conventional retail bank licensee being put under administration by the CBB; or
            (b) Any conventional retail bank licensee being put into liquidation.

            In each case, such bank hereinafter referred to as a "defaulting bank".

            October 2012

        • CP-1.3 Voting by the Board

          • CP-1.3.1

            The Board meets as often as is necessary to carry out its duties under the Regulation referred to in this Module and takes decisions by a simple majority vote of those present at any meeting thereof provided that, in the event of a tie, the Chairman will have the casting vote.

            October 2012

          • CP-1.3.2

            Decisions of the Board are binding and are not subject to appeal.

            October 2012

      • CP-2 Deposits and Unrestricted Investment Accounts Protection Scheme

        • CP-2.1 Application of the Scheme

          • CP-2.1.1

            The Scheme will apply to Eligible Accounts (as defined in Paragraph CP-2.1.2) held with the Bahrain offices of conventional retail bank licensees which are licensed by the CBB. For the avoidance of doubt, "Eligible Accounts" do not include any Unrestricted Investment Accounts that may be held with conventional retail banks.

            October 2012

          • CP-2.1.2

            For conventional retail bank licensees, Eligible Accounts means any Deposit Account (as defined in Paragraph CP-2.1.3), and any other deposits or accounts similar in nature and which have similar characteristics which are approved by the CBB, regardless of currency, with the exception of bearer certificates of deposit.

            October 2012

          • CP-2.1.3

            For the purpose of Paragraph CP-2.1.2, Deposit Account means the account that is defined being a deposit in accordance with the CBB Resolution No.(23) of 2009 in respect of Definition of Deposit.

            October 2012

          • CP-2.1.4

            Without prejudice to Paragraph CP-2.1.1, the Board may, at its discretion, exclude (in whole or in part) from compensation payments to any Eligible Depositor of the defaulting bank in Bahrain who is entitled to claim in a similar scheme established in another jurisdiction, where such scheme covers the deposit liabilities of the Bahrain offices of such relevant bank.

            Amended: October 2014
            October 2012

          • CP-2.1.5

            For conventional retail bank licensees, Eligible Depositor means any natural person, (resident or non-resident), holding an Eligible Account(s) with a conventional retail bank in the Kingdom. It does not include Deposits and Unrestricted Investments Accounts held with a conventional retail bank's foreign branches operating outside the Kingdom.

            October 2012

          • CP-2.1.6

            Without prejudice to Paragraph CP-2.1.1, the Board may, at its discretion, exclude (in whole or in part) from the requirement to contribute to the conventional Fund, any conventional retail bank licensee in Bahrain whose Eligible Accounts (in whole or in part) covered by a similar scheme established in another jurisdiction provided that evidence of such coverage is provided to the Board to its satisfaction.

            October 2012

          • CP-2.1.7

            Without prejudice to the provisions of Paragraph CP-2.1.2, the Scheme will not apply to Deposits which have, in the opinion of the Board, been illegally gained and/or relate to illicit or illegal matters. The Scheme will also not apply to:

            (a) Accounts of shareholders with 10% or more shareholding (ordinary or preference), board members and senior managers of the defaulting bank; and/ or
            (b) Accounts of persons whose identity cannot be ascertained.
            October 2012

        • CP-2.2 Coverage of the Scheme

          • CP-2.2.1

            Each Eligible Depositor shall be entitled under the Regulation to claim an amount equivalent to the amount deposited by him in an Eligible Account save that no Eligible Depositor shall be entitled to receive more than BD20,000 (Twenty Thousand Bahraini Dinars) from the total amount of his Eligible Account held with the defaulting bank regardless of the number of Deposits and their currency. Other currencies shall be converted into Bahraini Dinars at the exchange rate on the date on which the CBB determines that the conventional retail bank licensee is a defaulting bank.

            October 2012

          • CP-2.2.2

            In calculating the amount payable to an Eligible Depositor, the Board shall have the right to set-off the debts of the Eligible Depositor with the defaulting bank and deduct any expenses incurred by the Board in paying out such amounts.

            October 2012

          • CP-2.2.3

            A joint Eligible Account should be treated as a single Eligible Account.

            October 2012

          • CP-2.2.4

            If the Board is satisfied that a person is a trustee of an Eligible Account with a defaulting bank, and that the beneficial owner of any such Account has no other Eligible Account with the defaulting bank, the Board shall deem such beneficial owner as a separate Eligible Depositor. However, in the event that a beneficial owner of any of such Eligible Account held in the name of the trustee is the same owner of other Eligible Account at the defaulting bank, such accounts, including the account(s) registered in the name of trustee, shall be treated as a single Eligible Account.

            October 2012

          • CP-2.2.5

            No transfer of any part of an Eligible Account shall be considered valid if, in the opinion of the Board, the purpose of such transfer is to enable any person, including an Eligible Depositor, to gain an advantage that is not permitted or intended by this Module.

            October 2012

        • CP-2.3 The Deposits and Unrestricted Investment Accounts Protection Funds

          • CP-2.3.1

            For the purpose of the Scheme, the Board administers two separate funds referred to as the "Conventional Banks Fund" and the "Islamic Banks Fund" as defined under Article 1 of the Regulation. Each Fund shall constitute a separate legal entity and shall have an independent balance sheet from the CBB.

            October 2012

          • CP-2.3.2

            Conventional retail bank licensees collectively contribute an initial aggregate amount of BD60 million (Sixty Million Bahraini Dinars) over a period of fifteen years and title to such monies once contributed shall legally belong to the Conventional Banks Fund.

            October 2012

          • CP-2.3.3

            The Board periodically assesses the size of the Conventional Fund in relation to liabilities to be covered and, where appropriate, makes recommendations to the CBB for increasing or decreasing the amount of the Conventional Fund. No such adjustments to the aggregate amount BD80 million (Eighty Million Bahraini Dinars) for both Funds shall be made without the express approval of the CBB.

            October 2012

          • CP-2.3.4

            The contribution of each conventional retail bank licensee in the total amount of the Fund is determined on an annual pro-rata basis of the total Eligible accounts of all conventional retail bank licensees in Bahrain.

            Amended: April 2014
            October 2012

          • CP-2.3.4A

            The CBB provides the Board with the necessary data to allow it to determine the amounts of contributions each conventional retail bank licensee must make. The Board may allow the conventional retail bank licensees to make its contribution in the form of quarterly installments which shall be charged against the profit & loss account of the banks.

            Added: April 2014

          • CP-2.3.4B

            Each conventional retail bank licensee must submit to the CBB within 2 months of the financial year end a report on all eligible accounts in accordance with Section BR-1.4.

            Added: April 2014

          • CP-2.3.5

            No contribution (or part thereof) is refundable to a conventional retail bank licensee in any circumstance.

            October 2012

          • CP-2.3.6

            Conventional retail bank licensees pay the contributions referred to in Paragraph CP-2.3.4 within the periods specified by the Board. Each conventional retail bank licensee is notified of the amount of its calculated contribution as well as the date of payment thereof.

            October 2012

          • CP-2.3.7

            In the event of failure of any conventional retail bank licensee in the payment of the full contribution during the periods specified by the Board, the CBB may take enforcement action against that bank, including the imposition of administrative fines in accordance with Article 129 of the CBB Law and, in cases of repeated violation, withdrawal of the licence granted by the CBB.

            October 2012

          • CP-2.3.8

            In the event that a new conventional retail bank licensee joins the Conventional Fund during any year, the Board determines the contribution of that bank to the Fund on the basis of the minimum payment made by other participating banks during that year for the remaining period of the year after dividing the full contribution amount over the number of months of a year. At the beginning of the following year, there will be an assessment of that bank's contribution based on the size of its Eligible Accounts base.

