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    • Money Changers Licensees

      • Part A

        • High Level Standards

          • HC HC Money Changers High-Level Controls Module [Version from 1 October 2010 to 31 March 2016]

            • HC-2.3.4 [Version from 1 October 2010 to 31 March 2016]

              Prior approval from the CBB is required for significant outsourcing arrangements, including all outsourcing of internal audit. Note that in all such cases, the licensee retains ultimate responsibility for the adequacy of its outsourcing function, and is required to identify the person within the licensee responsible for internal audit: this person should be an approved person (see Section AU-1.2 and Chapter RM-2).

              October 2010

            • HC-2.3.5 [Version from 1 October 2010 to 31 March 2016]

              Internal audit functions must have terms of reference that clearly indicate:

              (a)The scope and frequency of audits;
              (b)Reporting lines; and
              (c)The review and approval process applied to audits.
              October 2010

            • HC-2.3.6 [Version from 1 October 2010 to 31 March 2016]

              Paragraph HC-2.3.5 applies irrespective of whether the internal audit function is outsourced. Where it is outsourced, the CBB would expect to see these matters addressed in the contract with the outsourcing provider.

              October 2010

            • HC-2.3.7 [Version from 1 October 2010 to 31 March 2016]

              Internal audit functions must report directly to the Audit Committee or, where none exists, to the Board. They must have unrestricted access to all the appropriate records of the licensee. They must have open and regular access to the Audit Committee, the Board, the Chief Executive, and the licensee's external auditor.

              October 2010

            • HC-2.3.8 [Version from 1 October 2010 to 31 March 2016]

              Internal audit functions must have adequate staff levels with appropriate skills and knowledge, such that they can act as an effective challenge to the business. Where the function is not outsourced, the head of the function should be a senior and experienced employee. Internal audit functions must not perform other activities that compromise their independence.

              October 2010

            • HC-2.3.9 [Version from 1 October 2010 to 31 March 2016]

              The CBB would expect to see in place a formal audit plan that:

              (a) Is reviewed and approved at least annually by the Audit Committee or, where none exists, the Board;
              (b) Is risk-based, with an appropriate scoring system; and
              (c) Covers all material areas of a licensee's operations over a reasonable timescale.
              October 2010

            • HC-2.3.10 [Version from 1 October 2010 to 31 March 2016]

              Internal Audit reports should also be:

              (a) Clear and prioritised, with action points directed towards identified individuals;
              (b) Timely; and
              (c) Distributed to the Audit Committee or Board and appropriate senior management.
              October 2010

            • HC-2.3.11 [Version from 1 October 2010 to 31 March 2016]

              Licensees should also have processes in place to deal with recommendations raised by internal audit to ensure that they are:

              (a) Dealt with in a timely fashion;
              (b) Monitored until they are settled; and
              (c) Raised with senior management if they have not been adequately dealt with.
              October 2010

            • HC-2.4.3 [Version from 1 October 2010 to 31 March 2016]

              Licensees must designate an employee, of appropriate standing and resident in Bahrain, as Compliance Officer. The duties of the Compliance Officer include:

              (a) Having responsibility for oversight of the licensee's compliance with the requirements of the CBB; and
              (b) Reporting to the licensee's Board in respect of that responsibility.
              October 2010

            • HC-2.4.4 [Version from 1 October 2010 to 31 March 2016]

              The Compliance Officer is a controlled function and the requirements relating to approved persons must be met (see Chapter AU-1.2). If the scale and nature of the licensee's operations are limited, then the individual who performs the function of Compliance Officer may also take on other responsibilities, providing this does not create a potential conflict of interest. The compliance function may not be combined with the internal audit function or any operational function as they are incompatible and may create a conflict of interest.

              October 2010

            • HC-2.5 HC-2.5 Remuneration Policies [Version from 1 October 2010 to 31 March 2016]

              • HC-2.5.1 [Version from 1 October 2010 to 31 March 2016]

                The review of Directors' remuneration must be a standing item on the licensee's Annual General Meeting agenda, and must be considered by shareholders at every Annual General Meeting. Directors' remuneration (including pension and severance arrangements) and bonuses must be clearly disclosed in the annual financial statements.

                October 2010

              • HC-2.5.2 [Version from 1 October 2010 to 31 March 2016]

                Directors' remuneration should also comply with all applicable laws, such as Legislative Decree No. 21 of 2001, with respect to promulgating the Commercial Companies Law.

                October 2010

            • HC-2.6 HC-2.6 Corporate Ethics [Version from 1 October 2010 to 31 March 2016]

              • HC-2.6.1 [Version from 1 October 2010 to 31 March 2016]

                A licensee's Board must establish and disseminate to all employees of the licensee a corporate code of conduct.

                October 2010

              • HC-2.6.2 [Version from 1 October 2010 to 31 March 2016]

                The code of conduct must establish standards by giving examples or expectations as regards:

                (a) Honesty;
                (b) Integrity;
                (c) The avoidance or disclosure of conflicts of interest;
                (d) Maintaining confidentiality;
                (e) Professionalism;
                (f) Commitment to the law and best practises; and
                (g) Reliability.
                October 2010

              • HC-2.6.3 [Version from 1 October 2010 to 31 March 2016]

                The Board must ensure that policies and procedures are in place to ensure that necessary customer confidentiality is maintained.

                October 2010

        • Business Standards

          • TC TC Money Changers Training and Competency Module

            • TC-A TC-A Introduction

              • TC-A.1 TC-A.1 Purpose

                • Executive Summary

                  • TC-A.1.1

                    This Module presents requirements that have to be met by licensees with respect to training and competency of individuals undertaking controlled functions (i.e. approved persons).

