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    CBB Issues Amendments to Outsourcing Requirements

    July 25, 2022

    The Central Bank of Bahrain (CBB) published amendments to the outsourcing requirements and proposed revisions to the high-level controls module (Module HC) under Volumes 1 and 2 of CBB Rulebook. CBB also published a Directive regarding Resolution No. (10) of 2022 on the rules and procedures for executing Executive Orders issued against the licensees of CBB.

    Below are the key highlights of the recent updates:

    • The document on amendments to the outsourcing requirements under the CBB Rulebook outline the expected approach to outsourcing by licensees. It sets out various requirements that licensees must address when considering outsourcing an activity or function. The rulebook sets out that a licensee must not outsource the following functions: compliance, anti-money laundering and counter financing of terrorism (AML/CFT), financial control, risk management, and business line functions offering regulated services directly to the customers. The amended outsourcing requirements came into effect immediately.
    • The proposed requirements under the revised Module HC will replace the existing Module. The new Module is consistent with Corporate Governance Principles for banks Paper issued in July 2015 by the Basel Committee on Banking Supervision. CBB is requesting comments on the proposed requirements until August 31, 2022.

    • CBB Directive with regard to the Execution Orders against banks specifies that banks are required to assign persons to be responsible for compliance with the  Resolution No. (10) of 2022 and the associated Directive. Each bank must create a dedicated e-mail address for the purpose of receiving from CBB all communication related to the implementation of the Resolution, including letters informing bank of Execution Orders issued against it. Banks must also ensure that the said Execution Orders are executed, or a settlement is reached, within the 21-day deadline outlined in the Resolution.


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    Keywords: Middle East and Africa, Bahrain, Banking, Outsourcing Arrangements, Outsourcing, CBB Rulebook, Module HC, Basel, Regtech, CBB

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