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  • FP-1: Fit and Proper

    • FP-1.1 Principles and Outcomes

      • FP-1.1.1

        Licensees must adhere to the following key principles and outcomes regarding the suitability of persons covered within the scope of this Module:

        (a) Ensure that unsuitable persons are not appointed to the board, or to senior management functions as identified by the licensee. A person is unsuitable if the person does not meet the fit and proper criteria set out in this Module;
        (b) Conduct comprehensive assessments prior to the appointment of persons covered within the scope of this Module to ensure they satisfy the CBB’s fit and proper criteria;
        (c) The board of directors and the chief executive officer are responsible for the organisation structure and for identifying the senior management functions;
        (d) Ensure the persons covered within the scope of this Module continue to meet the fit and proper criteria;
        (e) Establish documented board approved policies for recruitment, training and competency, including minimum competency standards addressing academic and/or professional qualifications and past experience, periodic competency assessments and training for persons covered within the scope of this Module; and
        (f) Promptly report to the CBB if the licensee identifies material deficiency in suitability of the persons covered within the scope of this Module.
        Added: March 2025

      • FP-1.1.2

        While licensees are afforded flexibility in determining how best to achieve the above outcomes based on their specific/ unique circumstances, they are responsible for maintaining adequate records that demonstrate their decisions and how the related outcomes have been achieved.

        Added: March 2025

      • FP-1.1.3

        With regards to competency standards referred to in Paragraph FP-1.1.1(e), Appendix FP-1 provides illustrative guidance for certain positions relevant to banks, insurance firms, category 1 investment firms and licensed exchanges. All licensees should develop their own standards. The illustrative qualifications and core competencies are not the minimum requirements.

        Added: March 2025

    • FP-1.2 Senior Management Functions

      • FP-1.2.1

        The board and the chief executive officer are responsible for the design and documentation of the organisation structure, for identifying senior management functions and ensuring compliance with the fit and proper requirements.

        Added: March 2025

      • Identifying Senior Management Functions

        • FP-1.2.2

          Senior management functions are those functions that are identified in accordance with Paragraph FP-1.2.1. In identifying senior management functions, the licensee should consider the size and nature of the activities, complexity of business, organisational structure, reporting lines and the delegated authorities. The following additional criteria may be considered for such identification:

          (a) A person who has significant authority to make decisions for the whole or a substantial part of the business of the licensee (e.g. positions with board delegated authority to oversee revenue generation of 20% or more) and can significantly impact the licensee’s safety and soundness or cause material harm to the licensee’s customers (e.g., CEO/general manager, heads of key business functions);
          (b) A person who enforces policies and implements strategies approved by the board of the licensee;
          (c) A person heading a function reporting to the board and/ or those heading control functions (i.e. chief financial officer, chief risk officer, chief internal auditor, chief information security officer, chief compliance officer etc.); or
          (d) For a licensee which is a branch of an overseas entity, a person who is nominated as the senior officer by the head office to the extent that the person meets the definition in subparagraphs (a), (b) or (c) above.
          Added: March 2025

        • FP-1.2.3

          Licensees must maintain a statement of responsibilities (SOR) for all senior management functions which sets out the description of the job role, the job objectives, function related responsibilities, reporting responsibilities, oversight responsibilities, delegated authorities and personal accountability. The SORs must be signed by the person in that relevant senior management function within one month of appointment.

          Added: March 2025

    • FP-1.3 Fit and Proper Criteria

      • FP-1.3.1

        Licensees must ensure that their fit and proper criteria cover the following areas:

        (a) Honesty, integrity and reputation;
        (b) Financial soundness; and
        (c) Competency (i.e. knowledge, skills and experience).
        Added: March 2025

      • FP-1.3.2

        Licensees must establish competency standards and consistently apply policies and procedures for fit and proper assessments. Licensees must assess the suitability:

        (a) When individuals are proposed for appointment to relevant positions; and
        (b) During annual assessments of an individual’s ongoing suitability.
        Added: March 2025

      • Honesty, Integrity and Reputation

        • FP-1.3.3

          Licensees must consider the person to have not met the criteria under FP-1.3.1 (a) whenever he displays one or more of the following:

          (a) Has previously been convicted of any felony or crime related to honesty and/or integrity unless subsequently restored to good standing;
          (b) Was the subject of civil or criminal proceedings or enforcement action, in relation to the management of an entity, or commercial or professional activities, which were determined adversely to the person and which reflected adversely on the person’s diligence, judgment, honesty or integrity;
          (c) Has been an officer found liable for an offence committed by a body corporate where the offense was proven to have been committed with the consent, connivance, or neglect attributable to that officer;
          (d) Has been refused the right or had restrictions placed on the individual’s right to carry on any trade, business, or profession requiring a specific license, registration, or other authorisation by law in any jurisdiction;
          (e) Has been disqualified by a court, regulator, or other competent body from acting as a board director, manager or employee of a company in any jurisdiction; or
          (f) Has been reprimanded, or disqualified, or removed by a professional or regulatory body in relation to matters relating to the person’s honesty, integrity or business conduct.
          Added: March 2025

        • FP-1.3.4

          In assessing if the criteria under FP-1.3.1(a) have been satisfied, the licensee shall also consider previous professional and personal conduct (in the Kingdom of 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 misfeasance or other misconduct in connection with the formation or management of a corporation or partnership;
          (d) Whether the person, or any body corporate, partnership or unincorporated institution to which the applicant has, or has been associated with as a board director, controller, manager or company secretary been the subject of any disciplinary proceeding, investigation or fines by any government authority, regulatory agency or professional body or association;
          (e) Whether the person is in breach of any financial services legislation;
          (f) Whether the person has ever been refused a license, authorisation, registration or other authority;
          (g) Is or has been subject to disciplinary proceedings by his current or former employer(s), whether in Bahrain or elsewhere;
          (h) Dismissal or a request to resign from any office or employment;
          (i) Whether the person has been a board member, 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) Whether he has been censured, disciplined, suspended or refused membership or registration by regulators, an operator of a market, trade repository or clearing facility, any professional body or government agency, whether in Bahrain or elsewhere;
          (k) A finding of guilt in respect of a complaint relating to activities that are regulated by the CBB or under any law in any jurisdiction;
          (l) Whether he has accepted civil liability for fraud or misrepresentation under any law in any jurisdiction; or
          (m) Whether there is evidence that the individual has not been transparent, open, and cooperative in his or her dealings with supervisory or regulatory authorities.
          Added: March 2025

      • Financial Soundness

        • FP-1.3.5

          FP-1.3.5 In determining if a person is financially sound as required under FP-1.3.1 (b) the following factors may be relevant and would require careful consideration as regards the circumstances and the reasons for such occurrence:

          (a) Such person was adjudged bankrupt by a court, unless a period of 5 years has passed, during which the person has been able to meet all his obligations;
          (b) Such person has failed to satisfy a judgement debt under a court order resulting from a business relationship; or
          (c) Such person has seriously or persistently failed to manage personal debts or financial affairs satisfactorily, in circumstances where such failure caused loss to others.
          Added: March 2025

      • Competency

        • FP-1.3.6

          Licensees must consider a person’s level of knowledge, skills and experience to assess competency. A person is deemed not competent, as required under the criteria in FP-1.3.1 (c), if he does not meet the qualifications, experience, skills or other competency standards set by the licensee. The criteria must consider the following:

          (a) Suitable academic and/or professional qualifications and/or other certifications;
          (b) Expertise or past experience having regard to the nature of the role; and
          (c) The ability to manage and supervise the operations that fall under his responsibilities.
          Added: March 2025

        • FP-1.3.7

          Licensees should ensure that the competency standards for all management positions whether senior or otherwise consider the following:

          (a) The necessary academic, professional or industry qualifications and certifications;
          (b) Knowledge about the industry /business segment/ financial products or the operations or control activity as may be relevant to the job role;
          (c) Sufficiency of industry and management experience (where applicable);
          (d) Understanding of the regulatory framework, including the laws, regulations and associated codes governing the industry sectors; and
          (e) Knowledge and expertise for the tasks relevant to the job role.
          Added: March 2025

        • FP-1.3.8

          The licensees’ competency standards for the CEO and senior management functions must consider:

          (a) Suitable academic and/or professional qualifications and/or other certifications;
          (b) Experience of working in financial services and other occupations including sufficient experience in a managerial capacity (taking into account the functions performed in previous employment and the nature, scale and complexity of the businesses in which the individual was employed);