            October 2012

          • CP-2.3.9

            The Board determines the investment policy of the Funds and the CBB is responsible for implementing such policy without receiving any commission or charges in return.

            October 2012

        • CP-2.4 Procedures for Making Claims under the Scheme

          • CP-2.4.1

            Upon the Board following the compensation process in accordance with Article 4 of the Regulation, the Board calculates the total amount of compensation payable thereunder to each Eligible Depositor of the defaulting bank. The total amount of compensation payable shall be remitted to the Bank(s) designated by the Board to act as a Lead Mandated Bank and/ or Mandated Bank(s) for processing compensation payments to Eligible Depositors of the defaulting bank.

            October 2012

          • CP-2.4.2

            For the purposes of this Module, Lead Mandated Bank means the bank appointed by the Deposits and Unrestricted Investment Accounts Protection Board to administer the procedures to make compensation payments.

            October 2012

          • CP-2.4.3

            For the purposes of this Module, Mandated Bank(s) means such other banks mandated by the Lead Mandated Bank to assist and/ or participate in the processing of compensation payments.

            October 2012

          • CP-2.4.4

            In the event of the amounts of the Conventional Fund being insufficient to cover the total compensation payable in accordance with the Regulation, the Board may cover the shortfall by borrowing (upon such terms and conditions as it considers appropriate) and such borrowings shall be reimbursed by future contributions from the conventional retail bank licensees as the case may be.

            October 2012

          • CP-2.4.5

            Following the completion of the calculation referred to in Paragraph CP-2.4.1, the Lead Mandated Bank and/ or Mandated Bank(s) pays, into a special account to be held by it/them, the total amount allocated to compensate the Eligible Depositors with the defaulting bank.

            October 2012

          • CP-2.4.6

            Upon receipt by the Board of confirmation from the Lead Mandated Bank that the requirements of Paragraphs CP-2.4.1 to CP-2.4.3 have been satisfied, the Board sends to each Eligible Depositor a certificate in the form set out in Appendix CP-1A, informing each Eligible Depositor of the amount of compensation due to him/her hereunder in respect of his/her Eligible Account(s) with the defaulting bank.

            October 2012

          • CP-2.4.7

            Appendix CP-1A contains instructions as to the method by which, and time within which, the compensatory amount referred to therein may be collected by the Eligible Depositor from the Lead Mandated Bank or Mandated Bank(s). No amounts of compensation shall be payable hereunder after the expiry of the period referred to in such certificate, which period shall not be more than 12 months.

            October 2012

          • CP-2.4.8

            Appendix CP-1B, "Customer Acknowledgment and Waiver" form is signed by an Eligible Depositor, and constitutes a waiver of any claims he (or his successors or assigns) may wish to make against the Lead Mandated Bank and/ or the Mandated Bank(s) and/or the Board in the future in respect of the amount being paid to him, and, a waiver to the Board of all his rights and interests related to that proportion of his claim against the defaulting bank.

            October 2012

          • CP-2.4.9

            Upon receipt of the signed Customer Acknowledgment and Waiver from an Eligible Depositor, the Lead Mandated Bank and/ or the Mandated Bank(s) shall pay the amount referred to in the certificate to such Eligible Depositor.

            October 2012

          • CP-2.4.10

            Once an Eligible Depositor has waived his right to claim against the defaulting bank to the Board (pursuant to the Customer Acknowledgment and Waiver referred to above), no bank may deny the rights of the Board to recover the debt so waived by way of action against the bank in liquidation.

            October 2012

          • CP-2.4.11

            The Lead Mandated Bank must reimburse the conventional Fund for any excess monies it has received during the mandate period.

            October 2012

          • CP-2.4.12

            The liquidator of the defaulting bank must, in making any payments to Eligible Depositors thereof in liquidation of such bank, be responsible for ensuring that Eligible Depositors shall not receive any payments in liquidation for any amount that constitutes a duplicate reimbursement that they have been compensated in accordance with the terms of the Regulation.

            October 2012

        • CP-2.5 Disclosure of Scheme's Applicability

          • CP-2.5.1

            All advertisements or other promotional publications issued by conventional retail bank licensees in the Kingdom which contain an invitation to make deposits with such banks and refer, directly or indirectly, to the Regulation Protecting Deposits and Unrestricted Investment Accounts hereunder, shall contain the following statement:

            "Deposits held with [name of conventional retail bank licensee] in the Kingdom are covered by the Regulation Protecting Deposits and Unrestricted Investment Accounts issued by the Central Bank of Bahrain in accordance with Resolution No. (34) of 2010."

            October 2012

        • CP-2.6 Other Provisions

          • CP-2.6.1

            Save as otherwise set out above, nothing in this Module shall affect the rights of Eligible Depositors of a defaulting bank to claim the remaining proportion of their total claims as creditors in the liquidation of the defaulting bank, regardless of the basis on which such claim is made.

            October 2012

          • CP-2.6.2

            The provisions of Article 119 of the CBB Law relating to confidential information shall apply to all matters discussed, decisions reached and records kept by the Board in accordance with the terms of this Regulation.

            October 2012

          • CP-2.6.3

            The Board is entitled to make subsidiary rules for the proper and regular enforcement of the Regulation, and must be empowered to hear any dispute in relation to the application of the Regulation, without prejudicing the right of the person concerned to take judicial proceedings.

            October 2012

          • CP-2.6.4

            The Regulation does not apply retrospectively to banks operating in the Kingdom which are already under administration or are being liquidated prior to the effective date of the Regulation.

            October 2012

    • EN Enforcement

      • EN-A Introduction

        • EN-A.1 Application

          • EN-A.1.1

            This Module sets out the Central Bank of Bahrain's ('CBB') approach to enforcement, and the mechanisms used by the CBB to address failures by licensees to comply with its regulatory requirements. The purpose of such measures is to encourage a high standard of compliance by the CBB licensees, thus reducing risk to their customers and the rest of the financial system.

            Amended: January 2011
            Amended: October 2010
            Added: October 2007

          • EN-A.1.2

            This Module provides support for all other Modules in the Rulebook.

            Added: October 2007

          • Legal Basis

            • EN-A.1.3

              This Module contains the CBB's Directive (as amended from time to time) relating to enforcement and penalties and administrative provisions under Articles 125 to 132 of the Central Bank of Bahrain and Financial Institutions Law 2006 and its amendments ('CBB Law'). It is issued under the powers available to the CBB under Article 38 of the CBB Law. The Directive in this Module is applicable as follows. Chapters EN-1 to EN-4 and EN-6 to EN-9 inclusive apply to all conventional bank licensee. Chapters EN-2 to EN-5 and EN-10 apply to the Directors and employees of all conventional bank licensees.

              Amended: April 2016
              Amended: January 2011
              Amended: October 2010
              Added: October 2007

            • EN-A.1.4

              For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

              Added: October 2007

        • EN-A.2 Module history

          • EN-A.2.1

            This Module was first issued in July 2004 as part of the conventional principles volume. All regulations in this volume have been effective since this date. All subsequent changes are dated with the month and year at the base of the relevant page and in the Table of Contents. Chapter 3 of Module UG provides further details on Rulebook maintenance and control.

