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  • EN-2 EN-2 Investigations

    • EN-2.1 EN-2.1 Legal Source

      • EN-2.1.1

        Articles 121 to 123 of the CBB Law empowers the CBB to order investigations of licensees, in order to help it assess a licensee's compliance with the provisions of the CBB Law. Such investigations may be carried out either by its own officials or appointed experts. Articles 111 and 124 require licensees to make available to the CBB's inspectors and appointed experts their books and other records, and to provide all relevant information within the time limits deemed reasonable by the inspectors and/or appointed experts.

        Amended: April 2012
        October 2010

      • EN-2.1.2

        Articles 163 and 170 of the CBB Law provide for criminal sanctions where false or misleading statements are made to the CBB, or an investigation by the CBB is otherwise obstructed (see Section EN-9.3).

        October 2010

    • EN-2.2 EN-2.2 CBB Policy

      • EN-2.2.1

        The CBB uses its own inspectors to undertake on-site examinations of licensees as an integral part of its regular supervisory efforts. In addition, the CBB may commission special investigations of licensees in order to help it assess their compliance with CBB requirements, as contained in Article 121 of the CBB Law. Such investigations may be carried out either by the CBB's own officials, by duly qualified experts appointed for the purpose by the CBB ('appointed experts'), or a combination of the two.

        Amended: April 2012
        October 2010

      • EN-2.2.2

        Failure by licensees to cooperate fully with the CBB's inspectors, or its appointed experts or to respond to their examination reports within the time limits specified, will be treated as demonstrating a material lack of cooperation with the CBB which will result in other enforcement measures being considered, as described elsewhere in this Module. This guidance is supported by Article 114(a) of the CBB Law.

        Amended: April 2012
        October 2010

      • EN-2.2.3

        The CBB may appoint an individual or a firm as an appointed expert. Examples of appointed experts are lawyers and expert witnesses. The appointment of appointed experts is not necessarily indicative of a contravention of CBB requirements or suspicion of such a contravention. For instance, an appointed expert may be commissioned to provide an expert opinion on a technical matter.

        Amended: April 2012
        October 2010

      • EN-2.2.4

        Appointed experts report in a form and within a scope defined by the CBB, and are solely responsible to the CBB for the work they undertake in relation to the investigation concerned. The report produced by the appointed experts is the property of the CBB (but is usually shared by the CBB with the firm concerned). The cost of the appointed experts' work must be borne by the licensee concerned.

        Amended: April 2012
        October 2010

      • EN-2.2.5

        In selecting an appointed expert, the CBB will take into account the level of fees proposed and aim to limit these to the lowest level consistent with an adequate review of the matters at hand, given the qualifications, track record and independence of the persons concerned. Because the costs of such investigations are met by the licensee, the CBB makes only selective use of appointed experts, when essential to supplement CBB's other supervisory tools and resources.

        Amended: April 2012
        October 2010

      • EN-2.2.6

        [This Paragraph was moved to Section BR-3.5 for money changers and administrators and the module GR for representative offices in April 2012.]

      • EN-2.2.7

        [This Paragraph was deleted in April 2012].

        Deleted: April 2012
        October 2010

      • EN-2.2.8

        [This Paragraph was deleted in April 2012].

        Deleted: April 2012
        October 2010

      • EN-2.2.9

        The CBB may commission reports, which require appointed experts to review information from another company within the reporting specialised licensee's group even when that other entity is not subject to any CBB requirements.

        Amended: January 2012
        October 2010

      • EN-2.2.10

        In accordance with Articles 114 and 123 of the CBB Law, specialised licensees must provide all relevant information and assistance to appointed experts on demand.

        Amended: April 2012
        October 2010

      • EN-2.2.11

        [This Paragraph was moved to Section BR-3.5 for money changers and administrators and the module GR for representative offices in April 2012.]

