• MIE-4 MIE-4: Financial Penalties

    • MIE-4.1 MIE-4.1 CBB Policy

      • MIE-4.1.1

        Under Chapter 2 "Procedures to be taken before penalties or administrative proceedings are applied" and Chapter 3 "Penalties and administrative proceedings" of Part 9 of the CBB Law, the CBB may impose financial penalties on licensees or listed companies or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law and its amendments (in particular Article 129). The CBB shall use judgement and will take into account relevant facts in determining the need to impose financial penalties. Financial penalties are thus normally preceded by the issuance of a written formal notice and/or Direction.

        Added: July 2021

      • MIE-4.1.2

        The level of financial penalty applied is determined by the nature of the contravention and the amount of additional supervisory attention and resources taken up by licensees or listed companies or persons, referred to in paragraph (b) of Article (68 bis 1) of the CBB Law, the licensees behaviour and by limits set in the CBB Law. The CBB will apply the methodology set out in Appendix A to determine the size of the penalty. The CBB intends that the impact of a penalty should derive more from its signaling effect than from the actual amount of money involved.

        Added: July 2021

      • MIE-4.1.3

        In accordance with Article 129 of the CBB Law, the maximum financial penalty levied for failing to comply with CBB Law, Regulations, Directives and other requirements is BD 100,000 per violation. The CBB may opt to limit the amount of the financial penalty and use other enforcement measures as outlined in this Module, such as imposing restrictions on a licensee or listed company or limiting the scope of operations.

        Added: July 2021

      • MIE-4.1.4

        As indicated in Paragraph MIE-3.1.12D, the CBB requires disclosure by licensees and listed companies in their annual report of any financial penalties served on them, together with a factual description of the reasons given by the CBB for applying the penalty. In addition, the CBB may publicise the issuance of a financial penalty notice, where there is a strong case that doing so would help achieve the CBB's supervisory objectives, as mentioned in Article 132 of the pre-mentioned Law.

        Added: July 2021

      • MIE-4.1.5

        Examples of the types of compliance failings that may lead to the serving of a financial penalty notice are outlined in Part 11 of the CBB Law and may include (but are not limited to):

        (a) Failures to address persistent delays and/or significant inaccuracies in regulatory reporting to the CBB;
        (b) Repeated failures to respond to formal requests for information from the CBB, within the deadlines set;
        (c) The submission of information to the CBB known to be false or misleading; and
        (d) Major failures in maintaining adequate systems and controls in accordance with the CBB's requirements, subjecting investors to significant risk of financial loss.
        Added: July 2021

      • MIE-4.1.6

        In assessing whether to serve a financial written penalty notice, the CBB takes into account the following criteria:

        (a) the seriousness of the contravention, in relation to the requirement(s) concerned;
        (b) the duration and/or frequency of the contravention, and the extent to which it reflects more widespread weaknesses in controls and/or management; the extent to which the contravention was deliberate or reckless;
        (c) the licensee's or listed company's past compliance record and conduct following the contravention; and
        (d) the scope of any other action taken by the CBB or other regulators against the licensee or listed company in response to the compliance failures in question.

        Additional criteria are set out in Appendix A.

        Added: July 2021

      • MIE-4.1.7

        The imposition of a financial penalty does not preclude the CBB from also using other enforcement measures to remedy the same violation (for instance, a Direction).

        Added: July 2021

      • MIE-4.1.8

        A written notice of a financial penalty must be issued before imposing any financial penalty. The written notice must contain the following information:

        (a) The violations committed by the licensee or listed company with respect to CBB Law; or the prudential Rulebook; or any Directions, warnings or formal requests for information; or violations of the terms and conditions of the license issued to the licensee;
        (b) Evidence or proof to support the above;
        (c) The level of financial penalty to be imposed; and
        (d) The grace period to be allowed to the licensee or listed company for challenging the intended penalty (which will not be less than 30 days).
        Added: July 2021

      • MIE-4.1.9

        The licensee or listed company may either pay the penalty or object within the above period. The CBB will consider any objection and make a formal resolution within 30 days of receiving the objection. Thereafter, the formal resolution and any accompanying penalties are final and must be paid within 30 days.

