EN EN Enforcement
EN-A EN-A Introduction
EN-A.1 EN-A.1 Purpose
Executive Summary
EN-A.1.1
This Module sets out the Central Bank of Bahrain’s (‘CBB’) approach to enforcement, and the measures used by the CBB to address failures by
authorised persons to comply with its regulatory requirements (whether they beinsurance licensees ,approved persons or registered persons). The purpose of such measures is to encourage a high standard of compliance by all those authorised by the CBB, thus reducing risk topolicyholders and the financial system.Amended: January 2007
Amended: October 2007Legal Basis
EN-A.1.2
This Module contains the CBB's Directive (as amended from time to time) relating to enforcement and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 and its amendments ('CBB Law'). The Directive in this Module is applicable to all
insurance licensees (including theirapproved persons ), and to registered persons.Amended: April 2016
Amended: January 2011
Adopted: January 2007EN-A.1.3
For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.
Adopted: January 2007EN-A.2 EN-A.2 Module History
EN-A.2.1
This Module was first issued in April 2005 by the BMA, together with the rest of Volume 3 (Insurance). Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made; Chapter UG-3 provides further details on Rulebook maintenance and version control.
Amended: January 2007EN-A.2.2
When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 3 was updated in January 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to the actual requirements.
Amended: January 2007EN-A.2.3
A list of recent changes made to this Module is detailed in the table below:
Module Ref. Change Date Description of Changes EN-A.1 01/2007 New Rule EN-A.1.2 introduced, categorising this Module as a Directive. EN-1.1,
EN-2.1,
EN-3.1,
EN-4.1,
EN-5.1,
EN-6.1,
EN-7.1,
EN-8.1, and
EN-9.101/2007 Insertion of new 'Legal Source' Sections, reflecting CBB Law. EN-2.2.10 01/2007 New Rule inserted on Appointed Experts reflecting CBB Law. EN-10.3,
EN-10.4,
EN-10.5 and
EN-10.601/2007 Revised new Sections describing criminal sanctions contained in CBB Law. EN-1.2.3,
EN-2.3.1,
EN-2.4,
EN-2.5,
EN-8.1 and
EN-8.310/2009 Amended terminology to be consistent with other Volumes of CBB Rulebook EN-2.2.7 10/2009 Added reference to 'actuary' for investigations. EN-5.2.7 10/2009 Paragraph deleted and replaced as it is a repetition of EN-5.2.6. EN-5.3A 10/2009 Added section on Financial Penalties for Non-Compliant Registered Appointed Representatives. EN-9-1 and
EN-9.210/2009 Reference added to appointed representatives as registered persons. EN-A.1.2 01/2011 Clarified legal basis EN-2 10/2011 Chapter has been streamlined and repetitive information has been eliminated and reference is now made to Section BR-3.5. EN-5.1.1 10/2012 Amended guidance. EN-5.3B 10/2012 Added new Section on financial penalties for date sensitive requirements EN-10.3A.1 01/2013 Section added to refer to Article 161 of the CBB Law. EN-5.2.2 10/2013 Clarified guidance to be in line with CBB Law. EN-5.3B 10/2013 Clarified Rules for financial penalties for date sensitive requirements. EN-A.1.2 04/2016 Reference added to amendments to the CBB Law. EN-B.1.4 04/2016 New guidance Paragraph added to broaden the scope of the application of financial penalties to persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law. EN-5 04/2016 Amended to be in line with amendments to Article 129 of the CBB Law. EN-5.3B.3 04/2017 Amendment to financial penalties for Data Sensitive Requirements. EN-B.2.9 04/2019 Guideline moved from Section EN-4.3. EN-4.3.3 04/2019 Moved guideline to Section EN-B.2. EN-6 04/2019 Deleted Chapter. EN-5.3C 04/2021 Added a new Section on ‘Financial Penalties for Non-compliance with Blocking / Unblocking Requirements’. EN-A.2.4
Guidance on the implementation and transition to Volume 3 (Insurance) is given in Module ES (Executive Summary).
EN-B EN-B Scope of Application
EN-B.1 EN-B.1 Scope
EN-B.1.1
The contents of this Module mostly consist of Guidance material, explaining the different measures that the CBB can employ to ensure compliance with Volume 3 (Insurance). Certain Rules, applicable to
insurance licensees , are however contained in Paragraphs EN-B.3.1, EN-B.4.5, EN-B.4.6, EN-2.2.4, EN-2.2.10 and EN-8.2.4.Amended: January 2007
Amended: October 2007EN-B.1.2
With the exception of Chapter EN-9, Chapters EN-1 to EN-10 of this Module are generally relevant to
insurance licensees . In the case ofoverseas insurance licensees , the CBB's enforcement powers apply only to the branch operating in the Kingdom of Bahrain.Amended: January 2007EN-B.1.3
In addition, Chapters EN-8 and EN-10 of this Module are relevant to
approved persons , whilst Chapter EN-9 is relevant to registered persons.Amended: January 2007
Amended: October 2007EN-B.1.4
Section EN-5 dealing with financial penalties is applicable to
insurance licensees as well as to persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law.Added: April 2016EN-B.2 EN-B.2 The CBB's Approach
EN-B.2.1
The CBB favours an open, pragmatic and collaborative relationship with
authorised persons , within the boundaries set by the CBB Law and Rulebook. Whilst the CBB wishes to avoid a legalistic and confrontational style of supervision, it believes that effective supervision requires effective and timely enforcement of its requirements. Shouldauthorised persons fail to cooperate, then the CBB will use the means described in this Module to achieve compliance.Amended: January 2007EN-B.2.2
In the CBB's view, it is generally neither practical nor effective to prescribe in detail the exact supervisory response for each and every potential contravention. There are a large number of potential contraventions. Moreover, individual circumstances are unlikely to be identical in all cases, and may warrant different responses.
Amended: January 2007EN-B.2.3
In deciding any given supervisory response, the CBB will nonetheless consistently assess the individual circumstance of each contravention against the principles set out in this Module. The CBB's overall approach is to take into account:
(a) The seriousness of the contravention concerned (including the risks posed tocustomers and other market participants);(b) The compliance track record of theauthorised person concerned (including the extent to which a contravention reflects systemic weaknesses or reckless behaviour); and(c) Which measures are most likely to achieve the desired result of remedying the contravention.Amended: January 2007EN-B.2.4
Such an approach reduces the risk of inappropriate enforcement actions, by allowing supervisory measures to be tailored to individual circumstances. By taking into account an
authorised person's compliance record and attitude, it also creates positive incentives and encourages an open and collaborative approach. By assessing individual cases against the same broad principles, the CBB also aims to achieve overall consistency in its supervisory actions.Amended: January 2007EN-B.2.5
Underlying the CBB's approach outlined in Paragraph EN-B.2.3 is the fundamental principle of proportionality. The enforcement measures contained in this Module are of varying severity, and will be used accordingly in keeping with the CBB's assessment of the contravention. Thus, the CBB will reserve its most serious enforcement measures — such as cancellation of license or withdrawal of 'fit and proper' status — for the most serious contraventions.
