Account Information Service

An 'account information service' is an online service which provides consolidated information to a customer on one or more accounts held by that customer with licensees maintaining customer accounts.

Account Information Service Provider or AISP (s)

A person licensed by the CBB to undertake the activity of providing account information services online.

Accredited Investor(s)

Accredited investors are defined as investors meeting the following criteria:

Individuals and commercial undertakings may elect in writing to be treated as accredited investors subject to meeting at least two of the following conditions:

Administrator(s) licensee(s)/license

A person licensed under Volume 5_Administrator of the CBB Rulebook to undertake regulated administration services as defined in Paragraph AU-1.1.11 or AU-1.1.12.

Ancillary Service Provider(s) or Ancillary Service Provider Licensee(s)

A person licensed under Volume 5 of the CBB Rulebook to undertake regulated ancillary services. These licensees are referred to as 'financial sector support institutions' under Article 1 of the CBB Law.

Appointed Expert(s)

A duly qualified individual or firm appointed by the CBB to carry out inspections in accordance with Article 114 of the CBB Law or special investigations of licensees in accordance with Article 121 of the CBB Law. Appointed Experts are appointed in addition to the CBB's own officials. Examples of Appointed Experts are reporting accountants, lawyers, expert witnesses and independent actuaries.

Approved Person(s)

Persons undertaking certain functions in relation to CBB specialised licensees require prior CBB approval. These functions (called "controlled functions") include directors and members of senior management. The controlled functions regime supplements the licensing regime by ensuring that key persons involved in the running of specialised licensees are fit and proper. Those authorised by the CBB to undertake controlled functions are called approved persons (see Paragraph AU-A.1.2; Section AU-1.3 for ancillary service providers).

Associate(d)

A company or other enterprise, which is not a subsidiary or joint venture, over which the licensee has significant influence. Significant influence means the power to participate in financial and operating policy decisions. Such influence is presumed to exist if the licensee owns more than 20 percent of the associate.

Authorised person(s)

A person authorised either as a CBB licensee or an Approved Person.

Bahrain domiciled CIU(s)

Bahrain domiciled CIUs are undertakings where:

Bahraini specialised licensees/ Bahraini licensees

A specialised licensee that is incorporated in the Kingdom of Bahrain.

Base Rate

The interest rate that underpins lending to customers.

Beneficial Owner

Refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. This definition should also apply to "Ultimate beneficial ownership".

Branch(es)

A place of business which forms a legally dependent part of a licensee and which carries out directly all or some of the transactions inherent in the business of the relevant licensee.

CBB licensees

Any person licensed by the CBB under any of the Volumes of the CBB Rulebook.

Card Processing or Card Processing Service(s)

Ancillary service provider activity as defined under Paragraph AU-1.2.5 of Module AU_Ancillary Service Provider.

Chief Executive, Chief Executive Officer or CEO

A person responsible under the immediate authority of the Board of Directors for the conduct of the firm (regardless of actual title): cf. AU-1.2.9; AU-1.3.5 for ancillary service providers).

Client Assets

Money or financial instruments belonging to clients of a licensee that are held or controlled by the licensee in connection with the conduct of regulated administration services.

Client money

Client money comprises any money that a licensee receives and holds on a fiduciary basis, as intermediary in the course of carrying on regulated services, towards the execution of transactions on behalf of its customers.

Client money account

A segregated bank account held by PSPs with a retail bank in order to hold client money.

Close link (as defined under Paragraph GR-6.2.1 of Module GR_Administrators; GR-5.2.1 for financing companies; GR-8.2.1 for ancillary service providers)

A licensee ("L") has close links with another undertaking ("U"), if:

Collective Investment Undertaking(s) ('CIUs')

Collective investment undertakings ('CIUs') are undertakings:

Compliance Officer

An employee of appropriate standing designated by licensees having responsibility for oversight of the licensee's compliance with the requirements of the CBB and reporting to the licensee's Board in respect of that responsibility. The compliance officer is an approved person occupying a controlled function.

Conflict of interest

A situation when a person or an entity has competing professional or personal obligations to other parties in a financial transaction (e.g. underwriting a securities transaction and simultaneously advising clients whether to buy the security or not) or in ongoing financial relationships (e.g. when a specialised licensee has a director or one of its major customers on its board), or personal or financial interests that would make it difficult to fulfil his duties fairly.