                    October 2010

                  • TC-A.1.2

                    Module TC provides Rules and Guidance to licensees to ensure satisfactory levels of competence, in terms of an individual's knowledge, skills, experience, and professional qualifications. Licensees are required to demonstrate that individuals undertaking controlled functions are sufficiently competent, and are able to undertake their respective roles and responsibilities.

                    October 2010

                  • TC-A.1.3

                    The Rules build upon Principles 3 and 10 of the Principles of Business (see Module PB (Principles of Business)). Principle 3 (Due Skill, Care and Diligence) requires licensees to observe high standards of integrity and fair dealing, and to be honest and straightforward in its dealings with customers. Principle 9 (Adequate Resources) requires licensees to maintain adequate human, financial and other resources sufficient to run its business in an orderly manner.

                    October 2010

                  • TC-A.1.4

                    Condition 4 of the Central Bank of Bahrain's ('CBB') Licensing Conditions (Chapter AU-2.4) and Condition 1 of the Approved Persons regime (Chapter AU-3.1) impose further requirements. To satisfy Condition 4 of the CBB's Licensing Conditions, a licensees' staff, taken together, must collectively provide a sufficient range of skills and experience to manage the affairs of the licensee in a sound and prudent manner (AU-2.4). This condition specifies that licensees must ensure their employees meet any training and competency requirements specified by the CBB. Condition 1 of the Approved Persons Conditions (AU-3.1) sets forth the 'fit and proper' requirements in relation to competence, experience and expertise required by approved persons.

                    Amended: January 2011
                    October 2010

                • Legal Basis

                  • TC-A.1.5

                    This Module contains the CBB's Directive (as amended from time to time) relating to Training and Competency and is issued under the powers available to the CBB under Articles 38 and 65 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all licensees (including their approved persons). Requirements regarding Money Changer Licensees are also included in the Regulation Organising Money Changing Business, issued in 1994 and included in this Module.

                    Amended: January 2011
                    October 2010

                  • TC-A.1.6

                    For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                    October 2010

              • TC-A.2 TC-A.2 Module History

                • Evolution of the Module

                  • TC-A.2.1

                    This Module was first issued in October 2010. Any material changes that are subsequently made to this Module are annotated with the calendar quarter date in which the change is made; Chapter UG-3 provides further details on Rulebook maintenance and version control.

                  • TC-A.2.2

                    A list of recent changes made to this Module is provided below:

                    Module Ref. Change Date Description of Changes
                    TC-A.1.5 01/2011 Clarified legal basis.
                         
                         
                         
                         

                • Superseded Requirements

                  • TC-A.2.3

                    This Module does not replace any regulations or circulars in force prior to October 2010.

                    October 2010

            • TC-B TC-B Scope of Application

              • TC-B.1 TC-B.1 Scope of Application

                • TC-B.1.1

                  This Module applies to all Money Changer licensees authorised in the Kingdom, thereafter referred to in this Module as licensees.

                  October 2010

                • TC-B.1.2

                  Persons authorised by the CBB as approved persons prior to the issuance of Module TC need not reapply for authorisation.

                  October 2010

                • TC-B.1.3

                  The requirements of this Module apply to approved persons holding controlled functions:

                  (a) Who are employed or appointed by the licensees in connection with the licensees' regulated activities, whether under a contract of service or for services or otherwise; or
                  (b)Whose services, under an arrangement between the licensee and a third party, are placed at the disposal and under the control of the licensee.
                  October 2010

                • TC-B.1.4

                  Licensees must satisfy the CBB that individuals performing a controlled function for it or on its behalf are suitable and competent to carry out that controlled function.

                  October 2010

                • TC-B.1.5

                  In implementing this Module, licensees must ensure that:

                  (a) Individuals recruited by the licensees to perform a controlled function hold suitable qualifications and experience appropriate to the nature of the business;
                  (b)Individuals performing a controlled function remain competent for the work they do; and
                  (c) Individuals performing a controlled function are appropriately supervised.
                  October 2010

            • TC-1 TC-1 Recruitment and Assessing Competence

              • TC-1.1 TC-1.1 Recruitment and Appointments

                • TC-1.1.1

                  If a licensee recruits an individual to undertake a controlled function, it must satisfy itself, where appropriate, of such individual's relevant qualifications and experience.

                  October 2010

                • TC-1.1.2

                  A licensee proposing to recruit an individual has to satisfy itself, of his/her relevant qualifications and experience. The licensee should:

                  (a) Take into account the knowledge and skills required for the role, in addition to the nature and the level of complexity of the controlled function; and
                  (b) Take reasonable steps to obtain sufficient information about the individual's background, experience, training and qualifications.
                  October 2010

                • TC-1.1.3

                  Individuals occupying the following controlled functions (refer to Paragraphs AU-1.2.5 to AU-1.2.10) at a licensee must be qualified and suitably experienced for their specific roles and responsibilities:

                  (a) Director;
                  (b)Chief Executive or General Manager;
                  (c) Head of function;
                  (d)Compliance officer; and
                  (e) Money Laundering Reporting Officer ('MLRO').
                  October 2010

                • TC-1.1.4

                  A licensee must take reasonable steps to ensure that individuals holding controlled functions are sufficiently knowledgeable about their respective fields of work to be able to guide and supervise operations that fall under their responsibilities. Competence must be assessed on the basis of experience and relevant qualifications described in Appendix TC-1 as a minimum. However, the CBB reserves the right to impose a higher level of qualifications as it deems necessary.