            Added: October 2007

          • EN-A.2.2

            A list of the most recent changes made to this Module are detailed in the table below:

            Module Ref. Change Date Description of Changes
            EN-7 07/2006 Addition of procedures for "Appointed Experts" (relocated from AU-4.)
            EN A 10/2007 New references to the CBB Law and new rule categorising this Module as a Directive
            EN-1, 3, 4, 6-10 10/2007 Administrative changes to sections as a result of the new CBB Law.
            EN-7.1 and 7.2 01/2009 Minor amendments due to new Role of Reporting Accountants chapter in Module AU
            EN 10/2010 Various minor amendments to ensure consistency in CBB Rulebook.
            EN-6.2A 10/2010 Added new Section on financial penalties for date sensitive requirements
            EN-A.1.3 01/2011 Clarified legal basis.
            EN-6.2A.7 04/2011 Clarified guidance on payment of annual fees.
            EN-6.2A.7(a) 07/2011 Clarified due date when a weekend is involved.
            EN-7 10/2011 Chapter has been streamlined and repetitive information has been eliminated and reference is now made to Section BR-6.5. The term 'appointed experts' has been substituted for the previously used 'investigators'.
            EN-10.3.1A 01/2013 Paragraph added to refer to Article 161 of the CBB Law.
            EN-6.2A.2(c) 10/2013 Corrected cross reference.
            EN-A.1.3 04/2016 Reference added to amendments to the CBB Law and to the broader scope of financial penalties also applicable to persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law.
            EN-6 04/2016 Amended to be in line with amendments to Article 129 of the CBB Law.
            EN-6.3.5 04/2016 Added Rule regarding anticipated late submission of date sensitive requirements.
            EN-6.2A.3 04/2017 Adjustment to Financial Penalties for Date Sensitive Requirements.
            EN-6.2A.1 and 6.2A.2 07/2017 Added the requirement of HC-7.2 as part of date sensitive requirements.
            EN-4.1 07/2018 Amended Section title.
            EN-5.2.2 07/2018 Amended Paragraph.
            EN-5.2.4 07/2018 Added new Paragraph on re-assessment tests.
            EN-6.1.1 07/2018 Amended Paragraph
            EN-6.1.2 07/2018 Amended Paragraph
            EN-6.1.2A 07/2018 Added a new Paragraph on maximum financial penalty.
            EN-6.1.5 07/2018 Added reference to new Appendix A.
            EN-6.2.1 07/2018 Deleted Paragraph.
            EN-6.2.2 07/2018 Deleted Paragraph.
            EN-6.2.3 07/2018 Deleted Paragraph.
            EN-6.2A.5 07/2018 Deleted Paragraph.
            EN-6.3.4 07/2018 Amended Paragraph
            Appendix A 07/2018 Added new Appendix.
            EN-3.2.3 04/2019 Moved guideline to Section EN-1.1.
            EN-8 04/2019 Deleted Chapter.
            EN-6.1.3 10/2019 Amended Paragraph to refer to Bahraini banks.
            EN-6.1.3A 10/2019 Added a new Paragraph on disclosure of financial penalties of branches of foreign banks.

          • Evolution of the Module

            • EN-A.2.3

              The Module incorporates the requirements set out under Circular No. ODG/249/2004 dated 22 July 2004 relating to the CBB's approach to enforcement.

              Amended: October 2010
              Added: October 2007

          • Effective Date

            • EN-A.2.4

              The contents in this Module are effective from 1st September 2004 or from the date given at the footer of the page where changes to Enforcement have occurred as a result of the issuance of the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006). However, the contents of other Modules referred to herein are effective from the dates specified in those respective Modules.

              Added: October 2007

      • EN-1 General Procedures

        • EN-1.1 The CBB's Approach to Enforcement

          • EN-1.1.1

            The CBB favours an open, pragmatic and collaborative relationship with its licensees, 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 enforcement of its requirements. Should licensees fail to cooperate, then the CBB will use the means described in this Module to achieve compliance.

            Amended: October 2010
            Added: October 2007

          • EN-1.1.2

            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.

            Amended: October 2010
            Added: October 2007

          • EN-1.1.3

            In deciding any given regulatory 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 the licensee's customers and other market participants);
            (b) The compliance track record of the licensee 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.
            Amended: October 2010
            Added: October 2007

          • EN-1.1.4

            Such an approach reduces the risk of inappropriate enforcement actions, by allowing regulatory measures to be tailored to individual circumstances. By taking into account a licensee's 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.

            Amended: October 2010
            Added: October 2007

          • EN-1.1.5

            Underlying the CBB's approach outlined in Paragraph EN-1.1.3 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.

            Amended: October 2010
            Added: October 2007

          • EN-1.1.6

            In keeping with the proportionality principle, and to the extent consistent with the CBB's enforcement approach in Paragraph EN-1.1.3, the CBB will usually opt for the least severe of appropriate enforcement measures. In most cases, the CBB expects to use a Formal Notice before resorting to more severe measures; the need for further measures will then usually be dependent on the response of the licensee or individual concerned.

            Amended: October 2010
            Added: October 2007

          • EN-1.1.7

            Where a significant element of judgment is required to assess compliance with a requirement, then the CBB will usually discuss the matter with the licensee or individual 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 the 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 licensee or individual concerned, aimed at remedying the contravention.

            Amended: October 2010
            Added: October 2007

          • EN-1.1.8

            Except in the limited circumstances outlined below, the CBB will usually only apply an enforcement measure after the licensee or person concerned has been given a suitable opportunity to make representations. In the case of measures described in Chapters EN-7 to EN-10, certain procedures are set out in the Central Bank of Bahrain and Financial Institutions Law (Decree No. 64 of 2006).

            Amended: October 2010
            Added: October 2007

          • EN-1.1.9

            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 customers of the licensee concerned, it may cancel or amend a license, as specified in Article 48(g) of the CBB Law, or place a licensee under administration according to Article 130(2) of the CBB Law, or suspend a license according to Article 131 of the pre-mentioned Law. These measures may be used in conjunction with directions.

            Added: April 2019

        • EN-1.2 Prohibition on Insurance

          • EN-1.2.1

            To help the CBB achieve the purpose of this Module, licensees may not enter into or make a claim under a contract of insurance that is intended to, or has the effect of, indemnifying them from the fines provided for in this Module.

            Amended: October 2010
            Added: October 2007

        • EN-1.3 Publicity

          • EN-1.3.1

            The CBB will not as a matter of general policy publicise individual cases when it uses the measures set out in Chapters EN-2 to EN-7. However, in such cases the CBB may inform the licensee's external auditor and – in the case of licensees with overseas operations – relevant overseas regulators.

            Amended: October 2010
            Added: October 2007

          • EN-1.3.2

            In exceptional circumstances, as allowed by Article 132 of the CBB Law, the CBB may decide to publicise individual cases when the measures set out in Chapters EN-2 to EN-7 are used, where there is a strong case that doing so would help achieve the CBB's supervisory objectives. In such instances, the CBB will usually allow the licensee or individual concerned the opportunity to make representations to the CBB before a public statement is issued.

            Amended: October 2010
            Added: October 2007

          • EN-1.3.3

            With respect to the financial penalties provided for in Chapter EN-6, licensees are required to disclose in their annual report the amount of any such penalties paid to the CBB, together with a factual description of the reason(s) given by the CBB for the penalty.

            Amended: October 2010
            Added: October 2007

          • EN-1.3.4

            Without prejudice to the above policy, the CBB may from time to time publish aggregate information on its use of measures set out in Chapters EN-2 to EN-7, without identifying the licensees or individuals concerned, unless their identities have previously been disclosed as provided for in Paragraphs EN-1.3.2 or EN-1.3.3.

            Amended: October 2010
            Added: October 2007

          • EN-1.3.5

            By their nature, the penalties in Chapters EN-8 to EN-10 inclusive are public acts, once applied. The CBB will in these instances generally issue a public statement explaining the circumstances of the case.

