CBB Addresses Crowdfunding & Outsourcing Rules, Issues Other Updates

Below are the key highlights of these recent developments:

• The regulations for crowdfunding platform operators address equity-based and financing-based crowdfunding and are covered under the Crowdfunding Platform Operators Module (Module CFP) of the CBB Rulebook. The regulations cover principles governing the conduct of operations by the platform, rules on platform offers and disclosures, avoiding conflicts of interest, due diligence of borrowers/issuers through Know Your Customer (KYC), segregation of client money from platform operators, and other measures to ensure safe operation of the activity. The regulations also require crowdfunding platform operators to ensure suitability of the products being offered on the platform to retail clients.
• The outsourcing requirements consultation, which ended on May 11, 2022, specifies, among others, that a licensee must not outsource the certain functions. These functions include compliance, anti-money laundering/combating the financing of terrorism (AML/CFT), financial control, risk management, and business line functions offering regulated services directly to the customers. However, certain support activities, processes and systems under these functions may be outsourced (for example call centers, data processing, credit recoveries, e-KYC solutions). The proposed requirements also specify the requirements that licensees must comply with prior to signing any outsourcing agreement. The proposed revisions to outsourcing requirements will replace the existing outsourcing requirements, as applicable. Examples of services that are typically outsourced include data processing, cloud services, customer call centers, and back-office-related activities
• Furthermore, to reduce the discrepancies and data inconsistencies in the Bahrain Credit Reference Bureau, all licensees are required to immediately conduct a full data cleansing exercise to ensure that all client data (consumer and corporate), regardless of the sector or type of exposure, is accurately reported. The licensees are also required to compare and verify core system data with the Bahrain Credit Reference Bureau data on a quarterly basis, to resolve any discrepancies on a real time basis.

Related Links

• Press Release on Crowdfunding Platform Rules
• Circular on Outsourcing Rules (PDF)
• Consultation on Outsourcing Rules (PDF)
• Circular on COVID-19 Reporting (PDF)
• Circular on Credit Bureau Data (PDF)

Keywords: Middle East And Africa, Bahrain, Banking, Covid-19, Crowdfunding Service Providers, Outsourcing Arrangements, Disclosures, Reporting, AML CFT, CBB Rulebook, Regtech, Cloud Computing, Lending, Credit Risk, Credit Bureau Data Reporting, CBB