• GR GR General Requirements

    • GR-A GR-A Introduction

      • GR-A.1 GR-A.1 Purpose

        • GR-A.1.1

          The General Requirements Module presents a variety of different requirements that are not extensive enough to warrant their own stand-alone Module, but for the most part are generally applicable. These include general requirements on books and records; on the use of corporate and trade names; and on controllers. Each set of requirements is contained in its own Chapter: a table listing these and their application to licensees is given in Chapter GR-B.

      • GR-A.2 GR-A.2 Module History

        • Evolution of Module

          • GR-A.2.1

            This Module was first issued in July 2006, with immediate effect, as a new Module aimed at aligning the structure and contents of Volume 1 with other Volumes of the BMA Rulebook. It is dated July 2006. All subsequent changes to this Module are annotated with the end-calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

          • GR-A.2.2

            The July 2006 version of Module GR does not introduce new requirements. Rather, it incorporates the record keeping requirements previously contained in Chapter LR-6 of the Licensing and Authorisation Requirement Module (reissued, in July 2006, as the Licensing Module). It also incorporates the requirements relating to controllers, previously contained in Chapter HC-2 of the High-Level Controls Module. Finally, Module GR expands on certain requirements that were previously contained only in the BMA Law 1973, such as the requirement to seek BMA approval for use of a corporate or trading name.

          • GR-A.2.3

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

            Module Ref. Change Date Description of Changes
                 
                 
                 
                 

        • Superseded Requirements

          • GR-A.2.4

            This Module supersedes:

            Circular / other reference Provision Subject
            Module LR (April 2006 version) LR-6: Record Keeping Record keeping requirements were moved to GR-1, and edited down to simplify and avoid duplication of record keeping requirements contained in Module FC.
            Module HC (April 2006 version) HC-2: 'Fit and Proper Requirement' Requirements relating to controllers were moved to GR-5. Remaining 'fit and proper' elements regarding Directors and key employees of licensees were retained in HC-2, in a re-drafted form.
                 

    • GR-B GR-B Scope of Application

      • GR-B.1 GR-B.1 Conventional Bank Licensees

        • License categories

          • GR-B.1.1

            The requirements in Module GR (General Requirements) apply to both retail and wholesale conventional bank licensees.

        • Bahraini and overseas conventional bank licensees

          • GR-B.1.2

            The scope of application of Module GR (General Requirements) is as follows:

            Chapter Bahraini bank licensees Overseas bank licensees
            GR-1 GR-1.1 and GR-1.3 apply to the whole bank; GR-1.2 applies to business booked in Bahrain only. Applies to the Bahrain branch only.
            GR-2 Applies to the whole bank. Applies to the Bahrain branch only.
            GR-3 Applies to the whole bank. Doesn't apply.
            GR-4 Applies to the whole bank. Applies to the Bahrain branch only.
            GR-5 Applies to the whole bank. Applies to the whole bank.
            GR-6 [This chapter has been left blank.] [This chapter has been left blank.]
            GR-7 Applies to the whole bank. Applies to the Bahrain branch only.

          • GR-B.1.3

            In the case of Bahraini bank licensees, certain requirements apply to the whole bank, irrespective of the location of its business; other requirements apply only in respect to business booked in Bahrain. In the case of overseas conventional bank licensees, the requirements of Module GR mostly only apply to business booked in the Bahrain branch.

    • GR-1 GR-1 Books and Records

      • GR-1.1 GR-1.1 General Requirements

        • GR-1.1.1

          The requirements in Section GR-1.1 apply to Bahraini conventional bank licensees, with respect to the business activities of the whole bank (whether booked in Bahrain or in a foreign branch). The requirements in Section GR-1.1 also apply to overseas conventional bank licensees, but only with respect to the business booked in their branch in Bahrain.

        • GR-1.1.2

          All conventional bank licensees must maintain books and records (whether in electronic or hard copy form) sufficient to produce financial statements and show a complete record of the business undertaken by a licensee. These records must be retained for at least the minimum period specified under Bahrain law.