Connected person(s)

Conspicuous notice

Means a written statement in both Arabic and English languages which is easily visible and legible and displayed in all credit institutions' premises open to the public (head offices and branches), and via means such as websites, newspapers and other press notices.

Controller's family

(to be defined at a later date)

Controlled function

A function carried on by an approved person in relation to a licensee that requires prior CBB approval: cf. AU-1.2.

Controller

As defined under Paragraph GR-5.2.1 for administrators, [GR-4.2.1 for financing companies; GR-7.2.1 for ancillary service providers], a controller is a natural or legal person who, either alone or with his associates:

Conventional bank licensees

A bank licensed by CBB under Volume 1 of the CBB Rulebook, and generally operating according to conventional finance principles (as opposed to operating in accordance with Islamic finance principles).

Conventional retail bank licensee(s)

Banks which undertake the regulated banking services of (a) to (o) in Paragraph LR-1.3.1 for both residents and non-residents of the Kingdom of Bahrain.

Core Capital (as defined in CA-1.1.6_Financing Companies)

Core capital shall consist of the sum of items (a) to (e) below, less the sum of items (f) to (i) below:

LESS:

¹ This refers to unrealised fair value gains reported directly in equity.

² This refers to both 'net losses taken through P&L'. and 'gross losses reported directly in equity'.

Core Capital (for Ancillary Service Providers)

Core capital refers to:

Less:

Interim profits which have been reviewed as per IAS 34 may be included as core capital.

CPD

Continuous professional development as referred to in Module TC (Training and Competency).

Credit Information

As defined under Article (68 bis) b) 1) of the CBB Law, means any information and data related to financial obligations of customers of members of a credit reference bureau. This includes information and data related to all of the customer's debts (liabilities), credit facilities, sale on credit arrangements, sale by instalments, and any other claims due from the customer, along with their due dates, terms and conditions, and guarantees related to such claims, repayment, and the extent of the customers' commitments as well as the data and information related to government claims against the customer in the form of fees, instalments and fines, and any other claims due to government bodies. For this definition, customer means any of the customers of a credit reference bureau whom the credit reference bureau holds credit information as defined under Article (68 bis) b) 3) of the CBB Law.

Credit Reference Bureau

A credit reference bureau is a company licensed by the CBB as an ancillary services provider that receives, stores, analyses and classifies the credit information of customers and issues credit reports and provides the members of the credit reference bureau with such reports upon their request (see Paragraph AU-1.2.6 of Module AU_Ancillary Service Provider). For this definition, customer means any of the customers of a credit reference bureau whom the credit reference bureau holds credit information as defined under Article (68 bis) b) 3) of the CBB Law.

Credit Report

As defined under Article (68 bis) b) 4) of the CBB Law, means any report issued by any of the credit reference bureaus based upon a request by a customer or any of the members of the credit reference bureau and which includes credit information indicating the credit worthiness of the customer.

Crowdfunding Platform Operator

A person licensed by the CBB under the CBB Rulebook Volume 5 in respect of operating a crowdfunding platform.

Customer

A customer refers to a person or persons who have a business relationship with the licensee—those who receive and use or are directly affected by the products and services of the licensee.

Director(s)

A person who acts in the capacity of director of a firm (whether appointed or not, or whether titled director or not). In the case of a sole trader, unincorporated body or partnership, a person directing its affairs, or a partner (of a partnership). Where relevant for CBB licensees, directors are a controlled function: see AU-1.2.2; AU-1.4.2 for microfinance institutions; and AU-1.3.2 for ancillary service providers.

Eligible Beneficiary(ies) (For Purposes of Module AU_Microfinance Institutions)

Low income individuals and small businesses, who are not eligible to secure financing facilities through the banking system that intend to get a credit facility to engage in small economic activities (examples: small farmers, fishermen, related activities, etc.).

Employees

An individual: a) who is employed or appointed by a person in connection with that person's business, whether under a contract of service or otherwise; or b) whose services, under an arrangement between that person and a third party, are placed at the disposal and under the control of that person.

Executive Director

Means a director who is an officer or employee, or is otherwise involved in day-to-day management, of either:

In this definition, the word "company" which is a controller of the licensee excludes sovereigns such as government owned entities and government ministries.

Expert Investor

Expert investors are:

Family

For purposes of Module AU, the term 'family' refers to father, mother, husband, wife, grandfather, grandmother, grandson and granddaughter.

Financial instrument(s)

Any of the following instruments:

Financing companies or financing company licensee(s)

A person licensed under Volume 5 of the CBB Rulebook to undertake regulated financing company services.

