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 undertakingcontrolled functions (i.e.approved persons ).October 2010TC-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 undertakingcontrolled functions are sufficiently competent, and are able to undertake their respective roles and responsibilities.October 2010TC-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) requireslicensees to maintain adequate human, financial and other resources sufficient to run its business in an orderly manner.October 2010TC-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 thelicensee in a sound and prudent manner (AU-2.4). This condition specifies thatlicensees 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 byapproved persons .Amended: January 2011
October 2010Legal 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 theirapproved persons ). Requirements regardingMoney Changer Licensees are also included in the Regulation Organising Money Changing Business, issued in 1994 and included in this Module.Amended: January 2011
October 2010TC-A.1.6
For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.
October 2010TC-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 2010TC-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 aslicensees .October 2010TC-B.1.2
Persons authorised by the CBB as
approved persons prior to the issuance of Module TC need not reapply for authorisation.October 2010TC-B.1.3
The requirements of this Module apply to
approved persons holdingcontrolled functions :(a) Who are employed or appointed by thelicensees in connection with thelicensees' regulated activities, whether under a contract of service or for services or otherwise; or(b)Whose services, under an arrangement between thelicensee and a third party, are placed at the disposal and under the control of thelicensee. October 2010TC-B.1.4
Licensees must satisfy the CBB that individuals performing acontrolled function for it or on its behalf are suitable and competent to carry out thatcontrolled function .October 2010TC-B.1.5
In implementing this Module,
licensees must ensure that:(a) Individuals recruited by thelicensees to perform acontrolled function hold suitable qualifications and experience appropriate to the nature of the business;(b)Individuals performing acontrolled function remain competent for the work they do; and(c) Individuals performing acontrolled function are appropriately supervised.October 2010TC-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 acontrolled function, it must satisfy itself, where appropriate, of such individual's relevant qualifications and experience.October 2010TC-1.1.2
A
licensee proposing to recruit an individual has to satisfy itself, of his/her relevant qualifications and experience. Thelicensee should:(a) Take into account the knowledge and skills required for the role, in addition to the nature and the level of complexity of thecontrolled function ; and(b) Take reasonable steps to obtain sufficient information about the individual's background, experience, training and qualifications.October 2010TC-1.1.3
Individuals occupying the following
controlled functions (refer to Paragraphs AU-1.2.5 to AU-1.2.10) at alicensee must be qualified and suitably experienced for their specific roles and responsibilities:(a)Director ;(b)Chief Executive orGeneral Manager ;(c)Head of function ;(d)Compliance officer ; and(e)Money Laundering Reporting Officer ('MLRO').October 2010TC-1.1.4
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licensee must take reasonable steps to ensure that individuals holdingcontrolled 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 2010Director
TC-1.1.5
As individuals,
directors of alicensee must hold professional qualifications and/or have relevant experience outlined in Appendix TC-1 as a minimum.October 2010TC-1.1.6
The role of the
director is to be accountable and responsible for the management and performance of thelicensee , and is outlined in more details in Section HC-1.1.October 2010TC-1.1.7
When taken as a whole, the board of
directors of alicencee 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 2010Chief Executive or General Manager
TC-1.1.8
Individuals holding the position of
chief executive officer or equivalent at alicensee must hold relevant qualifications and relevant experience as outlined in Appendix TC-1 as a minimum.October 2010TC-1.1.9
The
chief executive officer orgeneral manager (as appropriate) is responsible for the executive management and performance of thelicensee within the framework or delegated authorities set by the Board.October 2010Head of Function
TC-1.1.10
Individuals holding the position of
head of function at alicensee must hold relevant professional qualifications and experience as outlined in Appendix TC-1 as a minimum.October 2010TC-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 2010Compliance Officer
TC-1.1.12
Individuals holding the position of
compliance officer at alicensee must hold relevant experience and qualifications as outlined in Appendix TC-1 as a minimum.October 2010TC-1.1.13
In accordance with Paragraph HC-2.4.3, an employee of appropriate standing must be designated by
licensees for the position ofcompliance officer . The duties of thecompliance officer include:(a)Having responsibility for oversight of thelicensee's compliance with the requirements of the CBB; and(b)Reporting to thelicensee's Board in respect of that responsibility.October 2010Money 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 2010TC-1.2 TC-1.2 Assessing Competence
TC-1.2.1
Licensees must not allow an individual to undertake or supervisecontrolled functions unless that individual has been assessed by thelicensee as competent in accordance with this Section.October 2010TC-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 thelicensees's responsibility to ensure that such arrangements are in place and working successfully.October 2010TC-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 2010TC-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 specificcontrolled function without supervision.October 2010TC-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 similarcontrolled function with anotherlicensee .October 2010TC-1.2.6
If a
licensee assesses an individual as competent in accordance with TC-1.2.4 to perform a specificcontrolled function it does not necessarily mean that the individual is competent to undertake othercontrolled functions .October 2010TC-1.2.7
A firm should use methods of assessment that are appropriate to the
controlled function and to the individual's role.October 2010TC-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 undertakingcontrolled functions . It must develop a training plan to address these needs and ensure that training is planned, appropriately structured and evaluated.October 2010TC-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 thecontrolled 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 2010TC-2.1.3
The training plan of
licensees must include a programme for continuous professional development training ("CPD ") for their personnel.October 2010TC-2.1.4
Approved persons may choose to fulfil theirCPD requirements by attending courses and seminars at local or foreign training institutions.October 2010TC-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 2010TC-2.1.6
Individuals holding the
controlled functions ofcompliance officer and MLRO at alicensee must undergo a minimum of 15 hours ofCPD per annum.October 2010TC-2.1.7
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licensee should ensure that anapproved person undertaking acontrolled function undergoes appropriate review and assessment of performance.October 2010TC-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 2010TC-2.1.9
Assessors of
approved persons should have technical knowledge and relevant skills, e.g. coaching and assessment skills.October 2010TC-2.2 TC-2.2 Maintaining Competence
TC-2.2.1
A
licensee must make appropriate arrangements to ensure thatapproved persons maintain competence.October 2010TC-2.2.2
A
licensee should ensure that maintaining competence for anapproved 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 2010TC-2.2.3
A
licensee may utilise theCPD 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 2010TC-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 2010TC-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 2010TC-3.1.3
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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 ofCPD hours undertaken by eachapproved person .October 2010TC-3.1.4
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licensee should make and retain records of:(a)The annual training plan for allcontrolled 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 2010TC-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 thelicensee's systems and to review how thelicensee ensures that its staff are competent and remain competent for their roles.October 2010TC-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 2010TC-4.1.2
Where
approved persons holdingcontrolled functions are occupying positions within thelicensee and do not meet the qualifications and core competencies outlined in Appendix TC-1 at the time of the issuance of Module TC, thelicensee must ensure that such individuals will meet the requirements of Module TC by 31st December 2011 at the latest.October 2010Appendices: 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 thelicensee '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 thelicensee '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 thelicensee ; 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 thelicensee .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 thelicensee dealing directly withcustomers .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