                  October 2010

                • Director

                  • TC-1.1.5

                    As individuals, directors of a licensee must hold professional qualifications and/or have relevant experience outlined in Appendix TC-1 as a minimum.

                    October 2010

                  • TC-1.1.6

                    The role of the director is to be accountable and responsible for the management and performance of the licensee, and is outlined in more details in Section HC-1.1.

                    October 2010

                  • TC-1.1.7

                    When taken as a whole, the board of directors of a licencee must be able to demonstrate that it has the necessary expertise, as outlined in Paragraphs HC-1.2.4 and HC-1.2.5.

                    October 2010

                • Chief Executive or General Manager

                  • TC-1.1.8

                    Individuals holding the position of chief executive officer or equivalent at a licensee must hold relevant qualifications and relevant experience as outlined in Appendix TC-1 as a minimum.

                    October 2010

                  • TC-1.1.9

                    The chief executive officer or general manager (as appropriate) is responsible for the executive management and performance of the licensee within the framework or delegated authorities set by the Board.

                    October 2010

                • Head of Function

                  • TC-1.1.10

                    Individuals holding the position of head of function at a licensee must hold relevant professional qualifications and experience as outlined in Appendix TC-1 as a minimum.

                    October 2010

                  • TC-1.1.11

                    Heads of functions are responsible for tracking specific functional performance goals in addition to identifying, managing, and reporting critical organisational issues upstream.

                    October 2010

                • Compliance Officer

                  • TC-1.1.12

                    Individuals holding the position of compliance officer at a licensee must hold relevant experience and qualifications as outlined in Appendix TC-1 as a minimum.

                    October 2010

                  • TC-1.1.13

                    In accordance with Paragraph HC-2.4.3, an employee of appropriate standing must be designated by licensees for the position of compliance officer. The duties of the compliance officer include:

                    (a)Having responsibility for oversight of the licensee's compliance with the requirements of the CBB; and
                    (b)Reporting to the licensee's Board in respect of that responsibility.
                    October 2010

                • Money Laundering Reporting Officer (MLRO)

                  • TC-1.1.14

                    Individuals holding the position of MLRO at a licensee, whose attributes and responsibilities are described more fully in Paragraphs FC-4.1.7 and FC-4.2.1, must hold relevant qualifications as outlined in Appendix TC-1 as a minimum.

                    October 2010

              • TC-1.2 TC-1.2 Assessing Competence

                • TC-1.2.1

                  Licensees must not allow an individual to undertake or supervise controlled functions unless that individual has been assessed by the licensee as competent in accordance with this Section.

                  October 2010

                • TC-1.2.2

                  In the case of new personnel, the licensees should ensure that they work under proper supervision. Where a person is working towards attaining a level of competence, they should be supervised by a competent person until they can demonstrate the appropriate level of competence. It is the licensees's responsibility to ensure that such arrangements are in place and working successfully.

                  October 2010

                • TC-1.2.3

                  In determining an individual's competence, licensees may assess if the person is fit and proper in accordance with Chapter AU-3.

                  October 2010

                • TC-1.2.4

                  Licensees will assess individuals as competent when they have demonstrated the ability to apply the knowledge and skills required to perform a specific controlled function without supervision.

                  October 2010

                • TC-1.2.5

                  The assessment of competence will be dependent on the nature and the level of complexity of the controlled function. Such assessment of competence of new personnel may take into account the fact that an individual has been previously assessed as competent in a similar controlled function with another licensee.

                  October 2010

                • TC-1.2.6

                  If a licensee assesses an individual as competent in accordance with TC-1.2.4 to perform a specific controlled function it does not necessarily mean that the individual is competent to undertake other controlled functions.

                  October 2010

                • TC-1.2.7

                  A firm should use methods of assessment that are appropriate to the controlled function and to the individual's role.

                  October 2010

            • TC-2 TC-2 Training and Maintaining Competence

              • TC-2.1 TC-2.1 Training and Supervision

                • TC-2.1.1

                  A licensee must annually determine the training needs of individuals undertaking controlled functions. It must develop a training plan to address these needs and ensure that training is planned, appropriately structured and evaluated.

                  October 2010

                • TC-2.1.2

                  The assessment and training plan described in Paragraph TC-2.1.1 should be aimed at ensuring that the relevant approved person maintains competence in the controlled function. Training does not necessarily just imply attendance of courses. An individual can develop skills and gain experience in a variety of ways. These could include on the job learning, individual study, and other methods. In almost every situation, and for most individuals, it is likely that competence will be developed most effectively by a mixture of training methods.

                  October 2010

                • TC-2.1.3

                  The training plan of licensees must include a programme for continuous professional development training ("CPD") for their personnel.

                  October 2010

                • TC-2.1.4

                  Approved persons may choose to fulfil their CPD requirements by attending courses and seminars at local or foreign training institutions.

                  October 2010

                • TC-2.1.5

                  The annual training needs assessment required under Paragraph TC-2.1.1 must also consider quarterly updates, if any, to the CBB Volume 5 (Specialised Licensees) Rulebook, in areas relevant to each controlled function.

                  October 2010

                • TC-2.1.6

                  Individuals holding the controlled functions of compliance officer and MLRO at a licensee must undergo a minimum of 15 hours of CPD per annum.

                  October 2010

                • TC-2.1.7

                  A licensee should ensure that an approved person undertaking a controlled function undergoes appropriate review and assessment of performance.

                  October 2010

                • TC-2.1.8

                  The level of review and assessment should be proportionate to the level of competence demonstrated by the approved person. Review and assessment should take place on a regular basis and include coaching and assessing performance against the competencies necessary for the role.