Financial services (as used in Module AU)

For the purpose of Module AU, financial services means:

Framework (as used in Module OM_Financing Companies)

Framework refers to the operational risk framework of a licensee. An operational risk framework refers to the internal control systems of the licensee and contains five inter-related elements:

Fund administrators

A person licensed under Volume 5 of the CBB Rulebook to undertake regulated administration services as defined in Paragraph AU-1.1.11.

Gearing Ratio

For purposes of Module CA for financing companies, the gearing ratio is defined as the core capital divided by the total liabilities.

General Manager

The General Manager (of a firm whether incorporated in Bahrain or not) means a person who (regardless of actual title) is responsible, alone or jointly, for the conduct of the whole of the firm, or in the case of an overseas licensee, for all the activities of the branch. Equivalent to Chief Executive in the case of firms incorporated in Bahrain (cf. Rule AU-1.2.9; AU-1.3.5 for ancillary service providers).

Head of Function

A person who, under the immediate authority of the chief executive or general manager, exercises one or more major managerial functions or is responsible for maintaining accounts or other records of the firm (cf. Rule AU-1.2; AU-1.4 for microfinance institutions; AU-1.3.6 for ancillary service providers).

Home supervisor

The competent authority in which the parent licensee is incorporated, or in which the head office of a branch is incorporated.

Independent director

Determination by the Board. Under Module HC an 'independent director' is a director whom the board has specifically determined has no material relationship which could affect his independence of judgment, taking into account all known facts. The board should consider that, although a particular director meets the formal requirements, he may not be independent owing to specific circumstances of the person or the licensee, ownership structure of the licensee, or for any other reason. The board's determination should be a good faith finding after diligent review and full discussion.

Formal Requirements. 'Independent director' means a director of the licensee who, or whose family shareholders either separately or together with him or each other, does not have any material pecuniary relationships or transactions with the licensee (not counting director's remuneration for this purpose) and in particular who, during the one year preceding the time in question met all the following conditions:

For purposes of this definition, the 'payments' referred to in paragraph (b)(i), (b)(ii) and (b)(iii) do not include monies received from dividends and credit facilities arising from the licensee's normal business activities, but instead ordinarily refer to monies received (and/or payable during the period in question) for services rendered to the licensee by the director or company concerned, or paid (or payable) by the concerned director or company to the licensee for services provided by the licensee. The CBB may in its absolute discretion vary any such requirement (and /or restrictive effect thereof) in writing on a case-by-case basis. Dividends and credit facilities are to be considered under item (b)(iv) of this definition.

For the purpose of the definition of "independent director":

Insurance licensees

An insurance firm, insurance broker, insurance consultant, insurance manager or an insurance exchange operator who has been granted a licence by the CBB to undertake regulated insurance services as defined in Section AU-1.4 of Volume 3 (Insurance).

Intra-group outsourcing

Intra-group outsourcing is an arrangement in which one company within a group of companies provides services for another company within the same group that could also be or usually have been provided in-house.

Investment firm licensee(s)

A person licensed under Volume 4 of the CBB Rulebook to undertake regulated investment business services.

Islamic bank licensees

A bank licensed by CBB under Volume 2 of the CBB Rulebook, and generally operating according to Islamic finance principles (as opposed to operating in accordance with conventional finance principles).

Islamic retail banks licensee(s)

Banks which undertake the regulated banking services of (a) to (n) in Paragraph LR-1.3.1 for both residents and non-residents of the Kingdom of Bahrain.

Lead Supervisor

In the context of groups containing regulated financial companies, the principal regulator supervising those financial companies on a consolidated basis.

Leverage ratio (For Purposes of Module CA_Microfinance Institutions)

Defined under Paragraph CA-1.1.5 as the total equity divided by the total assets, where total equity is defined under Paragraph CA-1.1.6.

Liabilities

For purposes of Module CA for financing companies, liabilities are defined as the total amount of liabilities reported in the PIRF or PIRCC.

Licensed exchange(s)

"Licensed exchange" means an exchange licensed in respect of the operation of its market in and from the Kingdom of Bahrain.

Licensees

Any person licensed by the CBB under any of the Volumes of the CBB Rulebook.

Licensees maintaining customer account (s)

Banks, financing companies and, or as the case may be, credit card or PSPs operating digital wallets, who allow AISPs and PISPs access to customer accounts with the explicit customer consent.