Amended: January 2007
Amended: October 2007EN-B.2.6
In keeping with the proportionality principle, and to the extent consistent with the CBB's enforcement approach described above, the CBB will usually opt for the least severe of appropriate enforcement measures. In most cases, the CBB expects to use a formal warning before resorting to more severe measures. The need for further measures will then usually be dependent on the response of the
authorised person concerned.Amended: January 2007EN-B.2.7
Where a significant element of judgement is required to assess compliance with a requirement, the CBB will usually discuss the matter with the
authorised person concerned, before using one of this Module's enforcement mechanisms. This is likely to be the case, for example, with respect to requirements for adequate systems and controls. Conversely, where there are clear-cut contraventions of CBB requirements, then the CBB will usually resort immediately to one or more of these enforcement mechanisms outlined in this Module. This is more likely to occur in cases where quantitative requirements — such as those relating to capital adequacy — are concerned. In most such cases, though, the CBB also expects to continue an active dialogue with the person concerned, aimed at remedying the contravention.Amended: January 2007EN-B.2.8
Except in the limited circumstances outlined below, the CBB will usually only apply an enforcement measure after the person concerned has been given a suitable opportunity to make representations. In the case of measures described in Chapters EN-6 and EN-7, certain procedures are set out in the CBB Law.
Amended: January 2007EN-B.2.9
In extreme circumstances, where the CBB believes that immediate action is required to prevent real damage to Bahrain's financial markets, its users or to
policyholders of the licensee concerned, it may amend or cancel a license, place a licensee under administration, or suspend a license (cf. Articles 48(g), 130(b) and 131 of the CBB Law).Added: April 2019EN-B.3 EN-B.3 Prohibition on Insurance
EN-B.3.1
To help the CBB achieve the purpose of this Module,
insurance licensees may not enter or make a claim under acontract of insurance that is intended to, or has the effect of, indemnifying them from the financial penalties provided for in this Module.Amended: January 2007
Amended: October 2007EN-B.4 EN-B.4 Publicity
EN-B.4.1
The CBB will not as a matter of general policy publicise individual cases when it uses the measures described in Chapters EN-2 to EN-5, and EN-8. However, in such cases, the CBB may inform (where relevant) an
authorised person's externalauditor and — in the case of licensees with overseas operations — relevant overseas regulators.Amended: January 2007
Amended: October 2007EN-B.4.2
In exceptional circumstances, the CBB may decide to publicise individual cases when the measures set out in Chapters EN-2 to EN-5 and EN-8, are used, where there is a strong case that doing so would help achieve the CBB's supervisory objectives. In such instances, the CBB will usually allow the licensee or person concerned the opportunity to make representations to the CBB before a public statement is issued.
Amended: January 2007EN-B.4.3
Without prejudice to the above policy, the CBB may from time to time publish aggregate information on its use of enforcement measures, without identifying the licensees or persons concerned.
Amended: January 2007EN-B.4.4
By their nature, the penalties in Chapters EN-6, EN-7 and EN-9 inclusive are public acts, once applied. The CBB will in these instances generally issue a public statement explaining the circumstances of the case.
Amended: January 2007EN-B.4.5
If a financial penalty is imposed on an
insurance licensee under the provisions of Chapter EN-5, and it is subject to the requirements of Module PD (Public Disclosures), then it must disclose in the manner prescribed by Module PD the amount of any financial penalties imposed by the CBB, together with a factual description of the reason(s) given by the CBB for the penalty. (See Chapter PD-2.)Amended: January 2007EN-B.4.6
Insurance licensees subject to a CBB enforcement measure (with the exception of formal requests for information) must inform their externalauditor of the fact.Amended: January 2007
Amended: October 2007EN-1 EN-1 Formal Requests for Information
EN-1.1 EN-1.1 Legal Source
EN-1.1.1
As part of its on-going supervision, under Articles 111 and 123 of the CBB Law, the CBB may make specific ad-hoc requests for information, beyond the regular reporting or notifications specified in Module BR (CBB Reporting). Recipients of such requests are bound to respond to such requests under the terms of their license (see Paragraph BR-3.1.1).
Adopted: January 2007
Amended: October 2007EN-1.2 EN-1.2 Procedure
EN-1.1.1
As part of its on-going supervision, the BMA may make specific ad-hoc requests for information, beyond the regular reporting or notifications specified in Module BR (BMA Reporting). Recipients of such requests are bound to respond to such requests under the terms of their license (see Paragraph BR-4.2.1).
EN-1.2.1
To clearly identify formal information requests, these will always be made in writing, under the signature of a Director or more senior official of the CBB. They will include the statement, "This is a formal request for information as defined in Chapter 1 of Module EN (Enforcement) of Volume 3 (Insurance) of the CBB Rulebook"; and will state the deadline by which the information is to be communicated to the CBB.
Amended: January 2007
Amended: October 2007EN-1.2.2
Failure to respond to such formal requests within the deadline set will be viewed as a significant breach of supervisory requirements and may result in a formal warning or other enforcement measure, specified under Articles 163 and 170 of the CBB Law, as decided by the CBB depending on the circumstances of the case.
Amended: January 2007EN-1.2.3
The deadline set in the request will vary depending on individual circumstances. A recipient may submit a case for an extension to the deadline; it should do so as soon as possible if it believes that an extension will be required, and in any event prior to the passing of the original deadline. The Central Bank will respond before the original deadline has passed; if it fails to do so, then the requested extension will apply. Whilst waiting for a reply, the recipient must assume that the original deadline will apply.