                  October 2010

                • TC-2.1.9

                  Assessors of approved persons should have technical knowledge and relevant skills, e.g. coaching and assessment skills.

                  October 2010

              • TC-2.2 TC-2.2 Maintaining Competence

                • TC-2.2.1

                  A licensee must make appropriate arrangements to ensure that approved persons maintain competence.

                  October 2010

                • TC-2.2.2

                  A licensee should ensure that maintaining competence for an approved person takes into account:

                  (a) Application of technical knowledge;
                  (b) Application and development of skills; and
                  (c) Any market changes and changes to products, legislation and regulation.
                  October 2010

                • TC-2.2.3

                  A licensee may utilise the CPD schemes of relevant professional bodies to demonstrate compliance with TC-2.2.1. In-house training, seminars, conferences, further qualifications, product presentations, computer-based training and one-to-one tuition may also be considered to demonstrate compliance with TC-2.2.1.

                  October 2010

            • TC-3 TC-3 Record Keeping

              • TC-3.1 TC-3.1 Record Keeping

                • TC-3.1.1

                  A licensee must make and retain records of its recruitment procedures. Such procedures should be designed to adequately take into account proof of the candidates' knowledge and skills and their previous activities and training.

                  October 2010

                • TC-3.1.2

                  The recruitment record keeping procedure should include, but is not limited to, the following:

                  (a) Results of the initial screening;
                  (b) Results of any employment tests;
                  (c) Results and details of any interviews conducted;
                  (d) Background and references checks; and
                  (e) Details of any professional qualifications.
                  October 2010

                • TC-3.1.3

                  A licensee should make and retain updated records of:

                  (a)The criteria applied in assessing the ongoing and continuing competence;
                  (b)How and when the competence decision was arrived at;
                  (c)The annual assessment of competence; and
                  (d)Record of CPD hours undertaken by each approved person.
                  October 2010

                • TC-3.1.4

                  A licensee should make and retain records of:

                  (a)The annual training plan for all controlled functions;
                  (b)Materials used to conduct in-house training courses;
                  (c)List of participants attending such in-house training courses; and
                  (d)Results of evaluations conducted at the end of such training courses.
                  October 2010

                • TC-3.1.5

                  Licensees should maintain appropriate training records for each individual. Licensees should note how the relevant training relates to and supports the individual's role. Training records may be reviewed during supervisory visits to assess the licensee's systems and to review how the licensee ensures that its staff are competent and remain competent for their roles.

                  October 2010

            • TC-4 TC-4 Transitional Provisions

              • TC-4.1 TC-4.1 Transitional Period

                • TC-4.1.1

                  The requirements of Module TC for licensees are effective 31st December 2010.

                  October 2010

                • TC-4.1.2

                  Where approved persons holding controlled functions are occupying positions within the licensee and do not meet the qualifications and core competencies outlined in Appendix TC-1 at the time of the issuance of Module TC, the licensee must ensure that such individuals will meet the requirements of Module TC by 31st December 2011 at the latest.

                  October 2010

            • Appendices: Appendix TC-1

              • Qualifications and Core Competencies of Controlled Functions

                Role Core Competencies How can competence be demonstrated?
                Director Directors should have:
                (a) Experience to demonstrate sound business decision-making; and
                (b) A good understanding of the industry and its regulatory environment.
                		This person should be experienced in the industry. Competence could be demonstrated by:
                (a) Holding a relevant professional qualification; or
                (b) A minimum length of service (at least 5 years at director or senior management level) in the financial industry.
                Chief Executive or General Manager These roles require:
                (a) A clear understanding of the role and responsibilities associated with this position;
                (b) A good understanding of the licensee's business, the broader industry and its regulatory environment; and
                (c) The relevant experience and qualifications associated with any executive responsibilities.
                		This person should be experienced in the industry. Competence could be demonstrated by:
                (a) Holding a relevant professional qualification; or
                (b) A minimum length of service (at least 5 years at a relatively senior position) in the financial industry.
                Head of Function This role requires:
                (a) A clear understanding of the role and responsibilities associated with the relevant function;
                (b) A good understanding of the licensee's business, the broader industry and its regulatory environment; and
                (c) The relevant experience and qualifications to fulfill their responsibilities.
                		A senior manager responsible for a specialist function should demonstrate the competencies required for that role.
                (a) The person must have area specific experience/qualifications as required for head of function. These include accounting qualifications for financial managers, Bachelors degree in banking or finance, MBA, etc. and/or
                (b) The head of function should have at least 5 years of experience in the industry and will typically hold, or be working towards, a relevant professional qualification as appropriate to the controlled function.
                Compliance Officer A Compliance Officer should:
                (a) Have the ability and experience to take responsibility for implementing and maintaining compliance policies;
                (b) Have the appropriate level of experience to demonstrate independence from other functions within the licensee; and
                (c) Have a thorough understanding of the industry and the applicable regulatory framework.
                The level of required competence varies based on the scope, magnitude and complexity of the licensee.                 		The person should have a minimum of 2 years of relevant experience in a compliance function of a financial institution.

                Additional relevant certifications may include:
                (a) Diploma in International Compliance offered by the International Compliance Association; and/or
                (b) Other relevant professional qualification.
                Money
                Laundering
                Reporting
                Officer
                (MLRO)                 		The MLRO should:
                (a) Understand the business and how the Anti Money Laundering framework applies thereto; and
                (b) Have the appropriate level of experience to demonstrate independence from staff of the licensee dealing directly with customers.
                		An MLRO will typically hold a relevant professional qualification and / or a qualification related to the financial activities. These may include:
                (a) Certified Anti-Money Laundering Specialist Examination (ACAMS);
                (b) Other relevant MLRO programs; and/or
                (c) Diploma in International Compliance offered by the International Compliance Association.
                Additionally, he must have undergone training in anti money laundering, in a recognized institute. The initial training must be for a period of 35 hours or more.