    • EN-2.3 EN-2.3 Procedure

      [The Rules and guidance in this Section were moved to Section BR-3.5 for money changers and administrators and Module GR for Representative offices in April 2012]

      • EN-2.3.1

        All proposals for Appointed Experts require approval by an Executive Director or more senior official of the CBB. The appointment will be made in writing, and made directly with the experts concerned. A separate letter is sent to the licensee, notifying them of the appointment. At the CBB's discretion, a trilateral meeting may be held at any point, involving the CBB and representatives of the licensee and the Appointed Experts, to discuss any aspect of the investigation.

        October 2010

      • EN-2.3.2

        Following the completion of the investigation, the CBB will normally provide feedback on the findings of the investigation to the specialised licensee concerned.

        October 2010

    • EN-2.4 EN-2.4 The Required Report

      [The Rules and guidance in this Section were moved to Section BR-3.5 for money changers and administrators and Module GR for Representative offices in April 2012]

      • EN-2.4.1

        The scope of the required report will be determined and detailed by the CBB in the appointment letter. Commissioned Appointed Experts will normally be required to report on one or more of the following aspects of a licensee's business:

        a) Accounting and other records;
        b) Internal control systems;
        c) Returns of information provided to the CBB;
        d) Operations of certain departments; and/or
        e) Other matters specified by the CBB.
        October 2010

      • EN-2.4.2

        Appointed Experts will be required to form an opinion on whether, during the period examined, the licensee is in compliance with the relevant provisions of the CBB Law and the CBB's relevant requirements, as well as other requirements of Bahrain Law and, where relevant, industry best practice locally and/or internationally.

        October 2010

      • EN-2.4.3

        The Appointed Experts report should follow the format set out in Appendix EN-1 in Part B of Rulebook Volume 4.

        October 2010

      • EN-2.4.4

        Unless otherwise directed by the CBB, the report must be discussed with the Board of Directors and/or senior management in advance of it being sent to the CBB.

        October 2010

      • EN-2.4.5

        Where the report is qualified by exception, the report must clearly set out the risks which the licensee runs by not correcting the weakness, with an indication of the severity of the weakness, should it not be corrected. Appointed Experts will be expected to report on the type, nature and extent of any weaknesses found during their work, as well as the implications of a failure to address and resolve such weaknesses.

        October 2010

      • EN-2.4.6

        If the Appointed Experts conclude, after discussing the matter with the licensee, that they will give a negative opinion (as opposed to one qualified by exception) or that the issue of the report will be delayed, they must immediately inform the CBB in writing giving an explanation in this regard.

        October 2010

      • EN-2.4.7

        The report must be completed, dated and submitted, together with any comments by Directors or management (including any proposed timeframe within which the licensee has committed to resolving any issues highlighted by the report), to the CBB within the timeframe applicable.

        October 2010

    • EN-2.5 EN-2.5 Other Notifications to the CBB

      [The Rules and guidance in this Section were moved to Section BR-3.5 for money changers and administrators and Module GR for Representative offices in April 2012]

      • EN-2.5.1

        Appointed Experts must communicate to the CBB, during the conduct of their duties, any reasonable belief or concern they may have that any of the requirements of the CBB, including the criteria for licensing a licensee (see Module AU), are not or have not been fulfilled, or that there has been a material loss or there exists a significant risk of material loss in the concerned licensee, or that the interests of clients are at risk because of adverse changes in the financial position or in the management or other resources of a licensee. Notwithstanding the above, it is primarily the licensee's responsibility to report such matters to the CBB.

        October 2010

      • EN-2.5.2

        The CBB recognises that Appointed Experts cannot be expected to be aware of all circumstances which, had they known of them, would have led them to make a communication to the CBB as outlined above. It is only when Appointed Experts, in carrying out their duties, become aware of such a circumstance that they should make detailed inquiries with the above specific duty in mind.

        October 2010

      • EN-2.5.3

        If Appointed Experts decide to communicate directly with the CBB in the circumstances set out in Paragraph EN-2.5.1 above, they may wish to consider whether the matter should be reported at an appropriate senior level in the licensee at the same time and whether an appropriate senior representative of the licensee should be invited to attend the meeting with the CBB.

        October 2010