Amended: October 2009
Amended: January 2007EN-1.2.4
The above procedures do not prevent individual CBB supervisors from making oral requests for information as part of their day-to-day interaction with
authorised persons . The CBB expectsauthorised persons to maintain their cooperative response to such requests; however, in the interests of clarity, the CBB will not view failures to respond to oral requests as a breach of supervisory requirements.Amended: January 2007EN-2 EN-2 Investigations
EN-2.1 EN-2.1 Legal Source
EN-2.1.1
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 by its own officials or
appointed experts . Articles 111 and 124 requirelicensees to make available to the CBB's inspectors their books and records, and to provide all relevant information within the time limits deemed reasonable by the inspectors.Amended: October 2011
Adopted: January 2007EN-2.2 EN-2.2 CBB Policy
EN-2.2.1
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
insurance 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: January 2007EN-2.2.2
Failure by
insurance licensees to cooperate fully with the CBB's inspectors, or itsAppointed Experts , 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 guidance is supported by Article 114(a) of the CBB Law.Amended: January 2007EN-2.2.3
The CBB may appoint an individual or a firm as an
Appointed Expert . Examples ofAppointed Experts are reporting accountants, expert witnesses and independent actuaries. The appointment ofAppointed Experts is not necessarily indicative of a contravention of CBB requirements or suspicion of such a contravention. For instance, anAppointed Expert may typically be commissioned to provide an expert opinion on a technical matter.Amended: January 2007EN-2.2.4
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 theAppointed Experts is the property of the CBB (but is usually shared by the CBB with the firm concerned). The cost of theAppointed Experts' work must be borne by the licensee concerned.Amended: January 2007EN-2.2.5
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 costs of such investigations are met by the licensee, the CBB makes only selective use ofAppointed Experts , when essential to supplement CBB's other supervisory tools and resources.Amended: January 2007EN-2.2.6
[This paragraph was deleted in October 2011]
Deleted: October 2011EN-2.2.7
[This paragraph was deleted in October 2011]
Deleted: October 2011
EN-2.2.8
[This paragraph was deleted in October 2011]
Deleted: October 2011EN-2.2.6
The CBB may commission reports, which require
Appointed Experts to review information from another company within the reportinginsurance licensee's group even when that other entity is not subject to any CBB requirements.Amended: October 2011
Adopted: January 2007EN-2.2.7
In accordance with Articles 114 and 123 of the CBB Law,
insurance licensees must provide all relevant information and assistance toAppointed Experts on demand.Amended: October 2011
Adopted: January 2007EN-2.2.11
[This Paragraph was moved to Section BR-3.5]
Deleted: October 2011
Adopted: January 2007EN-2.3 EN-2.3 Procedure
[The content of this Section was moved to Section BR-3.5 in October 2011]
EN-2.3.1
All proposals for
investigators require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with theinvestigators 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 theinvestigators , to discuss any aspect of the investigation.Amended: October 2009
Amended: January 2007EN-2.3.2
Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the
insurance licensee concerned.Amended: January 2007EN-2.4 EN-2.4 The Required Report
[The content of this Section was moved to Section BR-3.5 in October 2011]
EN-2.4.1
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 an
insurance licensee's business:a) Accounting and other records;b) Actuarial estimates;c) Internal control systems;d) Returns of information provided to the CBB;e) Operations of certain departments; and/orf) Other matters specified by the CBB.Adopted: October 2009EN-2.4.2
Investigators will be required to form an opinion on whether, during the period examined, theinsurance licensee 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.Adopted: October 2009EN-2.4.3
The
investigators' report should follow the format set out in Appendix EN-1 in Part B of Rulebook Volume 3 (Insurance).Adopted: October 2009EN-2.4.4
Unless otherwise directed by the CBB, the
investigators should discuss the report with the Board of Directors and/or senior management in advance of it being sent to the CBB.Adopted: October 2009EN-2.4.5
Where the report is
qualified by exception , the report must clearly set out the risks which theinsurance licensee 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.Adopted: October 2009EN-2.4.6
If the
investigators conclude, after discussing the matter with theinsurance licensee , that they will give a negative opinion (as opposed to onequalified 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.Adopted: October 2009EN-2.4.7
The report must be completed, dated and submitted, together with any comments by Directors or management (including any proposed timeframe within which the
insurance licensee has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.Adopted: October 2009EN-2.5 EN-2.5 Other Notifications to the CBB
[The content of this Section was moved to Section BR-3.5 in October 2011]
EN-2.5.1
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 aninsurance licensee (see Module AU), 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 concernedinsurance licensee , or that the interests ofpolicyholders are at risk because of adverse changes in the financial position or in the management or other resources of aninsurance licensee . Notwithstanding the above, it is primarily theinsurance licensee's responsibility to report such matters to the CBB.Adopted: October 2009EN-2.5.2
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 wheninvestigators , in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.Adopted: October 2009EN-2.5.3
If
investigators decide to communicate directly with the CBB in the circumstances set out in Paragraph EN-2.5.1 above, they may wish to consider whether the matter should be reported at an appropriate senior level in theinsurance licensee at the same time and whether an appropriate senior representative of theinsurance licensee should be invited to attend the meeting with the CBB.Adopted: October 2009EN-3 EN-3 Formal Warnings
EN-3.1 EN-3.1 CBB Legal Source
EN-3.1.1
Article 38 of the CBB Law empowers the CBB to issue formal warnings to insurance licensees or individuals. The CBB will issue such warnings where it reasonably believes that these are required to achieve its statutory objectives.
Adopted: January 2007EN-3.2 EN-3.2 CBB Policy
EN-3.1.1
The BMA may issue formal warnings to licensees or individuals where it reasonably believes that these are required to achieve its statutory objectives.
EN-3.2.1
Formal warnings are clearly identified as such and represent the CBB's first level of formal enforcement measure. They are intended to clearly set out the CBB's concerns to a licensee or individual regarding an issue, and should be viewed by a recipient with the appropriate degree of seriousness.
Amended: January 2007EN-3.2.2
As indicated in Paragraph EN-B.2.7, the CBB will usually discuss concerns it may have prior to resorting to a formal enforcement measure, especially where a significant element of judgement is required in assessing compliance with a regulatory requirement.
Amended: January 2007EN-3.2.3
Where such discussions fail to resolve matters to the CBB's satisfaction, then it may issue a formal warning. Failure to respond adequately to a formal warning will lead the CBB to consider more severe enforcement measures. However, more severe measures do not require the prior issuance of a formal warning — depending on its assessment of the circumstances, the CBB may decide to have immediate recourse to other measures. Similarly, there may be circumstances where the CBB issues a formal warning without prior discussion with the licensee or person concerned. This would usually be the case where a clear-cut compliance failing has occurred.