                MLROs should have thorough knowledge of the financial institutions industry and be familiar with relevant international standards and applicable domestic regulatory requirements.
                October 2010

    • Financing Companies

      • Part A

        • Business Standards

          • TC TC Financing Companies Training and Competency Module

            • TC-A TC-A Introduction

              • TC-A.1 TC-A.1 Purpose

                • Executive Summary

                  • TC-A.1.1

                    This Module presents requirements that have to be met by financing company licensees with respect to training and competency of individuals undertaking controlled functions (i.e. approved persons) (as defined in Paragraph AU-1.2.2)

                    January 2014

                  • TC-A.1.2

                    Module TC provides Rules and Guidance to financing company licencees to ensure satisfactory levels of competence, in terms of an individual's knowledge, skills, experience, and professional qualifications. Financing company licencees must maintain the competence to provide regulated financing company services as outlined in Section AU-1.3. Individuals occupying controlled functions, as outlined in Paragraph AU-1.2.2, must therefore meet minimum levels of training and experience related to their functions.

                    January 2014

                  • TC-A.1.3

                    The Rules build upon Principles 3 and 9 of the Principles of Business (see Module PB (Principles of Business)). Principle 3 (Due Skill, Care and Diligence) requires financing company licensees to observe high standards of integrity and fair dealing, and to be honest and straightforward in its dealings with customers. Principle 9 (Adequate Resources) requires financing company licensees to maintain adequate human, financial and other resources sufficient to run its business in an orderly manner.

                    January 2014

                  • TC-A.1.4

                    Condition 4 of CBB's Licensing Conditions (Chapter AU-2.4) and Condition 1 of the Approved Persons regime (Chapter AU-3.1) impose further requirements. To satisfy Condition 4 of the CBB's Licensing Conditions, a financing company licensee's staff, taken together, must collectively provide a sufficient range of skills and experience to manage the affairs of the financing company licensee in a sound and prudent manner (AU-2.4). This condition specifies that financing company licensees must ensure their employees meet any training and competency requirements specified by the CBB. Condition 1 of the Approved Persons Conditions (AU-3.1) sets forth the 'fit and proper' requirements in relation to competence, experience and expertise required by approved persons.

                    January 2014

                • Legal Basis

                  • TC-A.1.5

                    This Module contains the CBB's Directive relating to Training and Competency and is issued under the powers available to the CBB under Articles 38 and 65(b) of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all financing company licensees (including their approved persons).

                    January 2014

                  • TC-A.1.6

                    For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

                    January 2014

              • TC-A.2 TC-A.2 Module History

                • Evolution of the Module

                  • TC-A.2.1

                    This Module was first issued in January 2014. Any material changes that are subsequently made to this Module will be annotated with the calendar quarter date in which the change is made; Chapter UG-3 provides further details on Rulebook maintenance and version control.

                    January 2014

                  • TC-A.2.2

                    A list of recent changes made to this Module is provided below:

                    Module Ref. Change Date Description of Changes
                    TC-B.1.3 07/2014 Clarified scope of application.
                    TC-2.3.3 04/2017 Amended Paragraph on exception to the grandfathering Rule.
                         
                         
                         

                • Superseded Requirements

                  • TC-A.2.3

                    This Module does not replace any regulations or circulars in force prior to January 2014.

                    January 2014

            • TC-B TC-B Scope of Application

              • TC-B.1 TC-B.1 Scope

                • TC-B.1.1

                  This Module applies to all financing company licensees authorised in the Kingdom, thereafter referred to in this Module as licensees. It covers the training and competency requirements for staff occupying controlled functions (See Chapter TC-1).

                  January 2014

                • TC-B.1.2

                  Persons authorised by the CBB as approved persons prior to the issuance of Module TC need not reapply for authorisation.

                  January 2014

                • TC-B.1.3

                  The requirements of this Module apply to approved persons holding controlled functions, including board members, in connection with the licensee's regulated financing company services, or under a contract of service.

                  Amended: July 2014
                  January 2014

                • TC-B.1.4

                  In the case of outsourcing arrangements, the licensee should refer to the competency requirements, outlined in Appendix TC-1 for controlled functions, for assessing the suitability of the outsourcing provider.

                  January 2014

                • TC-B.1.5

                  Licensees must satisfy the CBB that individuals performing a controlled function for it or on its behalf are suitable and competent to carry on that controlled function.

                  January 2014

                • TC-B.1.6

                  In implementing this Module, licensees must ensure that individuals recruited to perform controlled functions:

                  (a) Hold suitable qualifications and experience appropriate to the nature of the business;
                  (b) Remain competent for the work they do; and
                  (c) Are appropriately supervised.
                  January 2014

            • TC-1 TC-1 Requirements for Controlled Functions

              • TC-1.1 TC-1.1 Controlled Functions

                • TC-1.1.1

                  Individuals occupying controlled functions (refer to Section AU-1.2) in a licensee must be qualified and suitably experienced for their specific roles and responsibilities. The controlled functions are those of:

                  (a) Board Member;
                  (b) Chief Executive or General Manager;
                  (c) Head of function;
                  (d) Compliance Officer;
                  (e) Money Laundering Reporting Officer ('MLRO'); and
                  (f) Head of Shari'a Review
                  January 2014

                • TC-1.1.2

                  A licensee must take reasonable steps to ensure that individuals holding controlled functions are sufficiently knowledgeable about their respective fields of work to be able to guide and supervise operations that fall under their responsibilities.