            Amended: October 2010
            Added: October 2007

      • EN-2 Formal Warnings

        • EN-2.1 CBB Policy

          • EN-2.1.1

            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 an individual regarding an issue, and should be viewed by the recipient with the appropriate degree of seriousness.

            Amended: October 2010
            Added: October 2007

          • EN-2.1.2

            As indicated in Section EN-1.1, the CBB will usually discuss concerns prior to resorting to a formal enforcement measure, especially where a significant element of judgment is required in assessing compliance with a regulatory requirement.

            Amended: October 2010
            Added: October 2007

          • EN-2.1.3

            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 may 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 person concerned: this would usually be the case where a clear-cut compliance failing has occurred.

            Amended: October 2010
            Added: October 2007

          • EN-2.1.4

            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 the licensee's customers, market participants and other stakeholders;
            (b) In the case of an autual 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: October 2010
            Added: October 2007

        • EN-2.2 Procedure for Issuing Formal Warnings

          • EN-2.2.1

            Proposals to issue formal warnings are carefully considered against the criteria listed in Section EN-2.1. They require the approval of a Director or more senior CBB official, and include the statement "This is a formal warning as defined in Chapter EN-2 of the CBB Rulebook".

            Amended: October 2010
            Added: October 2007

          • EN-2.2.2

            Depending on the issue in question, recipients of a formal warning may be required to respond to the contents of the warning. In any case, recipients have the right to object to or challenge a formal warning as specified under Articles 125(c) and 126 of the CBB Law.

            Amended: October 2010
            Added: October 2007

      • EN-3 Directions

        • EN-3.1 CBB Policy

          • EN-3.1.1

            The CBB may issue Directions to licensees or individuals under supervisory powers granted to it by the CBB Law. These powers are broad in nature, and effectively allow the CBB to issue whatever Directions it reasonably believes are required to achieve its statutory objectives.

            Amended: October 2010
            Added: October 2007

          • EN-3.1.2

            The types of Directions that the CBB may issue in practice vary and will depend on the individual circumstances of a case. Generally, however, Directions require a licensee or individual to undertake specific actions in order to address or mitigate certain perceived risks. They may also include restrictions on a licensee's activities until those risks have been addressed – for instance, a ban on the acceptance of new customers.

            Amended: October 2010
            Added: October 2007

          • EN-3.1.3

            The CBB is conscious of the powerful nature of a Direction and, in the case of a licensee, the fact that it subordinates the role of its Board and management on a specific issue. The CBB will carefully consider the need for a Direction, and whether alternative measures may not achieve the same end. Where feasible, the CBB will try to achieve the desired outcome through persuasion, rather than recourse to a Direction.

            Amended: October 2010
            Added: October 2007

          • EN-3.1.4

            In considering whether to issue a Direction, the criteria taken into consideration by the CBB include the following:

            (a) The seriousness of the actual or potential contravention, in relation to the requirement(s) concerned and the risks posed to the licensee's customers, 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 Direction as opposed to another type of regulatory action.
            Amended: October 2010
            Added: October 2007

        • EN-3.2 Procedure for Issuing Directions

          • EN-3.2.1

            Proposals to issue Directions are carefully considered against the criteria listed in Section EN-3.1. They require the approval of an Executive Director or more senior official of the CBB, and include the statement "This is a formal Direction as defined in Chapter EN-3 of the CBB Rulebook".

            Amended: October 2010
            Added: October 2007

          • EN-3.2.2

            The subject of the Direction will normally be given 30 days from the Direction's date of issuance in which to make objections to the CBB concerning the actions required. This must be done in writing, and addressed to the issuer of the original notification. Should an objection be made, the CBB will make a final determination, within 30 days of the date of the objection, as specified in Articles 125(c) and 126 of the CBB Law.

            Amended: October 2010
            Added: October 2007

          • EN-3.2.3

            [This Paragraph was moved under Section EN-1.1 in April 2019].

            Amended: April 2019
            Amended: October 2010
            Added: October 2007

      • EN-4 Formal Requests for Information

        • EN-4.1 Procedure for requests of information

          Amended: July 2018

          • EN-4.1.1

            As part of its on-going supervision, under Articles 111, 113, 114, and 123 of the CBB Law, the CBB the may specifically request information or temporary reporting from a licensee or individual. Recipients of such requests are bound to respond to such requests under the terms of their license.

            Amended: October 2010
            Added: October 2007

          • EN-4.1.2

            Henceforward, to clearly identify such requests, they will always be made in writing, under signature of a Director or more senior official of the CBB; will include the statement "This is a formal request for information as defined in Chapter EN 4 of the CBB Rulebook"; and will state the deadline by which the information is to be communicated to the CBB.

            Amended: October 2010
            Added: October 2007

          • EN-4.1.3

            Failure to respond to such formal requests within the deadline set will be viewed as a significant breach of regulatory requirements and will incur a formal warning or other enforcement measure, specified under Articles 163 and 170 of the CBB Law, as decided by the CBB depending on the circumstances of the case.

            Amended: October 2010
            Added: October 2007

          • EN-4.1.4

            The deadline set in the request will vary depending on individual circumstances, but will in all cases be reasonable. A recipient may submit a case for an extension to the deadline, providing the request is made before the original deadline has passed. The CBB will respond before the original deadline has passed; if it fails to do so, then the requested extension will apply. Whilst waiting for a reply, the recipient must assume that the original deadline will apply.

            Amended: October 2010
            Added: October 2007

          • EN-4.1.5

            The above procedures do not prevent individual CBB supervisors making oral requests for information as part of their day-to-day interaction with licensees. The CBB expects licensees to maintain their cooperative response to such requests; however, in the interests of clarity, the CBB will not view failures to respond to oral requests as a breach of regulatory requirements.

            Amended: October 2010
            Added: October 2007

      • EN-5 Adverse "Fit and Proper" Findings

        • EN-5.1 Requirements for Individuals

          • EN-5.1.1

            Article 65 of the CBB Law, allows the CBB to determine the level of qualifications, experience, and training of a bank's board members, officers or employees.

            Added: October 2007

          • EN-5.1.2

            In addition, Chapter LR-1A specifies that all persons wishing to hold or holding the position of Director, Chief Executive/General Manager or Manager in a licensee must be assessed by the CBB as "fit and proper" to hold such a position. The Chapter specifies various factors that the CBB takes into account when reaching such a decision.

            Amended: October 2010
            Added: October 2007

          • EN-5.1.3

            Any Director, manager or official responsible for the direction or management of a licensee, is to be considered removed from office should he be convicted by a court for a crime affecting his honesty; is declared bankrupt by a court; or if a court rules that his legal capacity is totally or partially impaired.

            Added: October 2007

          • EN-5.1.4

            In interpreting the term "manager", the CBB uses the definition given in Chapter LR-1A. The same definition applies when the term "manager" is used in other Modules, unless a different definition is explicitly provided for in the Module concerned.

            Amended: October 2010
            Added: October 2007

        • EN-5.2 CBB Policy

          • EN-5.2.1

            The CBB is conscious of the impact that assessing someone as not "fit and proper" may have on an individual. Such assessments are carefully reviewed in the light of all relevant facts. The criteria used in reaching a decision include the following:

            (a) The extent to which the factors set out in Chapter LR-1A have not been met;
            (b) The extent to which the person has deliberately or recklessly breached requirements of the CBB Law or Volume 1 (Conventional Banks);
            (c) The person's past compliance record and conduct following any such contravention;
            (d) The length of time since factors indicating a lack of fitness or propriety occurred; and
            (e) The risk the person poses to licensees and their customers.
            Amended: October 2010
            Added: October 2007

          • EN-5.2.2

            In assessing evidence, the CBB applies a lower threshold than is applied in a criminal court of law, reflecting generally, the administrative nature of the sanction. The CBB may also take into account the cumulative effect of factors which, when considered individually, may not in themselves be sufficient to justify an adverse "fit and proper" finding.

