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  • FC-4 Money Laundering Reporting Officer (MLRO)

    • FC-4.1 Appointment of MLRO

      • FC-4.1.1

        Conventional bank licensees must appoint a Money Laundering Reporting Officer ('MLRO') who is an approved person. The MLRO must be approved by CBB prior to his appointment. The licensee must submit to the CBB a completed Form 3, in accordance with Chapter LR-1A.

        Amended: July 2016
        October 07

      • FC-4.1.2

        The position of MLRO must not be combined with functions that create potential conflicts of interest, such as an internal auditor or business line head. The position of MLRO may not be outsourced.

        October 07

      • FC-4.1.3

        Subject to Paragraph FC-4.1.2, however, the position of MLRO may otherwise be combined with other functions in the conventional bank licensee, such as that of Compliance Officer, in cases where the volume and geographical spread of the business is limited and, therefore, the demands of the function are not likely to require a full time resource. Paragraph FC-4.1.6 requires that the MLRO is a Director or employee of the licensee, so the function may not be outsourced to a third party employee.

        October 07

      • FC-4.1.3A

        For the purpose of Paragraphs FC-4.1.2 and FC-4.1.3 above, conventional bank licensees must clearly state in the Application for Approved Person Status — Form 3 — when combining the MLRO or DMLRO position with any other position within the conventional bank licensee.

        Added: October 2017

      • FC-4.1.4

        Conventional bank licensees must appoint at least one deputy MLRO (or more depending on the scale and complexity of the licensee's operations) to act for the MLRO in his absence. The position of Deputy MLRO is a controlled function and the DMLRO is an approved person. The DMLRO must be approved by CBB prior to his appointment. The DMLRO must satisfy the conditions outlined in Subparagraphs FC-4.1.6 (d) to (g).

        Amended: July 2016
        Amended: October 2009
        October 2007

      • FC-4.1.5

        Conventional bank licensees should note that although the MLRO may delegate some of his functions, either within the licensee or even possibly (in the case of larger groups) to individuals performing similar functions for other group entities, that the responsibility for compliance with the requirements of this Module remains with the licensee and the designated MLRO.

        October 07

      • FC-4.1.6

        So that he can carry out his functions effectively, conventional bank licensees must ensure that their MLRO:

        (a) Is a member of senior management of the licensee;
        (b) Has a sufficient level of seniority within the conventional bank licensee, has the authority to act without interference from business line management and has direct access to the Board and senior management (where necessary);
        (c) Has sufficient resources, including sufficient time and (if necessary) support staff, and has designated a replacement to carry out the function should the MLRO be unable to perform his duties;
        (d) Has unrestricted access to all transactional information relating to any financial services provided by the conventional bank licensee to a customer, or any transactions conducted by the conventional bank licensee on behalf of that customer;
        (e) Is provided with timely information needed to identify, analyse and effectively monitor customer accounts;
        (f) Has access to all customer due diligence information obtained by the conventional bank licensee; and
        (g) Is resident in Bahrain.
        Amended: October 2011
        October 2007

      • FC-4.1.7

        [This Paragraph is left blank].

        Added: July 2012

      • FC-4.1.8

        In addition, conventional bank licensees must ensure that their MLRO is able to:

        (a) Monitor the day-to-day operation of its policies and procedures relevant to this Module; and
        (b) Respond promptly to any reasonable request for information made by the Anti-Money Laundering Unit or the CBB.
        October 07

      • FC-4.1.9

        If the position of MLRO falls vacant, the conventional bank licensee must appoint a permanent replacement (after obtaining CBB approval), within 120 calendar days of the vacancy occurring. Pending the appointment of a permanent replacement, the licensee must make immediate interim arrangements (including the appointment of an acting MLRO) to ensure continuity in the MLRO function's performance. These interim arrangements must be approved by the CBB.

        October 07

    • FC-4.2 Responsibilities of the MLRO

      • FC-4.2.1

        The MLRO is responsible for:

        (a) Establishing and maintaining the conventional bank licensee's AML/CFT policies and procedures;
        (b) Ensuring that the licensee complies with the AML Law and any other applicable AML/CFT legislation and regulations;
        (c) Ensuring day-to-day compliance with the licensee's own internal AML/CFT policies and procedures;
        (d) Acting as the conventional bank licensee's main point of contact in respect of handling internal suspicious transaction reports from the licensee's staff (refer to Section FC-5.1) and as the main contact for the Financial Intelligence Directorate, the CBB and other concerned bodies regarding AML/CFT;
        (e) Making external suspicious transactions reports to the Financial Intelligence Directorate and the Compliance Directorate (refer to Section FC-5.2);
        (f) Taking reasonable steps to establish and maintain adequate arrangements for staff awareness and training on AML/CFT matters (whether internal or external), as per Chapter FC-5;
        (g) Producing annual reports on the effectiveness of the licensee's AML / CFT controls, for consideration by senior management, as per Paragraph FC-4.3.3;
        (h) On-going monitoring of what may, in his opinion, constitute high-risk customer accounts; and
        (i) Ensuring that the conventional bank licensee maintains all necessary CDD, transactions, STR and staff training records for the required periods (refer to Section FC-7.1).
        Amended: October 2019
        Amended: October 2014
        Amended: January 2011
        October 07

    • FC-4.3 Compliance Monitoring

      • Annual Compliance Review

        • FC-4.3.1

          Conventional bank licensees must take appropriate steps to identify and assess their money laundering and terrorist financing risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels). They must document those assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to the CBB. The nature and extent of any assessment of money laundering and terrorist financing risks must be appropriate to the nature and size of the business.