                  January 2014

                • TC-1.1.3

                  Competence is assessed by the CBB on the basis of experience and relevant qualifications described in Appendix TC-1 as a minimum. However, the CBB reserves the right to impose a higher level of qualifications as it deems necessary.

                  January 2014

                • Board Member

                  • TC-1.1.4

                    Board Members collectively are responsible for the business performance and strategy of the licensee, as outlined in more details in Section HC-1.2.

                    January 2014

                  • TC-1.1.5

                    When taken as a whole, the board of directors of a licensee must be able to demonstrate that it has the necessary skills and expertise, as outlined in Paragraph HC-1.2.10.

                    January 2014

                • Chief Executive or General Manager

                  • TC-1.1.6

                    The chief executive or general manager (as appropriate) are responsible for the executive management and performance of the licensee within the framework or delegated authorities set by the Board. The scope of authority of the CEO is outlined in more detail in Paragraph HC-6.3.2 (a).

                    January 2014

                • Head of Function

                  • TC-1.1.7

                    Heads of function, where risk acquisition or control is involved, are responsible for tracking specific functional performance goals in addition to identifying, managing, and reporting critical organisational issues upstream. Certain functions require dealing directly with clients while others do not. Both categories of functions, however, require specific qualifications and experience to meet the objectives as well as compliance requirements of the financing company licensee.

                    January 2014

                  • TC-1.1.8

                    For purposes of Paragraph TC-1.1.7, licensees should contact the CBB should they require further clarification on whether a specific position falls under the definition of "Heads of Function".

                    January 2014

                • Compliance Officer

                  • TC-1.1.9

                    In accordance with Paragraph AU-1.2.12, an employee of appropriate standing must be designated by the licensee for the position of compliance officer. The duties of the compliance officer include:

                    (a) Having responsibility for oversight of the licensee s compliance with the requirements of the CBB and other applicable laws and regulations;
                    (b) Raising awareness and providing training for the licensee s staff on compliance issues; and
                    (c) Reporting to the licensee s Board in respect of that responsibility.
                    January 2014

                • Money Laundering Reporting Officer (MLRO)

                  • TC-1.1.10

                    The attributes and responsibilities of the MLRO are described more fully in Paragraphs FC-4.1.7 and FC-4.2.1.

                    January 2014

                • Head of Shari'a Review

                  • TC-1.1.11

                    The head of Shari'a review in a licensee, dealing with Islamic products and services, is responsible for the examination of the extent of a licensee's compliance, in all its activities, with the Shari'a. This examination includes contracts, agreements, policies, products, transactions memorandum and articles of association, financial statements, reports (especially internal audit and central bank inspection), circulars, etc. The objective of the Shari'a review is to ensure that the activities carried out by a licensee do not contravene the Shari'a.

                    January 2014

              • TC-1.2 TC-1.2 Continuous Professional Development Training ("CPD")

                • CPD

                  • TC-1.2.1

                    All individuals holding controlled functions in a licensee must undergo a minimum of 15 hours of CPD per annum.

                    January 2014

                  • TC-1.2.2

                    A licensee must ensure that an approved person undertaking a controlled function undergoes appropriate annual review and assessment of performance.

                    January 2014

                  • TC-1.2.3

                    The level of supervision should be proportionate to the level of competence demonstrated by the approved person. Supervision will include, as appropriate:

                    (a) Reviewing and assessing work on a regular basis; and
                    (b) Coaching and assessing performance against the competencies necessary for the role.
                    January 2014

                  • TC-1.2.4

                    Supervisors of approved persons should have technical knowledge and relevant managerial skills.

                    January 2014

                • Record Keeping

                  • TC-1.2.5

                    A licensee should, for a minimum period of five years, retain records of:

                    (a) The annual training plan for each controlled function;
                    (b) Materials used to conduct in-house training courses;
                    (c) List of participants attending such in-house training courses; and
                    (d) Results of evaluations conducted at the end of such training courses.
                    January 2014

            • TC-2 TC-2 General Requirements

              • TC-2.1 TC-2.1 Recruitment and Assessing Competence

                • Recruitment and Appointment

                  • TC-2.1.1

                    If a licensee recruits or promotes an individual to undertake a controlled function, it must first file Form 3 (Approved Persons) with the CBB and obtain the express written approval of the CBB for that person to occupy the desired position. In its application, the licensee must demonstrate to the CBB that full consideration has been given to the qualifications and core competencies for controlled functions in Appendix TC-1. (See Article 65(b) of the CBB Law and Paragraph AU-2.3.1).

                    January 2014

                  • TC-2.1.2

                    Licensees should refer to Module AU (Authorisation) providing detailed requirements on the appointment of individuals occupying controlled functions (approved persons).

                    January 2014

                  • TC-2.1.3

                    A licensee proposing to recruit an individual has to satisfy itself, of his/her relevant qualifications and experience. The licensee should:

                    (a) Take into account the knowledge and skills required for the role, in addition to the nature and the level of complexity of the controlled function; and
                    (b) Take reasonable steps to obtain sufficient information about the individual's background, experience, training and qualifications.
                    January 2014

                  • TC-2.1.4

                    The licensee must retain the recruitment records of controlled functions for a minimum period of five years following termination of their services or employment with the licensee. Such records must include, but are not limited to, the following:

                    (a) Results of the initial screening;
                    (b) Results of any employment tests;
                    (c) Results and details of any interviews conducted;
                    (d) Background and references checks; and
                    (e) Details of any professional qualifications.
                    January 2014

                • Assessing Competence

                  • TC-2.1.5

                    Licensees must not allow an individual to undertake or supervise controlled functions unless that individual has been assessed by the licensee as competent in accordance with this Section.