Amended: January 2007EN-3.2.4
When considering whether to issue a formal warning, the criteria taken into consideration by the CBB include the following:
(a) The seriousness of the actual or potential contravention, in relation to the requirement(s) concerned and the risks posed to the licensee'spolicyholders and other stakeholders;(b) In the case of an actual contravention, its duration and/or frequency of the contravention; the extent to which it reflects more widespread weaknesses in controls and/or management; and the extent to which it was attributable to deliberate or reckless behaviour; and(c) The extent to which the CBB's supervisory objectives would be better served by issuance of a formal warning as opposed to another type of supervisory action.Amended: January 2007EN-3.3 EN-3.3 Procedure
EN-3.3.1
Proposals to issue formal warnings are carefully considered against the criteria listed in Paragraph EN-3.2.4. They require approval of a Director or more senior CBB official, and include the statement "This is a formal warning as defined in Chapter 3 of Module EN (Enforcement) of Volume 3 (Insurance) of the CBB Rulebook".
Amended: January 2007
Amended: October 2007EN-3.3.2
Depending on the issue in question, recipients of a formal warning may be required to respond to the contents of the notice. Where a formal warning is served prior to imposing any penalties or administrative proceedings, Articles 125(c) and 126 of the CBB Law provide the recipients the right to object or challenge the formal warning.
Amended: January 2007EN-4 EN-4 Directions
EN-4.1 EN-4.1 Legal Source
EN-4.1.1
Article 38 of the CBB Law empowers the CBB to issue Directions to
insurance licensees or individuals. The powers conveyed allow the CBB to issue whatever Directions, it reasonably believes, are required to achieve its statutory objectives.Amended: January 2007
Amended: October 2007EN-4.2 EN-4.2 CBB Policy
EN-4.1.1
The BMA may issue Directions to licensees or individuals where it reasonably believes that these are required to achieve its statutory objectives.
EN-4.2.1
The types of Directions that the CBB may issue in practice vary and will depend on the individual circumstances of a case. Generally, however, Directions require a licensee or individual either to undertake or to stop certain specific actions in order to address or mitigate certain perceived risks. They may also include restrictions on a licensee's activities until those risks have been addressed — for instance, a ban on the writing of new business.
Amended: January 2007EN-4.2.2
The CBB is conscious of the powerful nature of a Direction and, in the case of a licensee, the fact that it subordinates the role of its Board and management on a specific issue. The CBB will carefully consider the need for a Direction, and whether alternative measures may not achieve the same end. Where feasible, the CBB will try to achieve the desired outcome through persuasion, rather than recourse to a Direction.
Amended: January 2007EN-4.2.3
In considering whether to issue a Direction, the criteria taken into consideration by the CBB include the following:
(a) The seriousness of the actual or potential contravention, in relation to the requirement(s) concerned and the risks posed to the licensee'spolicyholders , market participants and other stakeholders;(b) In the case of an actual contravention, its duration and/or frequency of the contravention; the extent to which it reflects more widespread weaknesses in controls and/or management; and the extent to which it was attributable to deliberate or reckless behaviour; and(c) The extent to which the CBB's supervisory objectives would be better served by issuance of a Direction as opposed to another type of supervisory action.Amended: January 2007
Amended: October 2007EN-4.3 EN-4.3 Procedure
EN-4.3.1
Proposals to issue Directions are carefully considered against the criteria listed in Paragraph EN-4.2.3. They require approval of an Executive Director or more senior official of the CBB, and include the statement "This is a formal Direction as defined in Chapter 4 of Module EN (Enforcement) of Volume 3 (Insurance) of the CBB Rulebook".
Amended: January 2007
Amended: October 2007EN-4.3.2
The subject of the Direction will normally be given 30 calendar days from the Direction's date of issuance in which to make representations to the CBB concerning the actions required. This must be done in writing, and addressed to the issuer of the original Direction. Should a representation be made, the CBB will make a final determination, within 30 calendar days of the date of the representation, as specified in Articles 125(c) and 126 of the CBB Law.
Amended: January 2007EN-4.3.3
[This Paragraph was moved to Section EN-B.2 in April 2019].
Amended: January 2007
Amended: October 2007
Amended: April 2019EN-5 EN-5 Financial Penalties
EN-5.1 EN-5.1 Legal Source
EN-5.1.1
Article 129 of the CBB Law, provides the CBB the power to impose financial penalties on licensees or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law. Their use is generally limited to situations where major breaches of regulatory requirements have taken place and a licensee has failed to respond in an acceptable manner to the concerns expressed by the CBB. Financial penalties may be preceded by the issuance of a written formal warning and/or Direction.
Amended: April 2016
Amended: October 2012
Amended: January 2007EN-5.2 EN-5.2 CBB Policy
EN-5.2.1
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 a licensee's or persons' referred to in paragraph (b) of Article (68 bis 1) of the CBB Law behaviour and by limits set in the CBB Law. The CBB intends that the impact of a penalty should derive more from its signalling effect than from the actual amount of money involved.
Amended: April 2016
Amended: January 2007EN-5.2.2
As indicated in Paragraph EN-B.4.5 and as required by Module PD (Public Disclosure), the CBB requires disclosure by those licensees subject to the requirements of Module PD, 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, in accordance with Article 132 of the CBB Law, in the case of all
insurance licensees , registered persons orapproved persons , the CBB may publicise the issuance of a financial penalty notice, by way of its website or through other means, where there is a strong case that doing so would help achieve the CBB's supervisory objectives.Amended: October 2013
Amended: January 2007EN-5.2.3
In assessing whether to serve a financial 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;(c) The extent to which the contravention was deliberate or reckless;(d) The licensee's past compliance record and conduct following the contravention; and(e) The scope of any other action taken by the CBB or other supervisors against the licensee, in response to the compliance failures in question.Amended: January 2007EN-5.1.5
Examples of the types of compliance failings that may lead to the serving of a financial penalty notice include (but are not limited to):
(a) failures to address persistent delays and/or significant inaccuracies in regulatory reporting to the BMA;(b) repeated failures to respond to formal requests for information from the BMA, within the deadlines set;(c) the submission of information to the BMA known to be false or misleading; and(d) major failures in maintaining adequate systems and controls in accordance with BMA requirements, subjecting policyholders and other customers to significant risk of financial loss.EN-5.2.4
Part 11 of the CBB Law outlines instances where financial penalties may be imposed. Examples of the types of compliance failings that may lead to the serving of a financial penalty notice 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 CBB requirements, subjectingpolicyholders and othercustomers to significant risk of financial loss.Adopted: January 2007EN-5.2.5
In accordance with Article 125 of the CBB Law, 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 persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law with respect to the CBB Law; the CBB Rulebook; any Directions, Warnings of Formal Requests for Information; or violations of the terms and conditions of the license issued to the licensee;(b) Evidence of 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 persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law for challenging the intended penalty (which will not be less than 30 calendar days).Amended: April 2016
Adopted: January 2007EN-5.2.6
The licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law may either pay the penalty or, pursuant to Article 126 of the CBB Law, may object within the period noted in Sub-Paragraph EN-5.2.5(d). In accordance with Article 127 of the CBB Law, the CBB will consider any objection and make a formal resolution within 30 calendar days of receiving the objection. Thereafter, the resolution and any accompanying penalties are final and must be paid within 30 calendar days.
