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  • FC-B FC-B Scope of Application

    • FC-B.1 FC-B.1 License Categories

      • FC-B.1.1

        This Module applies to all categories of investment firm licensees (i.e. categories 1, 2 and 3). Category 3 investment firms are exempt from Chapter FC-10, however.

      • FC-B.1.2

        This Module applies to all investment firm licensees, irrespective of whether they are a Bahraini investment firm licensee or an overseas investment firm licensee operating in Bahrain as a branch. Overseas investment firm licensees, and Bahraini investment firm licensees that are subsidiaries of an overseas-based group, may apply additional AML/CFT policies and procedures, provided they satisfy the minimum requirements contained in this Module.

        Amended: July 2007

      • FC-B.1.3

        Category 3 investment firms are exempt from Chapter FC-10 because of the limited nature of their business.

      • FC-B.1.4

        The scope provided for simplified customer due diligence requirements — as set out in Section FC-1.8 — will reduce the burden of customer due diligence for many investment firm licensees.

      • FC-B.1.5

        The requirements of this Module are in addition to and supplement Decree Law No. (4) of 2001 with respect to the prevention and prohibition of the laundering of money; this Law was subsequently updated, with the issuance of Decree Law No. 54 of 2006 with respect to amending certain provisions of Decree No. 4 of 2001 (collectively, ‘the AML Law’). The AML Law imposes obligations generally in relation to the prevention of money laundering and the combating of the financing of terrorism, to all persons resident in Bahrain (including financial services firms such as investment firm licensees). All investment firm licensees are therefore under the statutory obligations of that Law, in addition to the more specific requirements contained in this Module. Nothing in this Module is intended to restrict the application of the AML Law (a copy of which is contained in Part B of Volume 4 (Investment Business), under 'Supplementary Information'). Also included in Part B is a copy of Decree Law No. 58 of 2006 with respect to the protection of society from terrorism activities (‘the anti-terrorism law’).

        Amended: January 2007

    • FC-B.2 FC-B.2 Overseas Subsidiaries and Branches

      • FC-B.2.1

        Investment firm licensees must apply the requirements in this Module to all their branches and subsidiaries operating both in the Kingdom of Bahrain and in foreign jurisdictions. Where local standards differ, the higher standard must be followed. Investment firm licensees must pay particular attention to procedures in branches or subsidiaries in countries that do not or insufficiently apply the FATF Recommendations and do not have adequate AML/CFT systems (see also Section FC-7.1).

        Amended: October 2014

      • FC-B.2.2

        Where another jurisdiction's laws or Regulations prevent a licensee (or any of its foreign branches or subsidiaries) from applying the same standards contained in this Module or higher, the licensee must immediately inform the CBB in writing.

        Amended: January 2007

      • FC-B.2.3

        In such instances, the CBB will review alternatives with the licensee. Should the CBB and the licensee be unable to reach agreement on the satisfactory implementation of this Module in a foreign subsidiary or branch, the licensee may be required by the CBB to cease the operations of the subsidiary or branch in the foreign jurisdiction in question.

        Amended: January 2007

      • FC-B.2.4

        Financial groups (e.g. an investment firm with its subsidiary) must implement groupwide programmes against money laundering and terrorist financing, including policies and procedures for sharing information within the group for AML/CFT purposes, which must also be applicable, and appropriate to, all branches and subsidiaries of the financial group. These must include:

        (a) The development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees;
        (b) An ongoing employee training programme;
        (c) An independent audit function to test the system;
        (d) Policies and procedures for sharing information required for the purposes of CDD and money laundering and terrorist financing risk management;
        (e) The provision at group-level compliance, audit, and/or AML/CFT functions of customer, account and transaction information from branches and subsidiaries when necessary for AML/CFT purposes; and
        (f) Adequate safeguards on the confidentiality and use of information exchanged.
        Amended: January 2018
        Added: October 2014