                    January 2014

                  • TC-2.1.6

                    In the case of new personnel, the licensee should ensure that they work under proper supervision. Where a person is working towards attaining a level of competence, they should be supervised by a competent person until they can demonstrate the appropriate level of competence. It is the licensee's responsibility to ensure that such arrangements are in place and working successfully.

                    January 2014

                  • TC-2.1.7

                    In determining an individual's competence, licensees may assess if the person is fit and proper in accordance with Chapter AU-3.

                    January 2014

                  • TC-2.1.8

                    Licensees must assess individuals as competent when they have demonstrated the ability to apply the knowledge and skills required to perform a specific controlled function.

                    January 2014

                  • TC-2.1.9

                    The assessment of competence will be dependent on the nature and the level of complexity of the controlled function. Such assessment of competence of new personnel may take into account the fact that an individual has been previously assessed as competent in a similar controlled function with another licensee.

                    January 2014

                  • TC-2.1.10

                    If a licensee assesses an individual as competent in accordance with Paragraph TC-2.1.8 to perform a specific controlled function, it does not necessarily mean that the individual is competent to undertake other controlled functions.

                    January 2014

                  • TC-2.1.11

                    A financing company should use methods of assessment that are appropriate to the controlled function and to the individual's role.

                    January 2014

                • Record Keeping

                  • TC-2.1.12

                    A licensee must, for a minimum period of five years, make and retain updated records of:

                    (a) Its recruitment procedures;
                    (b) The criteria applied in assessing competence; and
                    (c) How and when the competence decision was arrived at.
                    January 2014

                  • TC-2.1.13

                    For purposes of Paragraph TC-2.1.12, the record keeping requirements apply to both current employees as well as to employees following termination of their services or employment with the company, for a minimum period of five years.

                    January 2014

                  • TC-2.1.14

                    The recruitement procedures referred to in Subparagraph TC-2.1.12(a) should be designed to adequately take into account proof of the candidates' knowledge and skills and their previous activities and training.

                    January 2014

              • TC-2.2 TC-2.2 Training and Maintaining Competence

                • TC-2.2.1

                  A licensee must annually determine the training needs of individuals undertaking controlled functions. It must develop a training plan to address these needs and ensure that training is planned, appropriately structured and evaluated.

                  January 2014

                • TC-2.2.2

                  The assessment and training plan described in Paragraph TC-2.2.1 should be aimed at ensuring that the relevant approved person maintains competence in the controlled function. An individual can develop skills and gain experience in a variety of ways. These could include on-the-job learning, individual study, and other methods. In almost every situation, and for most individuals, it is likely that competence will be developed most effectively by a mixture of training methods.

                  January 2014

                • TC-2.2.3

                  The training plan of licensees must include a programme for continuous professional development training ('CPD') for their staff.

                  January 2014

                • TC-2.2.4

                  Approved persons may choose to fulfil their CPD requirements by attending courses, workshops, conferences and seminars at local or foreign training institutions.

                  January 2014

                • TC-2.2.5

                  The annual training required under Paragraph TC-2.2.1 must also include the quarterly updates, if any, to the CBB Volume 5 (Financing Companies) Rulebook, in areas relevant to each controlled function.

                  January 2014

                • TC-2.2.6

                  Licensees should maintain appropriate training records for each individual. Licensees should note how the relevant training relates to and supports the individual's role. Training records may be reviewed during supervisory visits to assess the licensee's systems and to review how the licensee ensures that its staff are competent and remain competent for their roles.

                  January 2014

                • Maintaining Competence

                  • TC-2.2.7

                    A licensee must make appropriate arrangements to ensure that approved persons maintain competence.

                    January 2014

                  • TC-2.2.8

                    A licensee should ensure that maintaining competence for an approved person takes into account:

                    (a) Application of technical knowledge;
                    (b) Application and development of skills; and
                    (c) Any market changes and changes to products, legislation and regulation.
                    January 2014

                  • TC-2.2.9

                    A licensee may utilise the CPD schemes of relevant professional bodies to demonstrate compliance with Paragraph TC-2.2.1. In-house training, seminars, conferences, further qualifications, product presentations, computer-based training and one-to-one tuition may also be considered to demonstrate compliance with Paragraph TC-2.2.1.

                    January 2014

                • Record Keeping

                  • TC-2.2.10

                    A licensee must, for a minimum period of five years, make and retain records of:

                    (a) The criteria applied in assessing continuing competence;
                    (b) The annual assessment of competence; and
                    (c) Record of CPD hours undertaken by each approved person.
                    January 2014

              • TC-2.3 TC-2.3 Transitional Period

                • TC-2.3.1

                  The requirements of this Module for licensees are effective from the issuance date of this Module.

                  January 2014

                • TC-2.3.2

                  New applications for approved persons are subject to the requirements of this Module (See Paragraph TC-B.1.3).

                  January 2014

                • TC-2.3.3

                  Approved persons occupying controlled functions at the time this Module is issued will be grandfathered and not subject to the requirements of this Module, with the exception of CPD requirements in Paragraph TC-1.2.1 and Paragraph BR-1.1.2(k). However, should the approved person move to another controlled function, Paragraph TC-2.3.4 will apply.