            Amended: July 2018
            Amended: October 2010
            Added: October 2007

          • EN-5.2.3

            The CBB may also take into account the particular function being undertaken in the licensee by the individual concerned, and the size and nature of the licensee itself, particularly when assessing the suitability of a person's experience or qualifications. Thus, the fact that a person was deemed "fit and proper" for a particular position in a particular firm does not necessarily mean he would be suitable in a different position or in a different firm.

            Amended: October 2010
            Added: October 2007

            EN-5.2.4">
          • EN-5.2.4

            The CBB may carry out re-assessment tests in case of individuals deemed to be responsible for serious or repeated violations. See Appendix A.

            Added: July 2018

        • EN-5.3 Procedure for Issuing an Adverse Finding

          • EN-5.3.1

            All proposals for issuing an adverse "fit and proper" finding are subject to a thorough review by the CBB of all relevant facts, assessed against the criteria outlined in Section EN-5.2. In some instances, it may be appropriate for the CBB to request the licensee or person concerned to provide further information, in order to help reach a decision.

            Amended: October 2010
            Added: October 2007

          • EN-5.3.2

            All adverse findings have to be approved by an Executive Director of the CBB. A notice of intent is issued to the person concerned, and copied to the Board/senior management of the licensee as appropriate, setting out the circumstances and the basis for the CBB's proposed adverse finding. The person has 30 calendar days from the date of the notice in which to make written representations, addressed to the Executive Director concerned, failing which a final notice is issued by the CBB.

            Amended: October 2010
            Added: October 2007

          • EN-5.3.3

            If representations are made, then the CBB has 30 calendar days from the date of the representation in which to consider any mitigating evidence submitted and make a final determination.

            Amended: October 2010
            Added: October 2007

      • EN-6 Financial Penalties

        • EN-6.1 CBB Policy

          • EN-6.1.1

            Under Chapter 2 "Procedures to be taken before penalties or administrative proceedings are applied" and Chapter 3 "Penalties and administrative proceedings" of Part 9 of the CBB Law, the CBB may impose financial penalties on licensees or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law and its amendments (in particular Article 129). The CBB shall use judgement and will take into account relevant facts in determining the need to impose financial penalties. Financial penalties are thus normally preceded by the issuance of a written formal notice and/or Direction.

            Amended: July 2018
            Amended: April 2016
            Amended: October 2010
            Added: October 2007

          • EN-6.1.2

            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 will apply the methodology set out in Appendix A to determine the size of the penalty. The CBB intends that the impact of a penalty should derive more from its signaling effect than from the actual amount of money involved.

            Amended: July 2018
            Amended: April 2016
            Amended: October 2010
            Added: October 2007

            EN-6.1.2A">
          • EN-6.1.2A

            In accordance with Article 129 of the amendment to the CBB Law, the maximum financial penalty levied for failing to comply with CBB Law, Regulations, Directives and other requirements is BD 100,000 per violation. The CBB may opt to limit the amount of the financial penalty and use other enforcement measures as outlined in this Module, such as imposing restrictions on a conventional bank licensee limiting the scope of operations.

            Added: July 2018

          • EN-6.1.3

            As indicated in Paragraph EN-1.3.3, the CBB requires disclosure by Bahraini conventional bank licensees in their annual report of any financial penalties served on them, together with a factual description of the reasons given by the CBB for applying the penalty. In addition, the CBB may publicise the issuance of a financial penalty notice, where there is a strong case that doing so would help achieve the CBB's supervisory objectives, as mentioned in Article 132 of the pre-mentioned Law.

            Amended: October 2019
            Amended: October 2010
            Added: October 2007

          • EN-6.1.3A

            As indicated in Paragraph EN-1.3.3, the CBB requires disclosure by branches of foreign bank licensees in their annual audited financial statements of any financial penalties served on them, together with a factual description of the reasons given by the Central Bank for applying the penalty. In addition, the CBB may publicise the issuance of a financial penalty notice, where there is a strong case that doing so would help achieve the CBB's supervisory objectives, as mentioned in Article 132 of the pre-mentioned Law.

            Added: October 2019

          • EN-6.1.4

            Examples of the types of compliance failings that may lead to the serving of a financial penalty notice are outlined in Part 11 of the CBB Law and may 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 the CBB's requirements, subjecting depositors and other customers to significant risk of financial loss.
            Amended: October 2010
            Added: October 2007

          • EN-6.1.5

            In assessing whether to serve a financial written 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; the extent to which the contravention was deliberate or reckless;
            (c) the licensee's past compliance record and conduct following the contravention; and
            (d) the scope of any other action taken by the CBB or other regulators against the licensee, in response to the compliance failures in question.
            Additional criteria are set out in Appendix A.
            Amended: July 2018
            Amended: October 2010
            Added: October 2007

          • EN-6.1.6

            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).

            Added: October 2007

          • EN-6.1.7

            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 with respect to CBB Law; or the prudential Rulebook; or 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 for challenging the intended penalty (which will not be less than 30 days).
            Amended: October 2010
            Added: October 2007

          • EN-6.1.8

            The licensee may either pay the penalty or object within the above period. The CBB will consider any objection and make a formal resolution within 30 days of receiving the objection. Thereafter, the formal resolution and any accompanying penalties are final and must be paid within 30 days.

            Amended: October 2010
            Added: October 2007

        • EN-6.2 Module FC (Financial Crime)

          • EN-6.2.1

            [This Paragraph was deleted in July 2018].

            Deleted: July 2018

          • EN-6.2.2

            [This Paragraph was deleted in July 2018].

            Deleted: July 2018

          • EN-6.2.3

            [This Paragraph was deleted in July 2018].

            Deleted: July 2018

          • EN-6.2.4

            Any financial penalties applied by the CBB as regards the implementation of its requirements set out under Module FC, 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 requirements in Module FC does not prevent the CBB from also using other enforcement measures to remedy the same violation (for instance, a Direction).

            Amended: October 2010
            Added: October 2007

        • EN-6.2A Financial Penalties for Date Sensitive Requirements

          • EN-6.2A.1

            Modules LR, FC, BR, HC and PD contain specific requirements where conventional bank licensees 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.

            Amended: July 2017
            Added: October 2010

          • EN-6.2A.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 a consultancy firm approved by the CBB required as per Paragraph FC-4.3.1B (d);
            (d) Annual licensing fees required as per Section LR-4.2, and
            (e) Conduct of Shareholders' Meetings requirements included in Section HC-7.2.
            Amended: July 2017
            Amended: October 2013
            Added: October 2010

          • EN-6.2A.3

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

            (a) Where the conventional bank licensee's total consolidated assets are less than or equal to BD 50 million, the financial penalty for late filing is BD 100 per day;
            (b) Where the conventional bank licensee's total consolidated assets are greater than BD 50 million but less than BD 250 million, the financial penalty for late filing is BD 200 per day;
            (c) Where the conventional bank licensee's total consolidated assets are greater than BD 250 million but less than or equal to BD 5 billion, the financial penalty is BD 400 per day;
            (d) Where the conventional bank licensee's total consolidated assets are greater than BD 5 billion, the financial penalty is BD 800 per day; and
            (e) For new licensees who have yet to provide audited financial statements, the financial penalty is BD 100 per day.
            Amended: April 2017
            Added: October 2010

          • EN-6.2A.4

            For overseas conventional bank licensees, only those assets reported as part of the filing for their Bahraini operations, shall be considered in determining the per diem financial penalty.