Amended: April 2016
Adopted: January 2007EN-5.2.7
[This Paragraph was deleted October 2009]
Deleted: October 2009EN-5.2.8
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).
Amended: January 2007EN-5.3 EN-5.3 Module FC (Financial Crime)
EN-5.3.1
In addition to the general circumstances set out in Section EN-5.2, a financial penalty of up to BD 100,000 may be applied by the CBB, in cases where an
insurance licensee fails to comply with any of the requirements of Module FC (Financial Crime). The fine shall be multiplied by the number of violations.Amended: April 2016
Amended: January 2007EN-5.3.2
As with the imposition of financial penalties in response to breaches of other supervisory requirements, the CBB will apply financial penalties with respect to Module FC, based on the criteria set out in Paragraph EN-5.2.3. Financial penalties applied under this Section are also subject to the same disclosure requirements as described in Paragraph EN-B.4.5.
Amended: January 2007
Amended: October 2007EN-5.3.3
A failure to comply with the Module FC (Financial Crime) that warrants a financial penalty would not trigger also a financial penalty under Section EN-5.2.
Amended: January 2007EN-5.3.4
Any financial penalties applied by the CBB as regards the implementation of Module FC, 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 Module FC does not prevent the CBB from also using other enforcement measures to remedy the same violation (for instance, a Direction).
Amended: January 2007EN-5.3A EN-5.3A Financial Penalties for Non-Compliant Registered Appointed Representatives
EN-5.3A.1
Section AU-1.3A and Chapter GR-9 dealing with
appointed representatives , outlines specific requirements whichinsurance firms must comply with, particularly with regard to the registration and the fit and proper requirements ofappointed representatives and their dealings with potentialpolicyholders .Adopted: October 2009EN-5.3A.2
This Section outlines specific financial penalties dealing with the non-compliance of specific provisions of Section AU-1.3A and Chapter GR-9. The CBB views the breach of these requirements as a serious concern.
Adopted: October 2009EN-5.3A.3
Where an
insurance firm has appointed an individualappointed representative or the designated individuals of an incorporatedappointed representative and these individuals do not comply with the requirements of Section AU-1.3A and/or Chapter GR-9, a financial penalty of BD500 will be imposed to theinsurance firm for each individual found in breach of these provisions.Adopted: October 2009EN-5.3A.5
A decision to impose a financial penalty for non-compliance with Section AU-1.3A and/or Chapter GR-9 is unrelated to whether the CBB issues a formal warning; it is the
insurance firm's responsibility to ensure that itsappointed representatives comply with the requirements of Section AU-1.3A and Chapter GR-9.Adopted: October 2009EN-5.3B EN-5.3B Financial Penalties for Date Sensitive Requirements
EN-5.3B.1
Modules AU, FC, BR and PD contain specific requirements where
insurance licensees and/or registered persons must comply with, by a precise date. Where a specific due date is involved, the CBB's financial penalties are based on a per diem basis.Added: October 2012EN-5.3B.2
This Section applies to due dates for:
(a) Reporting requirements included in Module BR;(b) Public disclosure requirements included in Module PD;(c) The report of the external auditor or approved consultancy firm required as per Paragraph FC-3.3.1 (d); and(d) Annual licensing and registration fees required as per Section AU-6.3.Amended: October 2013
Added: October 2012EN-5.3B.3
Financial penalties related to late filing or other date sensitive requirements are calculated as per the following per diem basis:
(a) Where theinsurance firm's gross premiums written are less than or equal to BD 10 million, the financial penalty for late filing is BD 40 per day;(b) Where theinsurance firm's gross premiums written are greater than BD 10 million but less than or equal to BD 30 million, the financial penalty for late filing is BD 100 per day;(c) Where theinsurance firm's gross premiums written are greater than BD 30 million, the financial penalty for late filing is BD 200 per day;(d) For newly licensedinsurance firms who have yet to provide audited financial statements, the financial penalty is BD 40 per day; and(e) Forinsurance brokers ,insurance consultants ,insurance managers ,loss adjusters andactuaries , the financial penalty is BD 20 per day.Amended: April 2017
Amended: October 2013
Added: October 2012EN-5.3B.3A
For purposes of Paragraph EN-5.3B.3, reference to gross premiums written refers to the amount of gross premiums reported in the latest consolidated annual audited financial statements of the
insurance firm .Added: October 2013EN-5.3B.3B
Where an
insurance firm must pay the annual CBB fixed fees for its appointed representatives under Paragraph AU-6.3.6A and has failed to meet the deadline of the 1st December of the prior year for which the fees are due, the financial penalty imposed for each day late will be:(a) For incorporatedappointed representatives that have 1 to 10 individuals, the financial penalty is BD 10 per day;(b) For incorporatedappointed representatives that have 11 to 20 individuals, the financial penalty is BD 15 per day;(c) For incorporatedappointed representatives that have more than 20 individuals, the financial penalty is BD 20 per day; and(d) For individualappointed representatives , the financial penalty is BD 10 per day.Added: October 2013EN-5.3B.4
For
overseas insurance licensees , only those gross written premiums reported as part of the year-end filing for their Bahraini operations, shall be considered in determining the per diem financial penalty.Amended: October 2013
Added: October 2012EN-5.3B.5
In accordance with Article 129 of the CBB Law, the maximum financial penalty levied for failing to comply with date sensitive requirements is BD 100,000. The fine shall be multiplied by the number of violations. The CBB may opt to limit the amount of the financial penalty and use other enforcement measures as outlined in Module EN (Enforcement), such as imposing restrictions on an insurance license limiting the scope of operations.