        Added: July 2021

    • MIE-4.2 MIE-4.2 Module AML (Anti-Money Laundering and Combating of Financial Crime)

      • MIE-4.2.1

        Any financial penalties applied by the CBB as regards the implementation of its requirements set out under Module AML, are without prejudice to the criminal sanctions available to the Bahraini courts under the Decree – Law No. 4 of 2001, with respect to the prevention and prohibition of the laundering of money. As with other financial penalties, the imposition of a financial penalty with regards to breaches of the requirements in Module AML does not prevent the CBB from also using other enforcement measures to remedy the same violation (for instance, a Direction).

        Added: July 2021

    • MIE-4.3 MIE-4.3 Financial Penalties for Date Sensitive Requirements

      • MIE-4.3.1

        Volume 6 (Capital Markets) Modules contain specific requirements where licensees and listed companies must comply with, by a precise date. As per MIE-3.1.17, the CBB attaches considerable importance to the timely submission of reports, and late reporting or non-submission of reports will prompt the CBB to consider initiating enforcement actions. In cases where a specific due date and licensees and listed companies are involved, the CBB will impose financial penalties which are based on a per diem basis.

        Added: July 2021

      • MIE-4.3.2

        This Section applies to date sensitive requirements for:

        (a) Reporting requirements included in Volume 6 Modules;
        (b) Public disclosure requirements included in Volume 6 Modules and any related regulations pursuant thereto;
        (c) The report of the external auditor required as per Paragraph AML-3.3.1B (d);
        (d) Annual licensing fees required as per Volume 6 Modules, and
        (e) Conduct of Shareholders' Meetings requirements included in Section HC-7.4.
        Added: July 2021

      • MIE-4.3.3

        For listed companies, financial penalties related to late filing or other date sensitive requirements are calculated as per the following per diem basis:

        (a) Where the listed company’s total consolidated assets are less than or equal to BD 50 million, the financial penalty for late filing is BD 100 per day;
        (b) Where the listed company’s total consolidated assets are greater than BD 50 million but less than BD 250 million, the financial penalty for late filing is BD 200 per day;
        (c) Where the listed company’s total consolidated assets are greater than BD 250 million but less than or equal to BD 5 billion, the financial penalty is BD 400 per day;
        (d) Where the listed company’s total consolidated assets are greater than BD 5 billion, the financial penalty is BD 800 per day; and
        (e) For a newly listed company who is yet to provide audited financial statements, the financial penalty is BD 100 per day.
        Added: July 2021

      • MIE-4.3.4

        For SROs and members of SROs, the financial penalties related to late filing or other date sensitive requirements are calculated as per the following per diem basis:

        (a) For SROs under Module MAE and Module CSD, the financial penalty for late filing is BD 100 per day;
        (b) For members of SROs under Module MIR, the financial penalty for late filing is BD 50 per day.
        Added: July 2021

      • MIE-4.3.5

        For licensed crypto-asset service providers, the financial penalties related to late filing or other date sensitive requirements are outlined in Paragraph CRA-14.6.13 of the Crypto-Asset Module (CRA).