            Added: October 2010

          • EN-6.2A.5

            [This Paragraph was deleted in July 2018].

            Deleted: July 2018

          • EN-6.2A.6

            The various deadlines for submission of reports and annual fees referred to in Modules BR, FC, PD and LR 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.
            Amended: April 2011
            Added: October 2010

          • EN-6.2A.7

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

            (a) Where the due date falls on a weekend or a holiday as designated by the CBB, the first business day following the weekend or 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.
            Amended: July 2011
            Amended: April 2011
            Added: October 2010

          • EN-6.2A.8

            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 1.

            Amended: April 2011
            Added: October 2010

          • EN-6.2A.9

            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 1 (Conventional Banks) Rulebook.

            Amended: April 2011
            Added: October 2010

        • EN-6.3 Procedures for Financial Penalties

          • EN-6.3.1

            A written financial penalty notice will be addressed to the Chief Executive Officer or General Manager 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: October 2010
            Added: October 2007

          • EN-6.3.2

            The licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law has 30 days from the notification's date of issuance to submit any objections 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 objections, it has 30 calendar days from the notification's date of issuance in which to pay the penalty.

            Amended: April 2016
            Amended: October 2010
            Added: October 2007

          • EN-6.3.3

            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 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: October 2010
            Added: October 2007

          • EN-6.3.4

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

            Amended: July 2018
            Amended: October 2010
            Added: October 2007

          • EN-6.3.5

            In instances where a bank anticipates that it will be unable to meet any date sensitive requirements prescribed by the Rulebook, it must provide a written notification to the CBB at least one week prior to the prescribed due date outlining the date sensitive requirements which it will be unable to comply with, along with a well justified reason for the non-compliance.

            Added: April 2016

        • EN-6.4 Remedying a Compliance Failure

          • EN-6.4.1

            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: October 2010
            Added: October 2007

      • EN-7 Investigations

        • EN-7.1 Legal Source

          • EN-7.1.1

            Articles 121 to 123 of the CBB Law empower the CBB to order investigations of licensees, in order to help it assess a licensee's compliance with the provisions of the CBB Law. Such investigations may be carried out either by its own officials or by appointed experts. Articles 111 and 124 require licensees to make available to the CBB's inspectors and appointed experts their books and other records, and to provide all relevant information within the time limits deemed reasonable by the inspectors and/or appointed experts.

            Amended October 2011
            Amended October 2010
            Amended January 2009
            Added October 2007

          • EN-7.1.2

            Articles 163 and 170 of the CBB Law provide for criminal sanctions where false or misleading statements are made to the CBB, or an investigation by the CBB is otherwise obstructed (see Section EN-10.3).

            Amended: October 2010
            Added: October 2007

        • EN-7.2 CBB Policy

          • EN-7.2.1

            The CBB uses its own inspectors to undertake on-site examinations of licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission special investigations of licensees in order to help it assess their compliance with CBB requirements, as contained in Article 121 of the CBB Law. Such investigations may be carried out either by the CBB's own officials, by duly qualified experts appointed for the purpose by the CBB (appointed experts), or a combination of the two.

            Amended: October 2011
            Added: October 2007

          • EN-7.2.2

            Failure by licensees to cooperate fully with the CBB's inspectors or appointed experts, 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 this Module. This Rule is supported by Article 124(a) of the CBB Law.

            Amended October 2011
            Amended October 2010
            Amended January 2009
            Added October 2007

          • EN-7.2.3

            The CBB may appoint an individual or a firm as an appointed expert. Examples of appointed experts are lawyers, audit firms and expert witnesses. The appointment of appointed experts is not necessarily indicative of a contravention of CBB requirements or suspicion of such a contravention. For instance, an appointed expert may be commissioned to provide an expert opinion on a technical matter.

            Amended October 2011
            Amended January 2009
            Added October 2007

          • EN-7.2.4

            Appointed experts report in a form and within a scope defined by the CBB, and are solely responsible to the CBB for the work they undertake in relation to the investigation concerned. The report produced by the appointed experts is the property of the CBB (but is usually shared by the CBB with the firm concerned). The cost of the appointed experts' work must be borne by the licensee concerned.

            Amended: October 2011
            Added: October 2007

          • EN-7.2.5

            In selecting an appointed expert, the CBB will take into account the level of fees proposed and aim to limit these to the lowest level consistent with an adequate review of the matters at hand, given the qualifications, track record and independence of the persons concerned. Because the cost of such investigations are met by the licensee, the CBB makes only selective use of appointed experts when essential to supplement CBB's other supervisory tools and resources.

            Amended: October 2011
            Added: October 2007

          • EN-7.2.6

            The CBB may commission reports, which require appointed experts to review information from another company within the reporting bank's group even where that other company is not itself subject to any CBB requirements.

            Amended: October 2011
            Added: October 2007

          • EN-7.2.7

            [This paragraph was deleted in October 2011]

            Deleted: October 2011

          • EN-7.2.8

            Further details on the required report and other aspects related to the role of the appointed expert are contained in Section BR-6.5.

            Amended: October 2011
            Added: October 2007

          • EN-7.2.9

            [This paragraph was deleted in October 2011]

            Deleted: October 2011

          • EN-7.2.7

            Banks must provide all relevant information and assistance to appointed experts on demand. This rule is based on Article 123 of the CBB Law.

            Amended: October 2011
            Amended January 2009
            Added October 2007

          • EN-7.2.11

            [This Paragraph was moved to Section BR-6.5 in October 2011].

        • EN-7.3 The Required Report

          [The Rules and Guidance in this Section were moved to Section BR-6.5 in October 2011].

          • EN-7.3.1

            Effective from Oct 1 2010 - Oct 1 2011.

            The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned Investigators will normally be required to report on one or more of the following aspects of a bank's 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.
            Amended: October 2010
            Added: October 2007

          • EN-7.3.2

            Effective from Oct 1 2010 - Oct 1 2011.

            Investigators will be required to form an opinion on whether, during the period examined, the bank 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.

            Amended: October 2010
            Added: October 2007

          • EN-7.3.3

            Effective from Oct 1 2007 - Oct 1 2011.

            The Investigators report should follow the format set out in Appendix EN-1.

            Added: October 2007

          • EN-7.3.4

            Effective from Oct 1 2010 - Oct 1 2011.

            Unless otherwise directed by the CBB or unless the circumstances described in Section EN-7.3 apply, the report should be discussed with the Board of Directors and/or senior management in advance of it being sent to the CBB.

            Amended: October 2010
            Added: October 2007

          • EN-7.3.5

            Effective from Oct 1 2007 - Oct 1 2011.

            Where the report is qualified by exception, the report must clearly set out the risks which the bank runs by not correcting the weakness, with an indication of the severity of the weakness should it not be corrected. Investigators 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.

            Added: October 2007

          • EN-7.3.6

            Effective from Oct 1 2010 - Oct 1 2011.

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

            Amended: October 2010
            Added: October 2007

          • EN-7.3.7

            Effective from Oct 1 2010 - Oct 1 2011.

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

            Amended: October 2010
            Added: October 2007

        • EN-7.4 Other Notifications to the CBB

          [The Rules and Guidance in this Section were moved to Section BR-6.5 in October 2011].

          • EN-7.4.1

            Effective from Oct 1 2010 - Oct 1 2011.

            Investigators 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 bank (see Module LR), 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 bank, 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 bank. Notwithstanding the above, it is primarily the bank's responsibility to report such matters to the CBB.

            Amended: October 2010
            Added: October 2007

          • EN-7.4.2

            Effective from Oct 1 2010 - Oct 1 2011.