        • GR-1.1.3

          GR-1.1.2 includes accounts, books, files and other records (e.g. trial balance, general ledger, nostro/vostro statements, reconciliations and list of counterparties). It also includes records that substantiate the value of the assets, liabilities and off-balance sheet activities of the licensee (e.g. client activity files and valuation documentation). Finally, it includes email records, including email correspondence with customers and other third parties.

        • GR-1.1.4

          Bahrain law currently requires corporate records to be retained for at least 5 years (see Ministerial Order No. 23 of 2002, made pursuant to the Amiri Decree Law No. 4 of 2001).

        • GR-1.1.5

          Unless otherwise agreed with the BMA in writing, records must be kept in either English or Arabic; or else accompanied by a certified English or Arabic translation. Records must be kept current. The records must be sufficient to allow an audit of the licensee's business or an on-site examination of the licensee by the BMA.

        • GR-1.1.6

          If a licensee wishes to retain certain records in a language other than English or Arabic without translation, the licensee should write to the BMA, explaining which types of records it wishes to keep in a foreign language, and why systematically translating these may be unreasonable. Generally, only loan contracts or similar original transaction documents may be kept without translation. Where exemptions are granted by the BMA, the licensee is nonetheless asked to confirm that it will make available certified translations of such documents, if requested by the BMA for an inspection or other supervisory purpose.

        • GR-1.1.7

          Translations produced in compliance with Rule GR-1.1.5 may be undertaken in-house, by an employee or contractor of the licensee, providing they are certified by an appropriate officer of the licensee.

        • GR-1.1.8

          Records must be accessible at any time from within the Kingdom of Bahrain, or as otherwise agreed with the BMA in writing.

        • GR-1.1.9

          Where older records have been archived, or in the case of records relating to overseas branches of Bahraini conventional bank licensees, the BMA may accept that records be accessible within a reasonably short time frame (e.g. within 5 business days), instead of immediately. The BMA may also agree similar arrangements for overseas conventional bank licensees, as well as Bahraini conventional bank licensees, where elements of record retention and management have been centralised in another group company, whether inside or outside of Bahrain.

        • GR-1.1.10

          All original account opening documentation, due diligence and transaction documentation should normally be kept in Bahrain, if the business is booked in Bahrain. However, where a licensee books a transaction in Bahrain, but the transaction documentation is handled entirely by another (overseas) branch or affiliate of the licensee, the relevant transaction documentation may be held in the foreign office, provided electronic or hard copies are retained in Bahrain; the foreign office is located in a FATF member state; and the foreign office undertakes to provide the original documents should they be required.

        • GR-1.1.11

          Licensees should also note that to perform effective consolidated supervision of a group (or sub-group), the BMA needs to have access to financial information from foreign operations of a licensee, in order to gain a full picture of the financial condition of the group: see Module BR (BMA Reporting), regarding the submission of consolidated financial data. If a licensee is not able to provide to the BMA full financial information on the activities of its branches and subsidiaries, it should notify the BMA of the fact, to agree alternative arrangements: these may include requiring the group to restructure or limit its operations in the jurisdiction concerned.

        • GR-1.1.12

          In the case of Bahraini conventional bank licensees with branch operations overseas, where local record keeping requirements are different, the higher of the local requirements or those contained in this Chapter must be followed.

      • GR-1.2 GR-1.2 Transaction Records

        • GR-1.2.1

          Conventional bank licensees must keep completed transaction records for as long as they are relevant for the purposes for which they were made (with a minimum period in all cases of five years from the date when the transaction was completed). Records of completed transactions must be kept in their original form (whether in hard copy and / or electronic format), for at least five years from the date of the transaction.

        • GR-1.2.2

          For example, if the original documents are paper, they must be kept in their original form. Electronic payments and receipts may be kept electronically without the need for hard copies. The record format selected must be capable of producing complete and accurate financial, management and regulatory reports, and allow monitoring and review of all transactions.

        • GR-1.2.3

          Rule GR-1.2.1 applies to all transactions entered into by a Bahraini conventional bank licensee, whether booked in Bahrain or in an overseas branch. With respect to overseas conventional bank licensees, it applies only to transactions booked in the Bahrain branch.

