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  • AML-3 AML-3 Money Laundering Reporting Officer (MLRO)

    • AML-3.1 AML-3.1 Appointment of MLRO

      • AML-3.1.1

        Capital Market Licensees must appoint a Money Laundering Reporting Officer ("MLRO"). The position of the MLRO is a controlled function and the MLRO is an approved Person.

        Amended: January 2022
        Added: October 2010

      • AML-3.1.2

        For details of CBB's requirements regarding controlled functions and approved Persons, see the relevant licensing Module, such as MAE, CSD, or MIR Module. Amongst other things, approved Persons require CBB approval before being appointed, which is granted only if they are assessed as 'fit and proper' for the function in question. A completed Form 3 must accompany any request for CBB approval.

        October 2010

      • AML-3.1.3

        The position of the MLRO must not be combined with functions that create potential conflicts of interest, such as an internal auditor or business line head. The position of the MLRO may not be outsourced.

        October 2010

      • AML-3.1.4

        Subject to rule AML-3.1.3, however, the position of the MLRO may otherwise be combined with other functions in the Capital Market Licensees, such as that of Compliance Officer, in cases where the volume and geographical spread of the business is limited and, therefore, the demands of the function are not likely to require a full time resource. Rule AML-3.1.7 requires that the MLRO is a Director or employee of the Capital Market Licensees, so the function may not be outsourced to a third-party employee.

        Amended: January 2022
        Added: October 2010

      • AML-3.1.4A

        For purposes of Paragraphs AML-3.1.3 and AML-3.1.4 above, Capital Market Licensees must clearly state in the Application for Approved Person Status — Form 3 — when combining the MLRO or DMLRO position with any other position within the Capital Market Licensees.

        Added: January 2022

      • AML-3.1.5

        Unless exempted by the CBB, a Capital Market Licensees must appoint deputy MLRO to act for the MLRO in his/her absence. The deputy MLRO must be resident in Bahrain unless otherwise agreed with the CBB.

        Amended: January 2022
        Added: October 2010

      • AML-3.1.5A

        Where a Capital Market Licensees seeks an exemption from appointment of Deputy MLRO, from the CBB, it must provide in writing, to the satisfaction of the CBB, the nature, scale and complexity of their business and the alternative arrangements that the Capital Market Licensees shall implement when the MLRO is not available to carry out the controlled function.

        Added: January 2022

      • AML-3.1.6

        Capital Market Licensees should note that although the MLRO may delegate some of his functions, either to other employees of the Capital Market Licensees or even (in the case of larger groups) to individuals performing similar functions for other group entities, the responsibility for compliance with the requirements of this Module remains with the Capital Market Licensees and the designated MLRO. The deputy MLRO should be able to support the MLRO discharge his responsibilities and to deputise for him in his absence.

        Amended: January 2022
        Added: October 2010

      • AML-3.1.7

        So that he can carry out his functions effectively, Capital Market Licensees must ensure that their MLRO:

        (a) Is a Director or a member of senior management of the Capital Market Licensees;
        (b) Has a sufficient level of seniority within the Capital Market Licensees, has the authority to act without interference from business line management and has direct access to the Board and senior management (where necessary);
        (c) Has sufficient resources, including sufficient time and (if necessary) support staff, and has designated a replacement to carry out the function should the MLRO be unable to perform his duties;
        (d) Has unrestricted access to all transactional information relating to any financial services provided by the Capital Market Licensees to that customer, or any transactions conducted by the Capital Market Licensees on behalf of a customer;
        (e) Is provided with timely information needed to identify, analyze and effectively monitor customer accounts;
        (f) Has access to all customer due diligence information obtained by the Capital Market Licensees; and
        (g) Is resident in Bahrain.
        Amended: January 2022
        Added: October 2010

      • AML-3.1.8

        In addition, Capital Market Licensees must ensure that their MLRO is able to:

        (a) Monitor the day-to-day operation of its policies and procedures relevant to this Module; and
        (b) Respond promptly to any reasonable request for information made by the Financial Intelligence Directorate, or the CBB.
        Amended: January 2022
        Amended: October 2019
        Added: October 2010

      • AML-3.1.9

        If the position of the MLRO falls vacant, the Capital Market Licensee must appoint a permanent replacement (after obtaining CBB approval), within 120 calendar days of the vacancy occurring. Pending the appointment of a permanent replacement, the Capital Market Licensees must make immediate interim arrangements (including the appointment of an acting MLRO) to ensure continuity in the MLRO function's performance. These interim arrangements must be approved by the CBB. Any action taken by the Deputy MLRO will be regarded as having the same authority as if it had been done by the MLRO.

        Amended: January 2022
        Added: October 2010

    • AML-3.2 AML-3.2 Responsibilities of the MLRO

      • AML-3.2.1

        The MLRO is responsible for:

        (a) Establishing and maintaining the Capital Market Licensee's AML/CFT policies and procedures;
        (b) Ensuring that the Capital Market Licensees complies with the AML Law, any other applicable AML/CFT legislation and this Module;
        (c) Ensuring day-to-day compliance with the Capital Market Licensee's own internal AML/CFT policies and procedures;
        (d) Acting as the Capital Market Licensee's main point of contact in respect of handling internal Suspicious Transaction Reports from the Capital Market Licensee's staff (refer to section AML-4.1) and as the main contact for the Financial Intelligence Directorate, the CBB and other concerned bodies regarding AML/CFT;
        (e) Making external Suspicious Transaction Reports to the Financial Intelligence Directorate and the Compliance Directorate (refer to section AML-4.2);
        (f) Taking reasonable steps to establish and maintain adequate arrangements for staff awareness and training on AML/CFT matters (whether internal or external), as per Chapter AML-5;
        (g) Producing annual reports on the effectiveness of the Capital Market Licensee's AML/CFT controls, for consideration by senior management, as per rule AML-3.3.3 and following-up on the status of any anomaly identified or remedial measure required by the CBB;
        (h) On-going monitoring of what may, in his opinion, constitute high-risk customer accounts; and
        (i) Ensuring that the Capital Market Licensee maintains all necessary CDD, transactions, STR and staff training records for the required periods (refer to section AML-6.1).
        Amended: January 2022
        Amended: October 2019
        Amended: July 2016
        Added: October 2010