Amended: April 2016
Added: October 2012EN-5.3B.6
The various deadlines for submission of reports and annual fees referred to in Modules BR, FC, PD and AU are defined:
(a) In terms of a specified number of days following a given date, such as the last date of a calendar quarter;(b) A specified number of days after the occurrence of a specific event; or(c) A specific date.Added: October 2012EN-5.3B.7
In imposing financial penalties for date sensitive requirements, the following criteria apply:
(a) Where the due date falls on a holiday as designated by the CBB, the first business day following the 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 Module BR, is considered 'not filed' until the CBB receives all necessary elements of the return.Added: October 2012EN-5.3B.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 or registered person. For the payment of annual fees, licensees must follow the requirements of Form ALF, included under Part B of Volume 3.
Added: October 2012EN-5.3B.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 or registered person's responsibility to file and disclose on time as per the requirements of Volume 3 (Insurance) Rulebook.
Added: October 2012EN-5.3C EN-5.3C Financial Penalties for Non-compliance with Blocking / Unblocking Requirements
EN-5.3C.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 through billing on a weekly basis.
Added: April 2021EN-5.4 EN-5.4 Procedure
EN-5.4.1
A written financial penalty notice will be addressed to the
Chief Executive Officer orGeneral Manager of the licensee 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 an Executive Director or more senior member of the CBB's management may sign the notification.Amended: April 2016
Amended: January 2007EN-5.4.2
The licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law has 30 calendar days from the notification's date of issuance to submit any representations it wishes to make to the CBB, in writing and addressed to the issuer of the original notification. If the licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law decides not to submit representations, it has 30 calendar days from the notification's date of issuance in which to pay the penalty.
Amended: April 2016
Amended: January 2007EN-5.4.3
Should the licensee 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 calendar 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.
Amended: April 2016
Amended: January 2007EN-5.4.4
Failure to pay a penalty within the required deadlines will be considered a breach of CBB regulatory requirements, and will also result in other measures being considered, as described elsewhere in this Module.
Amended: January 2007EN-5.5 EN-5.5 Addressing a Compliance Failure
EN-5.5.1
Payment of a financial penalty does not by itself absolve a licensee or persons referred to in paragraph (b) of Article (68 bis 1) of the CBB Law from addressing the compliance failure concerned. The CBB will expect the licensee 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.
Amended: April 2016
Amended: January 2007EN-6 EN-6 [This Chapter was deleted in April 2019]
EN-6.1 EN-6.1 [This Section was deleted in April 2019]
EN-6.1.1
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Adopted: January 2007EN-6.1.2
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Adopted: January 2007EN-6.1.3
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Adopted: January 2007EN-6.2 EN-6.2 [This Section was deleted in April 2019]
EN-6.1.1
Subject to the approval of H.E. The Governor, in certain circumstances, the BMA may assume the administration of a licensee. These circumstances are where:
(a) the licensee has become insolvent;(b) the licensee's liquidity or solvency are in jeopardy;(c) the licensee's continued activity is detrimental to the rights of policyholders; or(d) the licensee commits serious contravention of the provisions of theInsurance Legislation or Volume 3 (Insurance).EN-6.1.2
Where the BMA assumes the administration of a licensee, the licensee concerned may appeal to H.E. The Governor and, subsequently, the courts, in order to challenge its administration by the BMA.
EN-6.2.1
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Amended: January 2007EN-6.2.2
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Amended: January 2007EN-6.2.3
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Amended: January 2007EN-6.3 EN-6.3 [This Section was deleted in April 2019]
EN-6.3.1
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Amended: January 2007EN-6.3.2
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Amended: January 2007EN-6.3.3
[This Paragraph was deleted in April 2019].
Deleted: April 2019
Amended: January 2007EN-7 EN-7 Cancellation or Amendment of License
EN-7.1 EN-7.1 Legal Source
EN-7.1.1
Article 48 of the CBB Law, empowers the CBB to cancel or amend a license under certain circumstances. These include cases where a licensee has:
(a) Failed to satisfy its license conditions;(b) Violated the terms of the CBB Law, Regulations or Rulebook;(c) Failed to start business within six months from the date of the license being issued;(d) Ceased to carry out the licensed activities permitted; or(e) Not acted in the legitimate interest of itscustomers or creditors.Amended: January 2007
Amended: October 2007EN-7.1.2
An example of amending the permitted activities of an
insurance licensee is to remove the permission to effectcontracts of insurance , which would have the effect of restricting the firm's activities to 'running off' existing business.Amended: January 2007
Amended: October 2007EN-7.1.3
Article 48(d) of the CBB Law requires the CBB to give the licensee concerned at least 30 calendar days in which to appeal any proposed cancellation or amendment of its license.
Adopted: January 2007EN-7.2 EN-7.2 CBB Policy
EN-7.1.3
The BMA will only propose the cancellation of the firm's license once it is satisfied that there are no longer any regulated activities for which it is necessary to keep the authorisation in force. In situations where it is necessary to keep the authorisation in force, for example where there are existing policyholder liabilities that have not been transferred under a portfolio transfer to another insurance licensee, the BMA will generally take alternative action, such as to place the firm in administration (in accordance with the procedures in Section EN-8.2) and only consider the cancellation of the license after other options such as the transfer of all or part of the portfolio to other insurers have been considered and, where appropriate, implemented.
EN-7.1.4
Where the BMA proposes to cancel a firm's license, it must provide the licensee concerned reasonable time to object to the proposed cancellation.
EN-7.2.1
When used as an enforcement tool, the CBB views cancelling a license as appropriate only in the most serious of circumstances, when faced with the gravest of contraventions or when left with no other reasonable means of successfully addressing the regulatory failings in question. Cancellation or amendment of a license, however, may also be required in circumstances outside an enforcement context, for instance because of a change in the business profile of a licensee.
Adopted: January 2007EN-7.2.2
When used as an enforcement tool, the criteria used by the CBB in assessing whether to seek the cancellation or amendment of a license include:
(a) The extent to which the interests of thepolicyholders and others who have a claim on the licensee would be best served by the cancellation or amendment of the license;(b) The extent to which other supervisory penalties could reasonably be expected to achieve the CBB's desired supervisory objectives;(c) The extent to which the licensee has contravened the condition of its license and/or the CBB Law, including the seriousness, duration and/or frequency of the contravention(s) concerned, and the extent to which the contraventions reflect more widespread or systemic weaknesses in controls and/or management;(d) The extent to which the licensee has been involved in financial crime or other criminal conduct; and(e) The licensee's past compliance record and conduct following the contravention(s).Amended: January 2007EN-7.2.3
When the CBB issues a notice of cancellation or amendment as an enforcement tool, it will only implement the actual change once it is satisfied that there are no longer any regulated activities for which it is necessary to keep the current authorisation in force. Until such time as these activities have been run off or moved to another licensee, the CBB will control these activities through other means (such as taking the licensee into administration or through issuing Directions).