            The CBB recognises that Investigators 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 Investigators, in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

            Amended: October 2010
            Added: October 2007

          • EN-7.4.3

            Effective from Oct 1 2010 - Oct 1 2011.

            If Investigators decide to communicate directly with the CBB in the circumstances set out in Paragraph EN-7.4.1 above, they may wish to consider whether the matter should be reported at an appropriate senior level in the bank at the same time and whether an appropriate senior representative of the bank should be invited to attend the meeting with the CBB.

            Amended: October 2010
            Added: October 2007

      • EN-8 [This Chapter was deleted in April 2019].

        • EN-8.1 [This Section was deleted in April 2019].

          • EN-8.1.1

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

          • EN-8.1.2

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

          • EN-8.1.3

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Added: October 2007

        • EN-8.2 [This Section was deleted in April 2019].

          • EN-8.2.1

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

          • EN-8.2.2

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

          • EN-8.2.3

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

        • EN-8.3 [This Section was deleted in April 2019].

          • EN-8.3.1

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

          • EN-8.3.2

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Added: October 2007

          • EN-8.3.3

            [This Paragraph was deleted in April 2019].

            Deleted: April 2019
            Amended: October 2010
            Added: October 2007

      • EN-9 Cancellation or Amendment of License

        • EN-9.1 Legal Source

          • EN-9.1.1

            Article 48 of the CBB Law empowers the CBB to cancel or amend a license under certain circumstances. These include cases where a licensee has:

            (a) Failed to satisfy its license conditions;
            (b) Violated the terms of the CBB Law, or CBB Regulations or Volume 1 (Conventional Banks) Rulebook; or
            (c) Failed to start business witin six months from the date of the license;
            (d) Ceased to carry out the licensed activities permitted; or
            (e) Not acted in the legitimate interest of its customers or creditors.
            Amended: October 2010
            Added: October 2007

          • EN-9.1.2

            Article 48(d) of the CBB Law also requires the CBB to give the licensee concerned reasonable time to object to any proposed cancellation or amendment of its license.

            Amended: October 2010
            Added: October 2007

        • EN-9.2 CBB Policy

          • EN-9.2.1

            The CBB generally views canceling a license as appropriate only in extreme circumstances, when faced with the gravest of contraventions or when left with no other reasonable means of successfully addressing the regulatory failings in question. Cancellation or amendment of a license, however, may also be required in circumstances outside of an enforcement context, for instance because of a change in the business profile of a licensee.

            Amended: October 2010
            Added: October 2007

          • EN-9.2.2

            The criteria used by the CBB in assessing whether to seek cancellation or amendment of a license include:

            (a) the extent to which the interests of the market, its users and those who have a claim on the licensee would be best served by the cancellation or amendment of the license;
            (b) the extent to which other regulatory penalties could reasonably be expected to achieve the CBB's desired supervisory objectives;
            (c) the extent to which the licensee has contravened the conditions of its license and/or the CBB Law, including the seriousness, duration and/or frequency of the contravention(s) concerned, and the extent to which the contraventions reflect more widespread or systemic weaknesses in controls and/or management;
            (d) the extent to which the licensee has been involved in financial crime or other criminal conduct; and
            (e) the licensee's past compliance record and conduct following the contravention(s).
            Amended: October 2010
            Added: October 2007

          • EN-9.2.3

            When the CBB issues a notice of cancellation or amendment as an enforcement tool, it will only implement the actual change once it is satisfied that there are no longer any regulated activities for which it is necessary to keep the current authorisation in force. Until such time as these activities have been run off or moved to another licensee, the CBB will control these activities through other means (such as taking the licensee into administration or through issuing Directions).

            Added: October 2007

        • EN-9.3 Procedure for Cancellation or Amendment of License

          • EN-9.3.1

            All proposals for canceling or amending a license are subject to a thorough review by the CBB of all relevant facts, assessed against cases and the criteria outlined in Sections EN-9.1 and EN-9.2. After being assessed at the Executive Director level, proposals are submitted to H.E. The Governor for approval.

            Amended: October 2010
            Added: October 2007

          • EN-9.3.2

            Once approved within the CBB, a formal notice of cancellation or amendment is issued to the licensee concerned. The notice of cancellation or amendment will describe the factual circumstances of the contraventions concerned, and the CBB's rationale for the proposed cancellation or amendment, as measured against the criteria outlined in Sections EN-9.1 and EN-9.2.

            Amended: October 2010
            Added: October 2007

          • EN-9.3.3

            The licensee has 30 calendar days from the date of the notice in which to lodge an appeal. The appeal should be addressed to the Board of the CBB, and copied to H.E. the Governor of the CBB.

            Added: October 2007

          • EN-9.3.4

            If an appeal is lodged, the Board of the CBB will make a final ruling within 60 calendar days of its date of issuance.

            Added: October 2007

          • EN-9.3.5

            A licensee may appeal to a competent court within 60 calendar days of the above final ruling for a decision. The court's decision will then be final.

            Amended: October 2010
            Added: October 2007

      • EN-10 Criminal Sanctions

        • EN-10.1 Overview

          • EN-10.1.1

            The CBB Law provides for a number of criminal sanctions in cases where certain of its provisions are contravened. This Section provides a summary of those sanctions most relevant to licensees, their Directors and employees. What follows is not a complete list of all sanctions provided for in the CBB Law, nor is it a substitute for reading the Law and being fully aware of its provisions.

            Amended: October 2010
            Added: October 2007

          • EN-10.1.2

            Licensees, their Directors and employees should also be aware of the criminal sanctions provided for under other relevant Bahraini laws, such as the Decree – Law No. 4 of 2001, with respect to the prevention and prohibition of the laundering of money.

            Added: October 2007

          • EN-10.1.3

            In all cases to do with criminal sanctions, the CBB can only refer the matter to the Office of Public Prosecutor. The CBB has no authority to apply such sanctions directly without recourse to the courts.

            Amended: October 2010
            Added: October 2007

        • EN-10.2 CBB Policy

          • EN-10.2.1

            Because of their criminal status, and their provision for custodial sentences, the sanctions provided for under the CBB Law are viewed by the CBB as very powerful measures, to be pursued sparingly. In most situations, the CBB will seek to address regulatory failures through administrative sanctions, as outlined in preceding Chapters, rather than by pursuing the criminal sanctions outlined here.

            Amended: October 2010
            Added: October 2007

          • EN-10.2.2

            Where, however, the nature of the offence is such that there is strong evidence of a reckless or intentional breach of the CBB Law relevant to the following Articles, then the CBB will usually refer the matter to the Office of Public Prosecutor.

            Amended: October 2010
            Added: October 2007

        • EN-10.3 Articles of CBB Law

          • Article 161

            • EN-10.3.1A

              Article 161 of the CBB Law provides for a penalty of up to BD 1 million, without prejudice to any other penalty prescribed in any other law, in case of any person who breaches the provisions of Resolution No.(16) for the year 2012 issued pursuant to Article 42 of the CBB Law. The Court may also confiscate the proceeds resulting from breaching the Resolution.

              Added: January 2013

          • Article 163

            • EN-10.3.1

              Article 163 of the CBB Law provides for a term of imprisonment and/or a fine of up to BD 20,000, without prejudice to any other penalty prescribed in any other law, in case of conviction of a Director, manager, official, agent or representative of any licensee who:

              (a) Conceals any records, information or documents requested by the CBB (or any person appointed by the CBB to conduct an investigation or inspection);
              (b) Provides statements or information in bad faith which do not reflect the actual financial position of the licensee;
              (c) Conceals from an external auditor any records, information or documents necessary for auditing the accounts of the licensee ; and
              (d) Provides in bad faith any misleading or inaccurate statements to an external auditor which do not reflect the actual financial position of the licensee.
              Amended: October 2010
              Added: October 2007

          • Article 169

            • EN-10.3.2

              Article 169 provides for a term of imprisonment, and/or a fine of up to BD 20,000 for any Director, manager, official or employee, who acts or permits an act in violation of Article 134 of the CBB Law where he knows (or should have known) that the licensee is insolvent.