    • AML-3.3 AML-3.3 Compliance Monitoring

      • Annual Compliance Review

        • AML-3.3.1

          Capital Market Licensees must take appropriate steps to identify and assess their money laundering and terrorist financing risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels). They must document those assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to the CBB. The nature and extent of any assessment of money laundering and terrorist financing risks must be appropriate to the nature and size of the business.

          Amended: January 2022
          Added: July 2016

        • AML-3.3.1A

          Capital Market Licensees should always understand their money laundering and terrorist financing risks, but the CBB may determine that individual documented risk assessments are not required, if the specific risks inherent to the sector are clearly identified and understood.

          Amended: January 2022
          Added: July 2016

        • AML-3.3.1B

          A Capital Market Licensee must review the effectiveness of its AML/CFT procedures, systems and controls at least once each calendar year. The review must cover the Capital Market Licensees and its branches and subsidiaries both inside and outside the Kingdom of Bahrain. A Capital Market Licensee must monitor the implementation of those controls and enhance them if necessary. The scope of the review must include:

          (a) A report, containing the number of internal reports made in accordance with section AML-4.1, a breakdown of all the results of those internal reports and their outcomes for each segment of the Capital Market Licensee's business, and an analysis of whether controls or training need to be enhanced;
          (b) A report, indicating the number of external reports made in accordance with section AML-4.2 and, where a Capital Market Licensee has made an internal report but not made an external report, noting why no external report was made;
          (c) A sample test of compliance with this Module's customer due diligence requirements; and
          (d) A report as to the quality of the Capital Market Licensee's anti-money laundering procedures, systems and controls and compliance with the rules of a licensed exchange and licensed clearing house or central depository, AML Law and this Module.
          Amended: January 2022
          Amended: July 2016
          Added: October 2010

        • AML-3.3.2

          The reports listed under rule AML-3.3.1B (a) and (b) must be made by the MLRO. The sample testing and report required under rule AML-3.3.1B (c) and (d) must be made by the Capital Market Licensee's external auditors or a consultancy firm approved by the CBB.

          Amended: January 2022
          Amended: January 2020
          Amended: January 2019
          Added: October 2010

        • AML-3.3.2A

          In order for a consultancy firm to be approved by the CBB for the purposes of Paragraph AML-3.3.2, such firm should provide the CBB’s Compliance Directorate with:

          (a) A sample AML/CFT report prepared for a financial institution;
          (b) A list of other AML/CFT related work undertaken by the firm;
          (c) A list of other audit/review assignments undertaken, specifying the nature of the work done, date and name of the licensee; and
          (d) An outline of any assignment conducted for or in cooperation with an international audit firm.
          Added: January 2020

        • AML-3.3.2B

          The firm should indicate which personnel (by name) will work on the report (including, where appropriate, which individual will be the team leader) and demonstrate that all such persons have appropriate qualifications in one of the following areas:

          (a) Audit;
          (b) Accounting;
          (c) Law; or
          (d) Banking/Finance.
          Added: January 2020

        • AML-3.3.2C

          Capital Market Licensees must ensure that the personnel conducting the review are qualified, skilled and have adequate experience to conduct such a review. At least two persons working on the report (one of whom should be the team leader) must have:

          (a) A minimum of 5 years professional experience dealing with AML/CFT issues; and
          (b) Formal AML/CFT training.
          Amended: January 2022
          Added: January 2020

        • AML-3.3.2D

          Submission of a curriculum vitae for all personnel to be engaged on the report is encouraged for the purposes of evidencing the above requirements.

          Added: January 2020

        • AML-3.3.2E

          Upon receipt of the above required information, the CBB Compliance Directorate will assess the firm and communicate to it whether it meets the criteria required to be approved by the CBB for this purpose. The CBB may also request any other information it considers necessary in order to conduct the assessment.

          Added: January 2020

        • AML-3.3.3

          The reports listed under rule AML-3.3.1B must be submitted to the Capital Market Licensee's Board for it to review and commission any required remedial measures and copied to the Capital Market Licensee's senior management.

          Amended: January 2022
          Amended: July 2016
          Added: October 2010

        • AML-3.3.4

          The purpose of the annual compliance review is to assist a Capital Market Licensee's Board and senior management to assess, amongst other things, whether internal and external reports are being made (as required under Chapter AML-4), and whether the overall number of such reports (which may otherwise appear satisfactory) does not conceal inadequate reporting in a particular segment of the Capital Market Licensee's business (or, where relevant, in particular branches or subsidiaries). Capital Market Licensees should use their judgement as to how the reports listed under rule AML-3.3.1B (a) and (b) should be broken down in order to achieve this aim (e.g. by branches, departments, product lines, etc).

          Amended: January 2022
          Amended: January 2019
          Added: October 2010

        • AML-3.3.5

          Capital Market Licensees must instruct their external auditor to produce the report referred to in rule AML-3.3.1B (c) and (d). The report must be submitted to the CBB by the 30th of June of the following year. The findings of this review must be received and acted upon by the Capital Market Licensee.

          Amended: January 2022
          Amended: January 2020
          Amended: January 2019
          Added: October 2010

        • AML-3.3.6

          [This Paragraph was deleted in January 2022].

          Deleted: January 2022
          Added: October 2010