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  • HC-2 HC-2 Approved Persons

    • HC-2.1 HC-2.1 CBB Notification and Approval

      • General Requirement

        • HC-2.1.1

          All persons wishing to undertake a controlled function in a conventional bank licensee must be approved by the CBB prior to their appointment (subject to the variations contained in Rule HC-2.1.3).

          October 07

        • HC-2.1.2

          Controlled functions are those of:

          (a) Director;
          (b) Chief Executive or General Manager;
          (c) Senior Manager;
          (d) Compliance officer;
          (e) Money Laundering Reporting Officer;
          (f) Deputy Money Laundering Reporting Officer; and
          (g) Financial Instruments Trader.
          Amended: October 2009
          October 2007

        • HC-2.1.3

          Prior approval is required for controlled functions (a), (b), (c), (d), (e) and (f). Controlled functions (d) and (e) may be combined, however (see also FC-4.1, regarding the MLRO function). Controlled function (g) does not require prior approval: instead, notification only is required, once the person concerned has accepted to undertake that function.

          Amended: October 2009
          October 2007

      • Basis for Approval

        • HC-2.1.4

          Approval under Rule HC-2.1.1 is only granted by the CBB, if it is satisfied that the person is fit and proper to hold the particular position in the licensee concerned. 'Fit and proper' is determined by the CBB on a case-by-case basis. The definition of 'fit and proper' and associated guidance is provided in Sections HC-2.2 and HC-2.3 respectively.

          October 07

      • Definitions

        • HC-2.1.5

          Director is any person who occupies the position of a Director, as defined in Article 173 of the Commercial Companies Law (Legislative Decree No. 21 of 2001).

          October 07

        • HC-2.1.6

          The fact that a person may have 'Director' in their job title does not of itself make them a Director within the meaning of the definition noted in Rule HC-2.1.5. For example, a 'Director of Marketing', is not necessarily a member of the Board of Directors and therefore may not fall under the definition of Rule HC-2.1.5.

          October 07

        • HC-2.1.7

          The Chief Executive or General Manager means a person who is responsible for the conduct of the licensee (regardless of actual title). The Chief Executive or General Manager must be resident in Bahrain. This person is responsible, alone or jointly, for the conduct of the whole of the firm, or, in the case of an overseas conventional bank licensee, for all of the activities of the branch (in which case, he may hold the title of 'Branch Manager').

          October 07

        • HC-2.1.8

          Senior Manager means a person who, under the immediate authority of a Director or the Chief Executive/General Manager, exercises major managerial responsibilities, is responsible for a significant business or operating unit, or has major managerial responsibility for maintaining accounts or other records of the licensee.

          October 07

        • HC-2.1.9

          Whether a person is a Senior Manager will depend on the facts in each case and is not determined by the presence or absence of the word in their job title. Examples of Senior Managers might include, depending on the scale, nature and complexity of the business, a deputy Chief Executive; and heads of departments such as Risk Management, or Internal Audit; or the Chief Financial Officer.

          October 07

        • HC-2.1.10

          Financial Instruments Trader means a person who is engaged in buying or selling financial instruments.

          October 07

        • HC-2.1.11

          Where a firm is in doubt as to whether a function should be considered a controlled function it must discuss the case with the CBB.

          October 07

      • Notification Requirements and Process

        • HC-2.1.12

          Conventional bank licensees must obtain CBB approval before a person is formally appointed to a controlled function; the request for CBB approval must be made by submitting to CBB a duly completed Form 3 (Application for Approved Person status). In the case of a financial instruments trader, notification only is required (see Rule HC-2.1.3): this notification must also be made by submitting a Form 3.

          October 07

        • HC-2.1.13

          In the case of license applications, the Form 3 must be marked for the attention of the Director, Licensing and Policy Directorate. When made by a conventional bank licensee, the Form 3 must be marked for the attention of either the Director, Retail Banks Supervision or the Director, Wholesale Banks Supervision, as appropriate.

          October 07

        • HC-2.1.14

          Licensees should give the CBB a reasonable amount of notice in order for an application for approval to be reviewed. The CBB aims to respond within 2 weeks of receipt of an application, although in some cases, where referral to an overseas supervisor is required, the response time is likely to be longer.