Adopted: January 2007EN-7.3 EN-7.3 Procedure
EN-7.3.1
All proposals for cancelling or amending a license are subject to a thorough review by the CBB of all relevant facts, assessed against the criteria outlined in Paragraphs EN-7.2.1 and EN-7.2.2. After being assessed at the Executive Director level, proposals are submitted to H.E. the Governor for approval.
Amended: January 2007EN-7.3.2
Once approved within the CBB, a formal notice of cancellation or amendment is issued to the licensee concerned. The notice of cancellation or amendment will describe the factual circumstances of the contraventions concerned, and the CBB's rationale for the proposed cancellation or amendment, as measured against the criteria outlined in Paragraphs EN-7.2.1 and EN-7.2.2.
Amended: January 2007EN-7.3.3
The licensee has 30 calendar days from the date of the notice in which to lodge an appeal. The appeal should be addressed to the Board of the CBB, and copied to H.E. the Governor of the CBB.
Amended: January 2007EN-7.3.4
If an appeal is lodged, the Board of the CBB will make a final ruling within 60 calendar days of its date of issuance.
Amended: January 2007EN-7.3.5
A licensee may appeal to a competent court within 60 calendar days of the above final ruling for a decision. The court’s decision will then be final.
Adopted: January 2007EN-8 EN-8 Cancellation of 'Fit and Proper' Approval
EN-8.1 EN-8.1 Legal Source
EN-8.1.1
Article 65 of the CBB Law allows the CBB to determine the level of qualifications, experience and training of a licensee’s
officers oremployees . Article 65(c) of the CBB Law empowers the CBB the right to remove any official, being a Board member or in an executive position, that is unqualified or unsuitable for the assigned position.Adopted: January 2007
Amended: October 2007EN-8.1.2
[This Paragraph was deleted October 2009]
Deleted: October 2009EN-8.2 EN-8.2 CBB Policy
EN-8.2.1
Chapter AU-3 of Module AU (Authorisation), specifies that
approved persons must be assessed by the CBB as 'fit and proper' to hold such a position. The Chapter specifies various factors that the CBB takes into account when reaching such a decision.Adopted: January 2007EN-8.2.2
The CBB is conscious of the impact that assessing someone as not 'fit and proper' may have on an individual
approved person . Such assessments are carefully reviewed in the light of all relevant facts. The criteria used in reaching a decision include the following:(a) The extent to which the factors set out Chapter AU-3 have not been met;(b) The extent to which the person has deliberately or recklessly breached requirements of the CBB Law or Volume 3 (Insurance);(c) The person's past compliance record and conduct following any such breaches;(d) The length of time since factors indicating a lack of fitness or propriety occurred; and(e) The risk the person poses to licensees and theirpolicyholders .Amended: January 2007
Amended: October 2007EN-8.2.3
Amongst other matters, the CBB will normally consider as grounds for the revocation of
approved person status the following events affecting theapproved person :(a) The conviction by a court, whether in Bahrain or elsewhere, for a crime affecting honesty;(b) A declaration of bankruptcy by a court of law;(c) A court ruling that theapproved person's legal capacity is totally or partially impaired; or(d) The sanction by a professional body of a fine, suspension, expulsion or censure.Amended: January 2007EN-8.2.4
Insurance licensees must inform the CBB immediately when they become aware of any of the events listed in Paragraph EN-8.2.3, affecting one of theirapproved persons (refer to Paragraph BR-2.2.5).Amended: January 2007
Amended: October 2007EN-8.2.5
If the CBB has grounds for considering that an individual is no longer fit and proper to continue to hold their existing
controlled function(s) , it will revoke theapproved person status granted to that individual. The individual will then be required to resign from each of thecontrolled functions to which this revocation applies. This revocation does not automatically preclude them from applying to hold othercontrolled functions in the future, but will be taken into account in considering new requests frominsurance licensees that pertain to that individual.Amended: January 2007EN-8.2.6
Depending on the seriousness of the situation, the CBB may impose further measures, which may include disqualification from:
(a) Holding anycontrolled function ;(b) Performing any function in relation to any regulated activity carried out by a licensed firm; or(c) Being acontroller of any licensed firm.Amended: January 2007EN-8.2.6
In assessing evidence, the CBB applies a lower threshold than is applied in a criminal court of law, reflecting the administrative nature of the sanction. The CBB may also take into account the cumulative effect of factors which, when considered individually, may not in themselves be sufficient to justify an adverse 'fit and proper' finding.
Amended: January 2007EN-8.2.7
The CBB may also take into account the particular function being undertaken in the licensee by the individual concerned, and the size and nature of the licensee itself, particularly when assessing the suitability of a person's experience or qualifications. Thus, the fact that a person was deemed 'fit and proper' for a particular position in a particular firm does not necessarily mean he would be suitable in a different position or in a different firm.
Amended: January 2007EN-8.3 EN-8.3 Procedure
EN-8.3.1
All proposals for issuing an adverse 'fit and proper' finding are subject to a thorough review by the CBB of all relevant facts, assessed against the criteria outlined in Paragraph EN-8.2.2. In some instances, it may be appropriate for the CBB to request the licensee or person concerned to provide further information, in order to help reach a decision.
Amended: January 2007EN-8.3.2
All adverse findings have to be approved by an Executive Director of the CBB. Once approved, a notice of intent is issued to the person concerned and copied to the Board/senior management of the licensee, setting out the circumstances and the basis for the CBB's proposed adverse finding. The person has 30 calendar days from the date of the notice in which to make written representations, addressed to the Executive Director concerned, failing which a final notice is issued by the CBB.
Amended: October 2009
Amended: January 2007EN-8.3.3
If representations are made, then the CBB has 30 calendar days from the date of the representation in which to consider any mitigating evidence submitted and make a final determination.
Amended: October 2009
Amended: January 2007EN-9 EN-9 Cancellation of Registration
EN-9.1 EN-9.1 Legal Source
EN-9.1.1
Article 74 of the CBB Law empowers the CBB to establish the terms and conditions for registration.