Liquid assets (for financing companies)

For purposes of Paragraph LM-1.2.5, liquid assets are defined as:

Market (as referred to in the definition of licensed exchange)

"Market" means a place at which, or a facility (whether electronic or otherwise) by means of which, offers or invitations to sell, purchase or exchange securities or futures contracts (including options and derivatives) regularly made on a centralised basis, being offers or invitations that are intended or may reasonably be expected to result, whether directly or indirectly, in the acceptance or making, respectively, of offers to sell, purchase or exchange securities or futures contracts (whether through that place or facility or otherwise).

Maturity mismatch ratio (for financing companies)

The maturity mismatch ratio is calculated using the net cumulative mismatch figure obtained under Paragraph LM-1.3.4 as a percentage of total liabilities.

Members of the credit reference bureau

As defined under Article (68 bis) b) 2) of the CBB Law, means CBB licensees as designated by the CBB, government bodies as specified by the Bahrain Cabinet of Ministers resolution and any other person as specified by the CBB resolution issued in coordination with the concerned regulatory body of such person.

Microfinance institution(s) or microfinance institution licensee(s)

A person licensed under Volume 5 of the CBB Rulebook to undertake regulated microfinance services.

Money changer or money changer licensee(s)

A person who has been granted a licence by the CBB to undertake regulated money changer services as defined in Paragraph AU-1.1.8 of Module AU (Authorisation) for Money changers.

Money Changers' Business Code of Practice ('the Code')

Business conduct code included in Chapter 2 of Module BC (Business Conduct) for Money changers.

NIM

Net Interest Margin.

Non-executive Director

Means any director who is not an executive director

Option(s)

An option is a contract giving the buyer the right, but not the obligation, to buy or sell any of the following at a specific price on or before a certain date:

Originator Information

Outsourcing

The use of a person to provide customised services to a licensee other than by a director or employee of the licensee.

Outsourcing provider

The person providing the customised services as described in the definition of "outsourcing".

Overseas specialised licensee(s)/Overseas licensee(s)

A specialised licensee which is incorporated in an overseas jurisdiction and operates in the Kingdom of Bahrain through a branch licensed by the CBB.

Parent Undertaking or Parent

An undertaking or individual ('P'), which has the following relationship to another undertaking ('S'):

Payment Initiation Service

A 'payment initiation service' is an online service to initiate a payment order at the request of a customer from a payment account held at a licensee maintaining customer accounts with the customer's explicit consent and authentication.

Payment Initiation Service Provider (s) or PISP(s)

A person licensed by the CBB to undertake payment initiation services.

Payment Instrument (s)

Payment instrument means a personalised device and/or a software application that the customer uses in order to initiate a payment.

Person

Unless the context requires otherwise, a natural or corporate person.

Politically Exposed Person or ('PEP')

'Politically Exposed Persons' or 'PEPs' means individuals who are, or have been entrusted with prominent public functions in Bahrain or a foreign country, for example Heads of State or government, senior politicians, senior government, judicial or military officials, senior executives of state owned corporations or important political party officials or persons who are or have been entrusted with a prominent function by an international organisation. Business relationships with family members or close associates of PEPs involve reputational risks similar to PEPs themselves. The definition is not intended to cover middle-ranking or more junior officials in the foregoing categories. Bahraini PEPs would include all Ministers, all MPs, and all Ministry officials with the rank of Undersecretary or above.

Principal

Means the amount of credit received plus any other potential other charges, the total of which is subject to interest/profit.

Qualified by Exception

A report issued by an appointed expert that is qualified and indicates that certain areas or issues remain unresolved or are unverifiable due to certain limitations imposed on the appointed expert's work. The report will clearly indicate the type and reason for exception and the action that would have been taken by the appointed experts had the mentioned limitation not been placed on their work.

Qualifying liabilities (for financing companies)

For purposes of Paragraph LM-1.2.3, qualifying liabilities are defined as:

ROAA

Return on Average Assets.

ROAE

Return on Average Equity.

Registrar

A person licensed under Volume 5 of the CBB Rulebook to undertake regulated administration services as defined in Paragraph AU-1.1.12.

Regulated administration services

Any of the regulated activities permitted to be undertaken by a fund administrator or registrar outlined in Module AU_Administrators Paragraphs AU-1.1.11 and AU-1.1.12.

Regulated ancillary services

Refer to any of the following categories:

Regulated financing company service(s)

Any of the regulated activities permitted to be undertaken by a financing company licensee outlined in Module AU_Financing Companies Paragraph AU-1.3.1.

