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  • BR-6 BR-6 Information Gathering by the CBB

    • BR-6.1 BR-6.1 Power to Request Information

      • BR-6.1.1

        In accordance with Article 111 of the CBB Law, banks must provide all information that the CBB may reasonably request in order to discharge its regulatory obligations.

        Added: January 2012

      • BR-6.1.2

        Banks must provide all relevant information and assistance to the CBB inspectors and appointed experts on demand as required by Articles 111 and 114 of the CBB Law. Failure by banks 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 Module EN. This rule is supported by Article 114(a) of the CBB Law.

        Added: January 2012

      • BR-6.1.3

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

        Added: January 2012

      • Information Requested on Behalf of other Supervisors

        • BR-6.1.4

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

          Added: January 2012

    • BR-6.2 BR-6.2 Access to Premises

      • BR-6.2.1

        In accordance with Article 114 of the CBB Law, all licensed banks must permit representatives of the CBB, or appointed experts, access, with or without notice, to any of its business premises in relation to the discharge of the CBB's functions under the relevant law.

        Amended: October 2011
        October 2007

      • BR-6.2.2

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

        Added: October 2011

      • BR-6.2.3

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

        Added: October 2011

      • BR-6.2.4

        The cooperation that banks are expected to procure from such providers is similar to that expected of banks themselves.

        Added: October 2011

    • BR-6.3 BR-6.3 Accuracy of Information

      • BR-6.3.1

        Banks must take reasonable steps to ensure that all information they give the CBB is:

        (a) Factually accurate or, in the case of estimates and judgements, fairly and properly based after appropriate enquiries have been made by the bank; and
        (b) Complete, in that it should include anything of which the CBB would reasonably expect notice.
        Added: October 2011

      • BR-6.3.2

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

        (a) Details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;
        (b) An explanation why such information was or may have been provided; and
        (c) The correct information.
        Added: October 2011

      • BR-6.3.3

        If the information in Paragraph BR-6.3.2 cannot be submitted with the notification (because it is not immediately available), it must instead be submitted as soon as possible afterwards.

        Added: October 2011

    • BR-6.4 BR-6.4 Methods of Information Gathering

      • BR-6.4.1

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

        (a) Representatives of the CBB may make onsite visits at the premises of the bank. These visits may be made on a regular basis, on a sample basis, for special purposes such as theme visits (looking at a particular issue across a range of banks), or when the CBB has a particular reason for visiting a bank;
        (b) Appointees of the CBB may also make onsite visits at the premises of the bank. Appointees of the CBB may include persons who are not CBB staff, but who have been appointed to undertake particular monitoring activities for the CBB, such as in the case of appointed experts (refer to Section BR-6.5).
        (c) The CBB may request the bank to attend meetings at the CBB's premises or elsewhere;
        (d) The CBB may seek information or request documents by telephone, at meetings or in writing, including electronic communication;
        (e) The CBB may require banks to submit various documents or notifications, as per Chapter BR-5, in the ordinary course of their business such as financial reports or on the happening of a particular event in relation to the bank such as a change in control.
        Added: January 2012

      • BR-6.4.2

        When seeking meetings with a bank or access to the bank's premises, the CBB or the CBB appointee needs to have access to a bank's documents and personnel. Such requests will be made during reasonable business hours and with proper notice. There may be instances where the CBB may seek access to the bank's premises without prior notice. While such visits are not customary, the prospect of unannounced visits is intended to encourage banks to comply at all times with the requirements and standards imposed by the CBB as per legislation and Volume 1 of the CBB Rulebook.

        Added: January 2012

      • BR-6.4.3

        The CBB considers that a bank should:

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

      • BR-6.4.4

        The CBB considers that a bank should take reasonable steps to ensure that the following persons act in the manner set out in Paragraph BR-6.4.3:

        (a) Its employees; and
        (b) Any other members of its group and their employees.
        Amended: July 2012
        Added: January 2012

      • BR-6.4.5

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

        Added: January 2012

    • BR-6.5 BR-6.5 Role of the Appointed Expert

      • Introduction

        • BR-6.5.1

          The content of this Chapter is applicable to all banks and appointed experts.

          Added: October 2011

        • BR-6.5.2

          The purpose of the contents of this Chapter is to set out the roles and responsibilities of appointed experts when appointed pursuant to Articles 114 or 121 of the CBB Law (see EN-7.1.1). These Articles empower the CBB to assign some of its officials or others to inspect or conduct investigations of banks.

          Added: October 2011

        • BR-6.5.3

          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 reports on matters relating to the business of licensees in order to help it assess their compliance with CBB requirements. Inspections may be carried out either by the CBB's own officials, by duly qualified appointed experts appointed for the purpose by the CBB, or a combination of the two.

          Added: October 2011

        • BR-6.5.4

          The CBB will not, as a matter of general policy, publicise the appointment of an appointed expert, although it reserves the right to do so where this would help achieve its supervisory objectives.

          Added: October 2011

        • BR-6.5.5

          Unless the CBB otherwise permits, appointed experts should not be the same firm appointed as external auditor of the bank.

          Added: October 2011

        • BR-6.5.6

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

          Added: October 2011

        • BR-6.5.7

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

          Added: October 2011

        • BR-6.5.8

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

          Added: October 2011

        • BR-6.5.9

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

          Added: October 2011

        • BR-6.5.10

          Compliance by appointed experts with the contents of this Chapter will not, of itself, constitute a breach of any other duty owed by them to a bank (i.e. create a conflict of interest).

          Added: October 2011

        • BR-6.5.11

          The CBB may appoint one or more of its officials to work on the appointed experts' team for a bank.

          Added: October 2011

      • The Required Report

        • BR-6.5.12

          The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned appointed experts would 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.
          Added: October 2011

        • BR-6.5.13

          Appointed experts 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.

          Added: October 2011

        • BR-6.5.14

          The appointed experts' report should follow the format set out in Appendix BR-13, in part B of the CBB Rulebook.

        • BR-6.5.15

          Unless otherwise directed by the CBB or unless the circumstances described in Section BR-6.5.19 apply, the report must be discussed with the Board of directors and/or senior management in advance of it being sent to the CBB.

          Added: October 2011

        • BR-6.5.16

          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. Appointed experts 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 2011

        • BR-6.5.17

          If the appointed experts 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.

          Added: October 2011

        • BR-6.5.18

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

          Added: October 2011

      • Other Notifications to the CBB

        • BR-6.5.19

          Appointed expertsmust 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.

          Added: October 2011

        • BR-6.5.20

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

          Added: October 2011

        • BR-6.5.21

          If appointed experts decide to communicate directly with the CBB in the circumstances set out in Paragraph BR-6.5.19, 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.

          Added: October 2011

      • Permitted Disclosure by the CBB

        • BR-6.5.22

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

          Added: October 2011

      • Trilateral Meeting

        • BR-6.5.23

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

          Added: October 2011