Adopted: January 2007EN-9.1.2
In addition,Paragraph AU-4.1.1 of Module AU (Authorisation) requires persons wishing to carry on the business of an
actuary ,loss adjuster orappointed representative in the Kingdom of Bahrain to be registered as such by the CBB. A condition of registration is thatactuaries ,loss adjusters andappointed representatives have relevant expertise and hold professional qualifications from a relevant, recognised professional body.Amended: October 2009
Amended: October 2007
Amended: January 2007EN-9.1.3
Actuaries andloss adjusters and thelicensed principal of theappointed representatives must satisfy the CBB that they are generally suitable to operate as such. The suitability ofactuaries ,loss adjusters andappointed representatives is determined in accordance with Sections AU-4.1 and AU-4.2. If the CBB is satisfied that they meet the necessary requirements, they will be granted registration. Should the CBB not be satisfied of the suitability of anactuary ,loss adjuster orappointed representatives it has the right to cancel their registration.Amended: October 2009
Amended: January 2007EN-9.2 EN-9.2 CBB Policy
EN-9.1.3
Where the BMA proposes to cancel the registration of an
actuary orloss adjuster , it must provide theactuary orloss adjuster concerned reasonable time to object to the proposed cancellation.EN-9.2.1
The CBB is conscious of the impact of revoking the registration of
actuaries ,loss adjusters andappointed representatives . Such assessments are carefully reviewed in light of all the relevant facts. In reaching a decision to cancel the registration, the CBB will consider the extent to which the factors set out in Chapter AU-4 have not been met.Amended: October 2009
Adopted: January 2007EN-9.2.2
The CBB will normally consider as grounds for the revocation of registration the following events affecting an
actuary ,loss adjuster orappointed representative :(a) The conviction by a court, whether in Bahrain or elsewhere, for a crime affecting honesty;(b) A bankruptcy declaration by a court of law;(c) A court ruling that theactuary's ,loss adjuster's orappointed representative's legal capacity is totally or partially impaired; or(d) The sanction by a professional body of a fine, suspension, expulsion or censure.Amended: October 2009
Adopted: January 2007EN-9.3 EN-9.3 Procedure
EN-9.3.1
All proposals to cancel a registration are subject to a thorough review of all relevant facts and must be approved by an Executive Director of the CBB.
Amended: January 2007EN-9.3.2
Once approved within the CBB, a notice of intent is issued to the registrant concerned, setting out the basis for the decision. The notice of intent will describe the factual circumstances and the CBB's rationale for the proposed cancellation.
Amended: January 2007EN-9.3.3
The registrant has 30 calendar days from the date stated in the notice in which to appeal the decision. The appeal should be addressed to the Executive Director that has approved the proposal for cancellation.
Amended: January 2007EN-9.3.4
If representations are made, then the CBB has 30 calendar days from the date of the representation in which to consider any mitigating evidence submitted and make a final determination.
Amended: January 2007EN-10 EN-10 Criminal Sanctions
EN-10.1 EN-10.1 Overview
EN-10.1.1
The CBB Law provides for a number of criminal sanctions in cases where certain provisions are contravened. This Section provides a summary of those sanctions most relevant to licensees, their
Directors andemployees . What follows is not a complete list of all sanctions provided for in the CBB Law, nor is it a substitute for reading the Law and being fully aware of its provisions.Amended: January 2007
Amended: October 2007EN-10.1.2
Licensees, their
Directors andemployees should also be aware of the criminal sanctions provided for under other relevant Bahraini Laws, such as the Decree No. 4 of 2001, with respect to the prevention and prohibition of the laundering of money.Amended: January 2007
Amended: October 2007EN-10.1.3
In all cases to do with criminal sanctions, the CBB can only refer the matter to the Office of the Public Prosecutor. The CBB has no authority to apply such sanctions without recourse to the courts.
Amended: January 2007EN-10.1.4
Examples of fraudulent acts for which a Director, manager, official, agent or representative of any
insurance licensee may be subject to penalty under the Penal Code include:(a) making false or misleading statements with fraudulent intent; and(b) omission, with fraudulent intent, to make any statement or any entry in the books or accounts of aninsurance licensee .EN-10.2 EN-10.2 CBB Policy
EN-10.2.1
Because of their criminal status, and their provision for custodial sentences, the sanctions provided for under the CBB Law are viewed by the CBB as very powerful measures, to be pursued sparingly. In most situations, the CBB will seek to address regulatory failures through administrative sanctions, as outlined in the preceding Chapters, rather than pursuing the criminal sanctions outlined here.
Adopted: January 2007EN-10.2.2
Where, however, the nature of the offence is such that there is strong evidence of a reckless or intentional breach of the CBB Law relevant to the following Articles, then the CBB will refer the matter to the Office of the Public Prosecutor.
Adopted: January 2007EN-10.3A EN-10.3A Article 161
EN-10.3A.1
Article 161 of the CBB Law provides for a penalty of up to BD 1 million, without prejudice to any other penalty prescribed in any other law, in case of any person who breaches the provisions of Resolution No.(16) for the year 2012 issued pursuant to Article 42 of the CBB Law. The Court may also confiscate the proceeds resulting from breaching the Resolution.
Added: January 2013EN-10.3 EN-10.3 Article 163
EN-10.3.1
Article 163 of the CBB Law provides for a term of imprisonment and/or fine of up to BD 20,000 without prejudice to any other penalty prescribed in any other law, in case of conviction of a
Director , manager, official, agent or representative of any licensee who:(a) Conceals any records, information or documents requested by the CBB (or any person appointed by the CBB to conduct an investigation or inspection);(b) Provides statements or information in bad faith which do not reflect the actual financial position of the licensee;(c) Conceals from an externalauditor any records, information or documents necessary for auditing the accounts of the licensee; or(d) Provides in bad faith any misleading or inaccurate statements to an externalauditor which do not reflect the actual financial position of the licensee.Adopted: January 2007
Amended: October 2007EN-10.4 EN-10.4 Article 169
EN-10.4.1
Article 169 provides for a term of imprisonment, and/or a fine of up to BD 20,000 for any
Director , manager, official oremployee , who acts or permits an act in violation of Article 134 of the CBB Law, dealing with the effects of insolvency, where he knows (or should have known) that the licensee is insolvent.Adopted: January 2007
Amended: October 2007EN-10.5 EN-10.5 Article 170
EN-10.5.1
Article 170(2) of the CBB Law provides for terms of imprisonment and/or a fine not exceeding BD 3,000 if any
Director , manager, official oremployee intentionally obstructs an investigation by the CBB or anAppointed Expert .Adopted: January 2007
Amended: October 2007EN-10.6 EN-10.6 Article 171
EN-10.6.1
Article 171 of the CBB Law provides for a term of imprisonment and/or a fine not exceeding BD 10,000, if any
Director , manager, official oremployee discloses in bad faith any confidential information relating to acustomer of a licensee.Adopted: January 2007
Amended: October 2007