          (c) Sufficiency of the level of knowledge, for example, of:

          i. Financial markets
          ii. Strategic and business planning
          iii. Risk management
          iv. Governance, compliance oversight and controls
          v. Financial reporting
          vi. Regulatory framework and requirements;

          (d) Skillsets:

          i. Technical/analytical/business skills etc.
          ii. Leadership/management skills.
          Added: March 2025

        • FP-1.3.9

          Persons appointed as directors must have:

          (a) Suitable academic and/or professional qualifications and/or other certifications;
          (b) Sufficient knowledge and experience to demonstrate sound business decision-making ability to challenge senior management;
          (c) A good understanding of the industry and the regulatory environment;
          (d) Experience in governance and oversight; and
          (e) The ability to commit sufficient time to the role, given other commitments.
          Added: March 2025

        • FP-1.3.10

          Licensees must conduct comprehensive due diligence to satisfy themselves that persons being considered for appointment meet their fit and proper criteria and the CBB requirements in this Module.

          Added: March 2025

        • FP-1.3.11

          Licensees must maintain adequate documentation of due diligence and checks.

          Added: March 2025

        • FP-1.3.12

          Due diligence and screening checks should consider reference checks, discussions with past employers, review of CVs, interview process, certificates and proof of credentials, reputation, brand and profile of past employers, police verifications where appropriate, credit scores or credit registry checks, LinkedIn profile checks, etc. and self-declarations.

          Added: March 2025

    • FP-1.4 Maintaining Competence

      • Directors

        • FP-1.4.1

          A licensee must establish appropriate induction and ongoing training and continuing professional development (‘CPD’) arrangements to educate the directors on topics of relevance to the licensee’s business, the industry and compliance obligations.

          Added: March 2025

        • FP-1.4.2

          Directors of the licensee have a key role in ensuring the licensee remains solvent, in safeguarding the interests of the licensee’s customers and counterparts and, more broadly, in setting the standards that help promote financial stability and soundness. Accordingly, the licensee’s directors should keep abreast of developments in the industry, the emerging risks and trends and on matters that help them fulfil their roles. Given the broad nature of their role, board training plans should be aligned to the training needs of the individual directors. Such programmes may include providing the directors with a detailed overview and risk profile of the institution’s significant or new business lines and periodic updates on regulatory developments.

          Added: March 2025

      • Senior Management Functions

        • FP-1.4.3

          Licensees must annually assess the training needs of persons heading senior management functions and update their annual training plans to ensure that the relevant individuals remain competent for their respective job roles. The training plan must address:

          (a) The specific training needs;
          (b) The methods for learning /training;
          (c) The time period during which training must be completed;
          (d) Annual review and assessments; and
          (e) A programme for CPD which must not be less than 15 hours per annum.
          Added: March 2025

        • FP-1.4.4

          In almost every situation, and for most individuals, it is likely that competence will be developed most effectively by a mix of training methods including on-the-job training. In-house training, seminars, conferences, further qualifications, product presentations, computer-based training and one-to-one tuition may also be considered.

          Added: March 2025

    • FP-1.5 Shared Responsibilities and Residency

      • FP-1.5.1

        Licensees may adopt shared responsibility structures (senior managers undertaking more than one function within the licensee’s organisation or within the group) subject to the following considerations:

        (a) The responsibilities, scope of authority and reporting lines for each senior manager function are clearly specified;
        (b) There is no conflict of interest inherent in or arising from simultaneously performing such functions;
        (c) Appropriate systems and controls are in place to manage the risks associated with the licensee’s offerings or transactions in Bahrain;

        (d) The licensee’s operations in Bahrain are not adversely impacted due to the shared responsibility structure, for example, there is:

        i. No impact on effective oversight of delegates and operations in Bahrain;
        ii. No material impact on, or compromise of the interests of, customers in Bahrain;
        iii. No disruption to the licensee’s day-to-day business or activities; and
        iv. No impairment in ability of the licensee to continue complying with the applicable laws, regulatory requirements, or codes of conduct, whether in Bahrain or elsewhere.
        Added: March 2025

      • FP-1.5.2

        Licensees must ensure that adequate mind and management, proportionate to their nature, size and complexity, are resident in Bahrain for managing their day-to-day operations and the conditions in sub-paragraph FP-1.5.1 (d) are met.

        Added: March 2025