              Amended: October 2010
              Added: October 2007

          • Article 170

            • EN-10.3.3

              Part 2 of Article 170 of the CBB Law provides for term of imprisonment and/or a fine not exceeding BD3,000 if any Director, manger, official or employee intentionally obstructs an investigation by the CBB or an investigator appointed by the CBB.

              Added: October 2007

          • Article 171

            • EN-10.3.4

              Article 171 of the CBB Law provides for a term of imprisonment and/or a fine not exceeding BD10,000, if any Director, manager, official or employee discloses in bad faith any confidential information relating to a customer of the concerned bank.

              Amended: October 2010
              Added: October 2007

      • Appendix

        • Appendix A">
        • Appendix A Methodology for calculating financial penalties

          I. Introduction

          This appendix sets out the Central Bank of Bahrain's ("CBB") approach on assessing and calculating/determining financial penalties.

          The purpose of the financial penalties is to encourage a high standard of conduct and compliance by CBB licensees, thereby reducing risk to their customers and the rest of the financial sector.

          The imposition of a financial penalty does not preclude the CBB from also using other enforcement measures to remedy the same violation.

          II. The Scope of application

          In assessing whether to serve a financial penalty upon a licensee the CBB shall consider the following additional criteria:

          (a) The assessment of gain/benefit made or cost avoided and/or the level of risks posed to customers, financial position of the licensee, shareholders, stability of the financial sector and/or the reputation of the Kingdom.
          (b) If the licensee made any gain/benefit or avoided any costs by violating the CBB rules then the gain/benefit and/or the cost avoided will be used as a benchmark for calculating the fine amount subject to BD 100,000 cap for each violation. In addition, the customers impacted must be compensated in full. The scope of this section does not cover penalties for non-compliance with date sensitive requirements of Section EN-6.2A.
          (c) Fit and proper reassessment tests would take place for the approved persons deemed to be responsible for serious or repeated violations at the discretion and judgment of the CBB. The relevant approved person/(s) will be identified based on a review of relevant information including but not limited to the bank's records before the final decision is made.
          (d) Each incident of breaching a rule (CBB Law, regulations, resolutions, and Rulebook directives) will be considered a stand-alone violation. For e.g. if a large exposure limit of 15% is breached by a licensee multiple times for a single customer each of these breaches will be considered a separate violation.
          (e) If the CBB discovers that one or more breaches had been committed by the licensee in the past and had gone un-detected, then the CBB has the right, at the point of detection, to impose penalties for each of these past breaches.
          (f) If the gain/benefit made and/or cost avoided cannot be quantified then the table below will be used to determine the penalty amount based on the seriousness of violations as determined by the CBB.
          (g) The factors used to determine the seriousness of the violation include, but are not limited to, the level of risks posed to the licensee's customers, financial position of the licensee, shareholders, stability of the financial sector and/or the reputation of the Kingdom. The CBB may consider other factors or circumstances as well.

          Table 1: Risk Rating of Violation and Related Penalty

          Risk Rating Fine Amount (BD)
          1 Low 1,000 to 10,000
          2 Moderate 10,001 to 50,000
          3 Serious 50,001 to 100,000

          III. Internal Assessment by the CBB

          In deciding which level of risk is most appropriate (which will then determine the size of the penalty amount in relation to the violation), various factors will undergo comprehensive assessment including but not limited to the following:

          1) Impact of the violation;
          2) Nature of the violation;
          3) Factors showing whether the violation was deliberate; and
          4) Mitigating and aggravating factors.

          1) Impact of the violation

          Factors relating to assessment of the impact of a violation licensee include:

          (a) The level of benefit gained or loss avoided, or intended to be gained or avoided, by the licensee as a result of the violation, either directly or indirectly;
          (b) The loss or risk of loss, as a whole, caused to customers, investors or other market users in general;
          (c) The loss or risk of loss caused to individual customers, investors or other market users;
          (d) Whether the violation had an effect on particularly vulnerable people, whether intentionally or otherwise;
          (e) The inconvenience or distress caused to customers; and
          (f) Whether the violation had an adverse effect on the financial sector and, if so, how serious that effect was. This may include its impact on the confidence in or damage caused to the financial sector. A violation is generally more serious when it causes or may cause extensive financial damage, or when it is likely to be particularly detrimental to investor or customer confidence.

          2) Nature of the violation

          Factors relating to assessment of the nature of the violation include:

          (a) Whether the violation revealed serious or systemic weaknesses in the licensee's procedures or in the management systems or internal controls relating to all or part of the licensee's business;
          (b) Whether the licensee's senior management was aware of the violation;
          (c) The nature and extent of any financial crime facilitated, occasioned or otherwise attributable to the violation;
          (d) The scope for any potential financial crime to be facilitated, occasioned or otherwise occurred as a result of the violation;
          (e) Whether the licensee failed to conduct its business with integrity; and
          (f) Whether the licensee, in committing the violation, took any steps to comply with CBB Law, regulations, resolutions, Rulebook directives, and the adequacy of such steps.

          3) Factors showing whether the violation was deliberate

          Factors relating to assessment of whether the violation was deliberate include:

          (a) The violation was intentional, in that the licensee's approved person(s), intended or foresaw that the likely or actual consequences of their actions or inaction would result in a violation and they failed to adequately mitigate that risk;
          (b) The licensee's approved person(s) knew that their actions were not in accordance with the licensee's internal policies and procedures;
          (c) The licensee's approved person(s) sought to conceal their misconduct;
          (d) The licensee's approved person(s) committed the violation in such a way as to avoid or reduce the risk that the violation would be discovered;
          (e) The licensee's approved person(s) were influenced to commit the violation by the belief that it would be difficult to detect;
          (f) The violation was repeated; and
          (g) In the context of a contravention of any rule or requirement imposed by or under CBB law, regulations, resolutions, Rulebook directives, the licensee obtained reasonable professional advice before the contravention occurred and failed to follow that advice. Obtaining professional advice does not remove a person's responsibility for compliance with applicable rules and requirements.

          4) Mitigating and aggravating factors

          Mitigation and aggravating factors include:

          (a) the conduct of the licensee in bringing (or failing to bring) quickly, effectively and completely the violation to the CBB's attention;
          (b) the degree of cooperation the licensee showed during the investigation of the violation. Correspondingly, if the licensee takes a passive stance towards the matter or avoids investigating the matter properly with the CBB, it is likely to increase the penalty payment and/or imposing other enforcement measures.
          (c) where the licensee's approved person(s) were aware of the violation or of the potential for a violation, whether they took any steps to stop the violation, and when these steps were taken;
          (d) any remedial steps taken by the licensee prior to the discovering of such violation by the CBB; for example, identifying whether customers or investors or other market users suffered loss and compensating them where they have; correcting any misleading statement or impression; taking disciplinary action against staff involved (if appropriate); and taking steps to ensure that similar problems do not arise in the future;
          (e) whether the licensee had previously been told about the CBB's concerns in relation to the issue, either by means of a written formal warning/notice and/or Direction;
          (f) whether the licensee had previously undertaken not to perform a particular act or engage in a particular behavior;
          (g) the previous disciplinary record and general compliance history of the licensee;
          (h) action taken against the licensee by other domestic or international regulatory authorities that is relevant to the violation in question.
          Added: July 2018

Back to top