          October 07

        • HC-2.1.15

          Licensees seeking to appoint Board Directors should seek CBB approval for all the candidates to be put forward for election at a shareholder meeting, in advance of the agenda being issued to shareholders. CBB approval of the candidates does not in any way limit shareholders' rights to refuse those put forward for election.

          October 07

        • HC-2.1.16

          All refusals by the CBB to grant a person approved person status have to be reviewed and approved by an Executive Director of the CBB. A notice of intent is issued to the licensee concerned, setting out the basis for the decision. The licensee has 30 calendar days from the date of the notice in which to appeal the decision. The CBB then has 30 calendar days from the date of the representation in which to make a final determination. See also Chapter EN-5.

          Amended January 2009
          October 07

        • HC-2.1.17

          Conventional bank licensees must immediately notify CBB when an approved person ceases to hold the controlled function for which they have been approved, for whatever reason (see also HC-1.5.2).

          Amended January 2009
          October 07

        • HC-2.1.18

          Thus, licensees are required to notify CBB should an approved person transfer to another function within the licensee, or to another group entity; or else resign, be suspended or dismissed. CBB may require further clarification as to the reasons for the person's transfer or departure. CBB will automatically withdraw the individual's approved person status: should the person wish to undertake another controlled function, whether within the same licensee or in another licensee, then a new application should be resubmitted.

          October 07

        • HC-2.1.19

          Conventional bank licensees must immediately notify CBB should they become aware of information that could reasonably be viewed as calling into question an approved person's compliance with CBB's 'fit and proper' requirement (see HC-2.2).

          October 07

    • HC-2.2 HC-2.2 'Fit and proper' requirement

      • HC-2.2.1

        Licensees seeking an approved person authorisation for an individual, must satisfy the CBB that the individual concerned is 'fit and proper' to undertake the controlled function in question.

        October 07

      • HC-2.2.2

        To be considered 'fit and proper', those nominated must demonstrate:

        (a) Personal integrity, honesty and good reputation;
        (b) Professional competence, experience and expertise, sufficient for the controlled function for which authorisation is being applied for, and given the scale, complexity and nature of the conventional bank licensee concerned; and
        (c) Financial soundness.
        October 07

      • HC-2.2.3

        In assessing the conditions prescribed in Rule HC-2.2.2, the CBB will take into account the criteria contained in Section HC-2.3. The CBB reviews each application on a case-by-case basis, taking into account all relevant circumstances. A person may be considered 'fit and proper' to undertake one type of controlled function but not another, depending on the function's job size and required levels of experience and expertise. Similarly, a person approved to undertake a controlled function in one conventional bank licensee may not be considered to have sufficient expertise and experience to undertake nominally the same controlled function but in a much bigger licensee.

        October 07

      • HC-2.2.4

        Approved persons undertaking a controlled function must act prudently, and with honesty, integrity, care, skill and due diligence in the performance of their duties. They must avoid conflicts of interest arising whilst undertaking a controlled function.

        October 07

      • HC-2.2.5

        In determining whether a conflict of interest may arise, factors that may be considered include whether:

        (a) A person has breached any fiduciary obligations to the company or terms of employment;
        (b) A person has undertaken actions that would be difficult to defend, when looked at objectively, as being in the interest of the licensee; and
        (c) A person has failed to declare a personal interest that has a material impact in terms of the person's relationship with the licensee.
        October 07

    • HC-2.3 HC-2.3 Interpretative Guidance on 'Fit and Proper' Requirement

      • HC-2.3.1

        In assessing a person's fitness and propriety, the CBB will consider previous professional and personal conduct (in Bahrain or elsewhere) including, but not limited to, the following:

        (a) The propriety of a person's conduct, whether or not such conduct resulted in a criminal offence being committed, 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 supervisors;
        (k) The extent to which the person has appropriate professional and other qualifications for the controlled function in question;
        (l) The extent to which the person has sufficient experience, or is otherwise able to perform the functions of the controlled function in question;
        (m) 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.
        October 07

      • HC-2.3.2

        With respect to HC-2.3.1(b), (c), (d) and (e), the CBB will take into account the length of time since any such event occurred, as well as the seriousness of the matter in question.

        October 07

      • HC-2.3.3

        Further guidance on the process for assessing a person's 'fit and proper' status is given in Module EN (Enforcement): see Chapter EN-8.

        October 07