        • GR-1.2.4

          In the case of overseas conventional bank licensees, Rule GR-1.2.1 therefore only applies to business booked in the Bahrain branch, not in the rest of the company.

      • GR-1.3 GR-1.3 Other Records

        • Corporate Records

          • GR-1.3.1

            Conventional bank licensees must maintain the following records in original form or in hard copy at their premises in Bahrain:

            (a) internal policies, procedures and operating manuals;
            (b) corporate records, including minutes of shareholders', Directors' and management meetings;
            (c) correspondence with the BMA and records relevant to monitoring compliance with BMA requirements;
            (d) reports prepared by the conventional bank licensee's internal and external auditors; and
            (e) employee training manuals and records.

          • GR-1.3.2

            In the case of Bahraini conventional bank licensees, these requirements apply to the licensee as a whole, including any overseas branches. In the case of overseas conventional bank licensees, all the requirements of Chapter GR-1 are limited to the business booked in their branch in Bahrain and the records of that branch (see Rule GR-1.1.1). They are thus not required to hold copies of shareholders' and Directors' meetings, except where relevant to the branch's operations.

        • Customer Records

          • GR-1.3.3

            Record keeping requirements with respect to customer records, including customer identification and due diligence records, are contained in Module FC (Financial Crime). These requirements address specific requirements under the Amiri Decree Law No. 4 of 2001, the standards promulgated by the Financial Action Task Force, as well as to the best practice requirements of the Basel Committee Core Principles methodology, and its paper on "Customer due diligence for banks".

    • GR-2 GR-2 Corporate and Trade Names

      • GR-2.1 GR-2.1 Vetting of Names

        • GR-2.1.1

          Conventional bank licensees must seek prior written approval from the BMA for their corporate name and any trade names, and those of their subsidiaries located in Bahrain.

        • GR-2.1.2

          GR-2.1.1 applies to overseas conventional bank licensees only with respect to their Bahrain branch.

        • GR-2.1.3

          Rules GR-2.1.1 and GR-2.1.2 implement the requirements contained in Article 62 of the BMA Law 1973.

        • GR-2.1.4

          In approving a corporate or trade name, the BMA seeks to ensure that it is sufficiently distinct as to reduce possible confusion with other unconnected businesses, particularly those operating in the financial services sector. The BMA also seeks to ensure that names used by unregulated subsidiaries do not suggest those subsidiaries are in fact regulated.

    • GR-3 GR-3 Dividends

      • GR-3.1 GR-3.1 BMA Non-Objection

        • GR-3.1.1

          Bahraini conventional bank licensees must obtain a letter of no-objection from the BMA to any dividend proposed, before submitting a proposal for a distribution of profits to a shareholder vote.

        • GR-3.1.2

          The BMA will grant a no-objection letter where it is satisfied that the level of dividend proposed is unlikely to leave the licensee vulnerable — for the foreseeable future — to breaching the BMA's capital requirements, taking into account (as appropriate) trends in the licensee's business volumes, expenses, overall performance and the adequacy of provisions against impaired loans or other assets.

        • GR-3.1.3

          To facilitate the prior approval required under Paragraph GR-3.1.1, conventional bank licensees subject to GR-3.1.1 should provide the BMA with a copy of the proposed agenda for the annual general meeting or other special meeting, noting the licensee's intended declared dividends for the coming year.

        • GR-3.1.4

          Conventional bank licensees must also comply with the provisions contained in Articles 72 to 75 of the BMA Law 1973.

    • GR-4 GR-4 Asset / Liability Transfers

      • GR-4.1 GR-4.1 [deleted] [1 July 2011 to 30 September 2012]

        [This Section was deleted in July 2011 as Regulation on Asset/Liability transfers currently under consultation].

        • GR-4.1.1 [deleted]

          Deleted: July 2011

        • GR-4.1.2 [deleted]

          Deleted: July 2011

        • GR-4.1.3 [deleted]

          Deleted: July 2011

        • GR-4.1.4 [deleted]

          Deleted: July 2011

        • GR-4.1.5 [deleted]

          Deleted: July 2011

        • GR-4.1.6 [deleted]

          Deleted: July 2011

      • GR-4.1 GR-4.1 BMA Approval

        • GR-4.1.1

          Conventional bank licensees must seek prior written approval from the BMA before transferring assets or liabilities of a material nature to a third party, except where such transfers are effected within the normal scope of the bank's operations.

