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  • EN-7 EN-7 Investigations

    • EN-7.1 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 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 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

        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

        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

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

        Added: October 2007

      • EN-7.3.4

        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

        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

        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

        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 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

        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

        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

        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