          Added: October 2014

        • FC-4.3.1A

          Conventional bank licensees should always understand their money laundering and terrorist financing risks, but the CBB may determine that individual documented risk assessments are not required, if the specific risks inherent to the sector are clearly identified and understood.

          Added: October 2014

        • FC-4.3.1B

          A conventional bank licensee must review the effectiveness of its AML/CFT procedures, systems and controls at least once each calendar year. The review must cover the conventional bank licensee and its branches and subsidiaries both inside and outside the Kingdom of Bahrain. The scope of the review must include:

          (a) A report, containing the number of internal reports made in accordance with Section FC-5.1, a breakdown of all the results of those internal reports and their outcomes for each segment of the licensee's business, and an analysis of whether controls or training need to be enhanced;
          (b) A report, indicating the number of external reports made in accordance with Section FC-5.2 and, where a conventional bank licensee has made an internal report but not made an external report, noting why no external report was made;
          (c) A sample test of compliance with this Module's customer due diligence requirements; and
          (d) A report as to the quality of the conventional bank licensee's anti-money laundering procedures, systems and controls, and compliance with the AML Law and this Module.
          Amended: October 2014
          October 07

        • FC-4.3.2

          The reports listed under Paragraph FC-4.3.1B (a) and (b) must be made by the MLRO. The sample testing required under Paragraph FC-4.3.1B (c) must be undertaken either by the licensee's internal auditor, its external auditor or a consultancy firm approved by the CBB. The report required under Paragraph FC-4.3.1B (d) must be made by the licensee's external auditor or a consultancy firm approved by the CBB.

          Amended: January 2019
          Amended: October 2011
          October 2007

        • FC-4.3.2A

          In order for a consultancy firm to be approved by the CBB for the purposes of Paragraph FC-4.3.2, such firm should provide the CBB's Compliance Directorate with:

          (a) A sample AML/CFT report prepared for a financial institution;
          (b) A list of other AML/CFT related work undertaken by the firm;
          (c) A list of other audit/review assignments undertaken, specifying the nature of the work done, date and name of the licensee; and
          (d) An outline of any assignment conducted for or in cooperation with an international audit firm.
          Added: October 2011

        • FC-4.3.2B

          The firm should indicate which personnel (by name) will work on the report (including, where appropriate, which individual will be the team leader) and demonstrate that all such persons have appropriate qualifications in one of the following areas:

          (a) Audit;
          (b) Accounting;
          (c) Law; or
          (d) Banking/Finance.
          Added: October 2011

        • FC-4.3.2C

          Conventional bank licensees must ensure that the personnel conducting the review are qualified, skilled and have adequate experience to conduct such a review. At least two persons working on the report (one of whom should be the team leader) must have:

          (a) A minimum of 5 years professional experience dealing with AML/CFT issues; and
          (b) Formal AML/CFT training.
          Amended: October 2018
          Added: October 2011

        • FC-4.3.2D

          Submission of a curriculum vitae for all personnel to be engaged on the report is encouraged for the purposes of evidencing the above requirements.

          Added: October 2011

        • FC-4.3.2E

          Upon receipt of the above required information, the CBB Compliance Directorate will assess the firm and communicate to it whether it meets the criteria required to be approved by the CBB for this purpose. The CBB may also request any other information it considers necessary in order to conduct the assessment.

          Added: October 2011

        • FC-4.3.3

          The reports listed under Paragraph FC-4.3.1B must be submitted to the licensee's Board, for it to review and commission any required remedial measures, and copied to the licensee's senior management.

          Amended: January 2019
          Amended: October 2014
          October 07

        • FC-4.3.4

          The purpose of the annual compliance review is to assist a licensee's Board and senior management to assess, amongst other things, whether internal and external reports are being made (as required under Chapter FC-5), and whether the overall number of such reports (which may otherwise appear satisfactory) does not conceal inadequate reporting in a particular segment of the licensee's business (or, where relevant, in particular branches or subsidiaries). Conventional bank licensees should use their judgement as to how the reports listed under Paragraph FC-4.3.1B (a) and (b) should be broken down in order to achieve this aim (e.g. by branches, departments, product lines, etc).

          Amended: January 2019
          October 07

        • FC-4.3.5

          Conventional bank licensees must instruct their appointed firm to produce the report referred to in Paragraph FC-4.3.1B (d). The report must be submitted to the Compliance Directorate at the CBB by the 30th of April of the following year. The findings of this review must be received and acted upon by the licensee.

          Amended: January 2019
          Amended: January 2012
          Amended: January 2011
          Amended: April 2008
          October 07

        • FC-4.3.6

          The appointed firm may rely upon work performed by the licensee's internal audit function, as part of their procedures for producing the statement referred to in Paragraph FC-4.3.5.

          Amended: January 2012
          Amended: January 2011
          October 07

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