        • GR-4.1.2

          Rule GR-4.1.1 is intended to apply to circumstances where a bank wishes to sell part of its business or a portfolio to a third party, or is undertaking winding up proceedings. It implements the provisions contained in Article 65(A)(2) of the BMA Law 1973.

        • GR-4.1.3

          For the purposes of Rule GR-4.1.1, assets or liabilities of a material nature would be assets or liabilities that comprise 5% or more of the total assets or liabilities of the bank concerned, and any deposit liabilities (regardless of amount).

        • GR-4.1.4

          In the case of a Bahraini conventional bank licensee, Chapter GR-4 applies to its assets and liabilities booked in Bahrain and in the bank's overseas branches. In the case of an overseas conventional bank licensee, Chapter GR-4 applies only to assets and liabilities booked in the bank's Bahrain branch.

        • GR-4.1.5

          Banks intending to apply to transfer assets or liabilities are advised to contact the BMA at the earliest possible opportunity, in order that the BMA may determine the nature and level of any documentation to be provided and the need for an auditor or other expert opinion to be provided. The BMA will grant its permission where the transfer will have no negative impact on the financial soundness of the bank, and does not otherwise compromise the interests of the bank's depositors and creditors. In all cases, the BMA will only grant its permission where the institution acquiring the assets or deposit liabilities holds the appropriate regulatory approvals and is in good regulatory standing.

    • GR-5 GR-5 Controllers

      • GR-5.1 GR-5.1 Key Provisions

        • GR-5.1.1

          Condition 3 of the BMA's licensing conditions specifies, amongst other things, that conventional bank licensees must satisfy the BMA that their controllers are suitable and pose no undue risks to the licensee. (See Paragraph LR-2.3.1.)

        • GR-5.1.2

          Applicants for a conventional bank license must provide details of their controllers, by submitting a duly completed Form 2 (Application for authorisation of controller). (See sub-paragraph LR-3.1.5(a)

        • GR-5.1.3

          Conventional bank licensees must obtain prior approval from the BMA for any of the following changes to its controllers (as defined in Section GR-5.2):

          (a) a new controller;
          (b) an existing controller increasing its holding from below 20% to above 20%;
          (c) an existing controller increasing its holding from below 33% to above 33%;
          (d) an existing controller increasing its holding from below 50% to above 50%; and
          (e) an existing controller increasing its holding from below 75% to above 75%.

        • GR-5.1.4

          For approval under Paragraph GR-5.1.3 to be granted, the BMA must be satisfied that the proposed increase in control poses no undue risks to the licensee. A duly completed Form 2 (Controllers) must be submitted as part of the request for a change in controllers.

        • GR-5.1.5

          If, as a result of circumstances outside the conventional bank licensee's knowledge and/or control, one of the changes specified in Paragraph GR-5.1.3 is triggered prior to BMA approval being sought or obtained, the conventional bank licensee must notify the BMA as soon as it becomes aware of the fact and no later than 7 days.

        • GR-5.1.6

          Conventional bank licensees are encouraged to notify the BMA as soon as they become aware of events that are likely to lead to changes in their controllers. The criteria by which the BMA assesses the suitability of controllers are set out in Section GR-5.3. The BMA aims to respond to requests for approval within 30 calendar days. The BMA may contact references and supervisory bodies in connection with any information provided to support an application for controller. The BMA may also ask for further information, in addition to that provided in Form 2, if required to satisfy itself as to the suitability of the applicant.

        • GR-5.1.7

          Conventional bank licensees must submit, within 3 months of their financial year-end, a report on their controllers. This report must identify all controllers of the licensee, as defined in Section GR-5.2.