        Added: July 2021

      • MIE-4.3.6

        The various deadlines for submission of reports and annual fees referred to in Volume 6 Modules are defined:

        (a) In terms of a specified number of days or months following a given date, such as the last date of a calendar quarter;
        (b) A specified number of days or months after the occurrence of a specific event; or
        (c) A specific date.
        Added: July 2021

      • MIE-4.3.7

        In imposing financial penalties for date sensitive requirements, the following criteria apply:

        (a) Where the due date falls on a weekend or a holiday as designated by the CBB, the first business day following the weekend or holiday will be considered as being the due date;
        (b) Where a due date is not complied with by the end of the day on which it is due, holidays and weekend days are included in the number of days the item is considered late;
        (c) For returns and other filings, the date received is the date recorded by the CBB's systems in case of returns filed electronically;
        (d) In the case of returns filed in hard copy, the CBB stamp is the date received;
        (e) All returns are to be sent to the respective Supervision Directorate and the annual fees to the Accounts Directorate, on or before the due date, to be considered filed on time;
        (f) A day ends at midnight in the case of returns that must be filed electronically, or at the close of CBB business day, in the case returns are filed in hard copy; and
        (g) An incomplete return, where completeness is determined in relation to the requirements of the relevant instructions and Volume 6 Modules, is considered 'not filed' until the CBB receives all necessary elements of the return.
        Added: July 2021

      • MIE-4.3.8

        The CBB does not require any particular method of delivery for returns and filings that are filed in hard copy. The use of the Bahrain postal services, private courier services or other methods of delivery is entirely at the discretion and risk of the licensee and listed company. For the payment of annual fees, licensees and listed companies must follow the requirements under Volume 6 Modules.

        Added: July 2021

      • MIE-4.3.9

        A decision to impose a financial penalty for date sensitive requirements is unrelated to whether the CBB issues a reminder; it is the licensee's and listed company’s responsibility to file and disclose on time as per the requirements of Volume 6 (Capital Markets) Rulebook.

        Added: July 2021

    • MIE-4.4 MIE-4.4 Financial Penalties for Non-compliance with Blocking/Unblocking Requirements

      • MIE-4.4.1

        The financial penalty for late execution of blocking/unblocking orders issued by the Court/Public Prosecution is BD 10 per day per customer account/claim. Such financial penalties will be charged to the licensee through billing on a weekly basis.

        Added: July 2021

    • MIE-4.5 MIE-4.5 Procedures for Financial Penalties

      • MIE-4.5.1

        A written financial penalty notice will be addressed to the Chief Executive Officer or General Manager of the licensee or listed company or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law concerned. This written notification will describe the contravention concerned, the CBB's evidence supporting a financial penalty, and the factors justifying the level of penalty proposed. Only a Director or more senior member of the CBB's management may sign the notification.

        Added: July 2021

      • MIE-4.5.2

        The licensee or listed company or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law has 30 days from the notification's date of issuance to submit any objections it wishes to make to the CBB, in writing and addressed to the issuer of the original notification. If the licensee or listed company or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law decides not to submit objections, it has 30 calendar days from the notification's date of issuance in which to pay the penalty.

        Added: July 2021

      • MIE-4.5.3

        Should the licensee or listed company or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law make representations challenging the proposed penalty, the CBB has 30 days from the issuance of those representations in which to re-examine the facts of the case and its conclusions. If the CBB confirms application of a penalty, payment is required within 30 calendar days of a final notice being issued.

        Added: July 2021

      • MIE-4.5.4

        Failure to pay penalties within the required deadlines will be considered a breach of the CBB's regulatory requirements, and will also result in other measures being considered, as described elsewhere in this Module.

        Added: July 2021

      • MIE-4.5.5

        In instances where a licensee or listed company anticipates that it will be unable to meet any date sensitive requirements prescribed by the Rulebook, it must provide a written notification to the CBB at least one week prior to the prescribed due date outlining the date sensitive requirements which it will be unable to comply with, along with a well justified reason for the non-compliance.

        Added: July 2021

    • MIE-4.6 MIE-4.6 Remedying a Compliance Failure

      • MIE-4.6.1

        Payment of a financial penalty does not by itself absolve a licensee or listed company or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law from remedying the compliance failure concerned. The CBB will expect the licensee or listed company or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law to address the contravention within a reasonable timescale, to be agreed on a case-by-case basis. Failure to do so will result in other measures being considered.

        Added: July 2021