                  Amended: April 2017
                  January 2014

                • TC-2.3.4

                  In instances, where an approved person in one licensee moves to another licensee and occupies the same function, the CBB will exercise its discretion on whether to grandfather such approved person from the required qualifications and competencies outlined in Appendix TC-1 into the new licensee. The grandfathering criteria used by the CBB will include a comparison of the scope and size of both positions. This will also apply in instances where an approved person in one licensee moves from one department to another within the same licensee.

                  January 2014

            • Appendix TC-1

              • Appendix TC-1 Qualifications and Core Competencies of Controlled Functions

                Role Core Competencies How can competence be demonstrated?
                Board Member Board Members must have:
                (a) Sufficient experience to demonstrate sound business decision-making; and
                (b) A good understanding of the industry and its regulatory environment.
                		Competence is demonstrated by:
                (a)
                (i) Holding a Bachelor's Degree; and
                (ii) A minimum experience of 7 years in business or government of which at least 4 years at a senior management level;

                OR
                (b) A minimum experience of 10 years in business
                Chief Executive or General Manager These roles require:
                (a) A clear understanding of the role and responsibilities associated with this position;
                (b) A good understanding of the licensee's business, the wider industry and its regulatory environment;
                (c) Relevant experience and qualifications associated with such executive responsibilities; and
                (d) The necessary professional and leadership capabilities which qualify him for this position.
                		This person should have a minimum experience of 10 years in the financial sector of which at least 7 years at a senior management level in a bank or finance company. He/she should hold a relevant academic/professional qualification, preferably MBA, Masters in finance/accounting/economics or masters in any other subject, or preferably other qualification related to banking, accounting or finance.
                Head of Function This role requires:
                (a) A clear understanding of the role and responsibilities associated with the relevant function;
                (b) A good understanding of the licensee's business, the broader industry and its regulatory environment; and
                (c) The relevant experience and qualifications to fulfill their responsibilities.
                		A senior manager responsible for a specialist function should have a minimum experience of 7 years in the banking/financial industry of which at least 5 years of experience in the same function that he/she will be heading. He/she should:
                (a) Hold a relevant academic/professional qualification, preferably MBA, Masters in finance/accounting/economics or masters in any other subject, and preferably other qualification related to banking/accounting; and
                (b) Have other relevant certification(s) specific to this role. Such certifications may, depending on the function being fulfilled, include but are not limited to:
                (a) Chartered Financial Analyst (CFA);
                (b) Certificate in Securities and Financial Derivatives;
                (c) Certificate in Investment Management;
                (d) Professional Certification in Accounting; and/or
                (e) Equivalent certificates or qualifications; and/or
                (f) Advanced Diploma in Banking/ Islamic Finance or Financial Advisory Program from the BIBF or other institutions.
                Compliance Officer A Compliance Officer should:
                (a) Have the ability and experience to take responsibility for implementing and maintaining compliance policies;
                (b) Have the appropriate level of experience to demonstrate independence from other functions within the licensee; and
                (c) Have a thorough understanding of the industry and the applicable regulatory framework.
                The level of required competence varies based on the scope, magnitude and complexity of the licensee.                 		The Compliance Officer should have a minimum of 3 years relevant experience in a bank, financial institution or financial regulator. He/she should:
                (a) Hold a degree from a university at bachelor level or higher or a relevant professional qualification in compliance; and
                (b) Have relevant certification(s) specific to this role. Such certifications may include but are not limited to:
                (i) International Diploma in Compliance offered by the International Compliance Association; and/or
                (ii) International Advanced Certificate in Compliance and Financial Crime offered by the International Compliance Association; and/or
                (iii) Any other relevant professional qualification deemed suitable by the CBB. These may include qualifications in areas related to the license.
                Money Laundering Reporting Officer (MLRO) The MLRO should:
                (a) Understand the business and how the Anti-Money Laundering framework applies thereto;
                (b) Have the appropriate level of experience to demonstrate independence from staff of the licensee dealing directly with customers; and
                (c) Have a thorough knowledge of the financial industry and be familiar with relevant FATF and applicable domestic regulatory requirements.
                		An MLRO should have a minimum experience of 3 years in anti-money laundering or anti-money laundering related role. The MLRO should:
                (a) Hold a degree from a university at bachelor level or higher or a relevant professional qualification; and
                (b) Have relevant certification(s) specific to this role. Such certifications may include but are not limited to:
                (i) Certified Anti-Money Laundering Specialist Examination (ACAMS); and/ or
                (ii) Diploma in Anti-Money Laundering offered by the International Compliance Association; and/ or
                (iii) International Diploma in Financial Crime Prevention offered by International Compliance Association; and/or
                (iv) International Advanced Certificate in Compliance and Financial Crime offered by the International Compliance Association.
                Head of Shari'a Review A Head of Shari'a Review should:
                (a) Have appropriate level of knowledge in Islamic Finance and Shari'a principles;
                (b) Have a good understanding of the banking/financial industry and possess good knowledge of economics and finance; and
                (c) Understand how to interpret financial statements.
                		The Head of Shari'a Review should have a minimum of 5 years relevant experience in a bank or financial institution dealing with Islamic products and services. He/she should:
                (a) Hold a bachelor's degree in Shari'a, which includes study in Usul Fiqh (the origin of Islamic law) and/or Fiqh Muamalat (Islamic jurisprudence) or;
                (b) Hold a university degree in banking and finance together with a qualification in Shari'a review.
                January 2014

    • Representative Offices [April 2008]

      Click here for a copy of the Application for a Representative Office License in PDF format.