      • GR-5.2 GR-5.2 Definition of Controller

        • GR-5.2.1

          A controller of a conventional bank licensee is a natural or legal person who:

          (a) holds 10% or more of the shares in the licensee ("L"), or is able to exercise (or control the exercise) of more than 10% of the voting power in L; or
          (b) holds 10% or more of the shares in a parent undertaking ("P") of L, or is able to exercise (or control the exercise) of more than 10% of the voting power in P; or
          (c) is able to exercise significant influence over the management of L or P.

        • GR-5.2.2

          For the purposes of Paragraph GR-5.2.1, "person" means the person ("H") or any of the person's associates, where associate includes:

          (a) the spouse, child or stepchild of H;
          (b) an undertaking of which H is a Director;
          (c) a person who is an employee or partner of H;
          (d) if H is a corporate entity, a Director of H, a subsidiary of H, or a Director of any subsidiary undertaking of H.

        • GR-5.2.3

          Associate also includes any other person or undertaking with which the person H has entered into an agreement or arrangement as to the acquisition, holding or disposal of shares or other interests in the conventional bank licensee, or under which they undertake to act together in exercising their voting power in relation to the conventional bank licensee.

      • GR-5.3 GR-5.3 Suitability of Controllers

        • GR-5.3.1

          A controller of a conventional bank licensee must satisfy the BMA of his suitability.

        • GR-5.3.2

          In assessing the suitability of controllers who are natural persons, the BMA has regard to their professional and personal conduct, including, but not limited to, the following:

          (a) the propriety of a person's conduct, whether or not such conduct resulted in conviction for a criminal offence, the contravention of a law or regulation, or the institution of legal or disciplinary proceedings;
          (b) a conviction or finding of guilt in respect of any offence, other than a minor traffic offence, by any court or competent jurisdiction;
          (c) any adverse finding in a civil action by any court or competent jurisdiction, relating to fraud, misfeasance or other misconduct in connection with the formation or management of a corporation or partnership;
          (d) whether the person has been the subject of any disciplinary proceeding by any government authority, regulatory agency or professional body or association;
          (e) the contravention of any financial services legislation or regulation;
          (f) whether the person has ever been refused a license, authorisation, registration or other authority;
          (g) dismissal or a request to resign from any office or employment;
          (h) disqualification by a court, regulator or other competent body, as a Director or as a manager of a corporation;
          (i) whether the person has been a Director, partner or manager of a corporation or partnership which has gone into liquidation or administration or where one or more partners have been declared bankrupt whilst the person was connected with that partnership;
          (j) the extent to which the person has been truthful and open with regulators; and
          (k) whether the person has ever been adjudged bankrupt, entered into any arrangement with creditors in relation to the inability to pay due debts, or failed to satisfy a judgement debt under a court order.

        • GR-5.3.3

          In addition, the following criteria are also taken into consideration:

          (a) the financial resources of the person and the likely stability of their shareholding;
          (b) existing directorships or ownership of more than 20% of the capital or voting rights of any financial institution in the Kingdom of Bahrain or elsewhere, and the potential for conflicts of interest that such directorships or ownership may imply;
          (c) the interests of depositors, creditors and shareholders of the licensee; and
          (d) the interests of Bahrain's banking and financial sector.

        • GR-5.3.4

          In assessing the suitability of corporate controllers, the BMA has regard to their financial standing, judicial and regulatory record, and standards of business practice and reputation, including, but not limited to, the following:

          (a) the financial strength of the controller, its parent(s) and other members of its group, its implications for the conventional bank licensee and the likely stability of the controller's shareholding;
          (b) whether the controller or members of its group have ever entered into any arrangement with creditors in relation to the inability to pay due debts;
          (c) the controller's jurisdiction of incorporation, location of Head Office, group structure and close links, and the implications for the conventional bank licensee as regards effective supervision of the conventional bank licensee and potential conflicts of interest;
          (d) the controller's (and other group members') propriety and general standards of business conduct, including the contravention of any laws or regulations, or the institution of disciplinary proceedings by a government authority, regulatory agency or professional body;
          (e) any adverse finding in a civil action by any court or competent jurisdiction, relating to fraud, misfeasance or other misconduct;
          (f) any criminal actions instigated against the controller or other members of its group, whether or not this resulted in an adverse finding; and
          (g) the extent to which the controller or other members of its group have been truthful and open with regulators and supervisors.