Regulated insurance services

Any of the regulated activities permitted to be undertaken by an insurance licensee as outlined in Section AU-1.4 for Volume 3 (Insurance) of the CBB Rulebook.

Regulated investment services

Any of the following, as further defined in Volume 4 (Investment Business) Section AU-1.4:

Regulated (Islamic) banking services

Any of the regulated activities permitted to be undertaken by a conventional bank or Islamic bank licensee as outlined in Paragraph LR-1.3.1 for Volumes 1 and 2 of the CBB Rulebook.

Regulated microfinance service

Any of the regulated activities to be undertaken by a microfinance institution licensee as outlined in Module AU_Microfinance Institutions Paragraph AU-1.2.1.

Regulated money changer services

Any of the regulated activities permitted to be undertaken by a money changer licensee as outlined in Module AU_Money Changers Paragraph AU-1.1.8.

Regulated representative office services

Any of the regulated activities permitted to be undertaken by a representative office licensee as outlined in Module AU_Representative Offices Paragraph AU-1.3.1.

Regulated services

Means those financial services regulated by the CBB and more particularly defined in Regulation No 1 of 2007.

Regulated specialised activities

Any of regulated activities permitted to be undertaken by specialised licensed as outlined in their specific Module AU.

Relevant Authorities

For the purposes of Module FC, relevant authority refers to the authorities listed in Rule FC-5.3.2.

Relevant Operating Expenses

For the purposes of calculating a licensee's annual CBB license fee, relevant operating expenses are defined as the total operating expenses of the licensee concerned, as recorded in the most recent audited financial statements available, excluding the following items:

Remuneration

Means all types of compensation including but not limited to salary, fee and non-cash benefits such as grants of stock, stock options or pension benefits.

Representative office or Representative office licensee(s)

A person who has been granted a licence by the CBB to undertake regulated representative office services as defined in Section AU-1.3.

Representative office manager or "Rep Manager"

A person who is responsible for the conduct of a representative office.

Reputational risk

Reputational risk is the potential that negative publicity regarding an institution's business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions.

Retail bank

A bank licensed in accordance with Volumes 1 or 2 of the CBB Rulebook.

Senior Manager/Management

Refers to individuals occupying the position of CEO or head of function.

Service level agreement(s)

An agreement forming part of the Outsourcing Agreement between the outsourcing service provider and the licensee that outlines the standards of service to be provided by the outsourcing service provider.

Shareholders

Persons who own shares in a company.

Significant transaction

For purposes of Module FC, in the absence of automated transaction monitoring systems, all transactions above BD 6,000 must be viewed as "significant".

Specialised Licensee(s)

A person licensed under Volume 5 of the CBB Rulebook.

Stock liquidity ratio (for Financing companies)

Expressed as a percentage, must be calculated on each business day and is the ratio of the sum of the licensee's liquid assets, net of deductions required under Paragraph LM-1.2.6, divided by the sum of qualifying liabilities.

Subsidiary or subsidiary undertaking

A company or other enterprise controlled by another company or enterprise (the parent or the holding company), including any other legal entity or other forms such as contractual agreements, where the licensee exercises a majority shareholding or has majority voting control by virtue of direct ownership or by proxy/nominee arrangements.

Succession plan

A plan developed by a licensee that would lay down the licensee's strategy with respect to succession of various senior management or board positions within the licensee.

Small business(es) (SMEs)

Corporate entities, being an unlisted or unincorporated enterprise where the reported annual sales for the consolidated group of which the firm is a part is less than BD 2 million.

Trilateral Meeting

A meeting between a licensee, appointed expert and the CBB.

Trust service providers

(to be defined at a later stage)

Without delay

The phrase without delay means, ideally, within a matter of hours of a designation by the United Nations Security Council or its relevant Sanctions Committee (e.g. the 1267 Committee, the 1988 Committee, the 1718 Sanctions Committee or the 1737 Sanctions Committee). For the purposes of S/RES/1373(2001), the phrase without delay means upon having reasonable grounds, or a reasonable basis, to suspect or believe that a person or entity is a terrorist, one who finances terrorism or a terrorist organisation. In both cases, the phrase without delay should be interpreted in the context of the need to prevent the flight or dissipation of funds or other assets which are linked to terrorists, terrorist organisations, those who finance terrorism, and to the financing of proliferation of weapons of mass destruction, and the need for global, concerted action to interdict and disrupt their flow swiftly.