        • GR-5.3.5

          In addition, the following criteria are also taken into consideration:

          (a) the interests of depositors, creditors and shareholders of the licensee; and
          (b) the interests of Bahrain's banking and financial sector.

      • GR-5.4 GR-5.4 Approval Process

        • GR-5.4.1

          Following receipt of an approval request under Paragraph GR-5.1.3, the BMA will issue a written notice of objection if it is not satisfied that the person concerned is suitable to become a controller of the conventional bank licensee. The notice of objection will specify the reasons for the objection and specify the applicant's right of appeal.

        • GR-5.4.2

          Notices of objection have to be approved by an Executive Director of the BMA. The applicant has 30 calendar days from the date of the notice in which to make written representations. The BMA then has 30 calendar days from the date of the representation in which to consider any mitigating evidence submitted and make a final determination. See Module EN (Enforcement).

        • GR-5.4.3

          Where a person has become a controller by virtue of his shareholding in contravention of Paragraph GR-5.1.3, or a notice of objection has been served to him under Paragraph GR-5.4.1 and the period of appeal has expired, the BMA may, by notice in writing served on the person concerned, direct that his shareholding shall, until further notice, be subject to all or any of the following restrictions:

          (a) no voting right shall be exercisable in respect of those shares; and
          (b) except in a liquidation, no payment shall be made of any sum due on the shares from the conventional bank licensee, whether in respect of capital, dividend or otherwise.

    • GR-6 [This Chapter has been left blank.]

      [This Chapter has been left blank.]

    • GR-7 GR-7 Suspension of Business

      • GR-7.1 GR-7.1 BMA Approval

        • GR-7.1.1

          A conventional bank licensee wishing to suspend its operations and liquidate its business must notify the BMA in writing at least six months in advance of its intended suspension, setting out how it proposes to do so and, in particular, how it will treat any deposits that it holds.

        • GR-7.1.2

          The notice period under Rule GR-7.1.1 is a statutory requirement, specified in Article 91 of the BMA Law 1973. Article 91, however, also provides for the notice period to be reduced, by prior agreement with the BMA, if in the BMA's view the rights of depositors are safeguarded.

        • GR-7.1.3

          If the conventional bank licensee wishes to transfer assets or liabilities to a third party, it must comply with the requirements contained in Chapter GR-4.

        • GR-7.1.4

          If the conventional bank licensee wishes to liquidate its business, the BMA will revise its license to restrict the firm from entering into new business. The licensee must continue to comply with all applicable BMA requirements until such time as it is formally notified by the BMA that its obligations have been discharged and that it may surrender its license.

        • GR-7.1.5

          A conventional bank licensee in liquidation must continue to meet its contractual and regulatory obligations to depositors, other clients and creditors.

        • GR-7.1.6

          Once the conventional bank licensee believes that it has discharged all its remaining contractual obligations to depositors, clients and creditors, it must publish a notice in two national newspapers in Bahrain approved by the BMA (one being in English and one in Arabic), stating that is has settled all its dues and wishes to leave the market.

        • GR-7.1.7

          The notice referred to in Paragraph GR-7.1.6 must include a statement that written representations concerning the liquidation may be sent to the BMA before a specified day, which shall not be earlier than sixty days after the day of the first publication of the notice. The BMA will not decide on the application until after considering any representations made to the BMA before the specified day.

        • GR-7.1.8

          If no objections to the liquidation are upheld by the BMA, then the BMA may issue a written notice of approval for the surrender of the license.

    • GR-8 GR-8 BMA Fees

      • GR-8.1 GR-8.1 Annual License Fees

        • GR-8.1.1

          Conventional bank licensees must pay the relevant annual license fee to the BMA, upon the issuance of their license and thereafter on 1 January each year. The annual license fee charged upon issuance of a license is charged on a pro-rata basis, proportionate to the period remaining between the issuance of the license and the end of the calendar year in question (subject to a minimum charge of BD 1,000).