The Central Bank reserves the right to undertake an examination at a Licensed Person at any time when it deems it appropriate. This chapter provides information on the Central Bank examinations and responsibilities of the Licensed Person in relation to such examinations.

1. 5.1.1The type and scope of an examination will be determined by the Central Bank on a case by case basis. There are three types of examinations and they are discussed under Paragraphs 5.1.2 to 5.1.4 of this Chapter:
2. 5.1.2Full Scope Examination
   1. a)A full scope examination is primarily meant to cover all aspects of the business of a Licensed Person such as financial and non-financial in addition to the compliance with all applicable Laws, Rules, Regulations, Notices and the Standards;
   2. b)The time frame to complete a full scope examination is usually between seven to fourteen (7 to 14) business days depending on the nature, size and complexity of the business of the Licensed Person; and
   3. c)Findings of a full scope examination will be communicated to the Licensed Person through an appropriate Transmittal Letter.
3. 5.1.3Fast Track Examination
   1. a)A fast track examination is a quick examination which will be completed within a short period of two to three (2 to 3) business days depending on the nature, size and complexity of the business of the Licensed Person;
   2. b)A fast track examination is meant to assess the level of compliance of a Licensed Person with high level requirements of all applicable Laws, Rules, Regulations, Notices and the Standards; and
   3. c)Findings of a fast track examination will be communicated to the Licensed Person through an appropriate Transmittal Letter.
4. 5.1.4Special Examination
   1. a)The Central Bank reserves the right to undertake special examinations or surprise examinations at any time, if it deems necessary;
   2. b)The scope and the timeframe of special examinations will be decided by the Central Bank on a case by case basis; and
   3. c)The Central Bank reserves the right to decide whether findings of such examinations need to be communicated to the Licensed Person or not.

1. 5.2.1The ultimate responsibility to prepare for the Central Bank examination lies with the Manager in Charge of the Licensed Person;
2. 5.2.2The Licensed Person must give special attention to Paragraphs 5.2.2 (a) to (d) of this Chapter in relation to the preparation for an examination:
   1. a)The Licensed Person must prepare and keep all information or documents ready within the timeline provided by the Central Bank;
   2. b)The Licensed Person must provide appropriate work space within its premises and full assistance to the Central Bank Examiners in order to carry out the examination;
   3. c)The Manager in Charge or any other authorized person of the Licensed Person must be available at all times to answer the queries of the Central Bank Examiners; and
   4. d)The Compliance Officer and the Accountant must be present at the time when the Central Bank Examiners review their respective functions.

1. 5.3.1The Transmittal Letter is the official communication from the Central Bank to the Licensed Person which contains all findings of an examination;
2. 5.3.2The objective of issuing a Transmittal Letter is to inform the Licensed Person about the areas of non-compliance noted by the Central Bank Examiners during an examination;
3. 5.3.3Transmittal Letters are issued after full scope or fast track examinations provided that there are observations related to non-compliance with applicable Laws, Rules, Regulations Notices and the Standards;
4. 5.3.4The Transmittal Letter is normally divided into several sections, such as, (a) Major Issues (b) Violations under the Regulations and the Standards (c) Violations under AML/CFT Regulations (d) Reporting Issues (e) Operational and Control Issues and (f) Other Issues; and
5. 5.3.5The risk grading awarded to the Licensed Person, whether it is low, medium, high, very high or unacceptable, and details of predefined parameters based on which the overall risk grading is calculated will be indicated in the Transmittal Letter.

1. 5.4.1The Licensed Person must provide its response in writing for each finding in the Transmittal Letter within the time frame provided by the Central Bank;
2. 5.4.2The response from a Licensed Person must include the detailed plan of action on how and when the findings of a Transmittal Letter will be resolved;
3. 5.4.3If no specific time frame is provided by the Central Bank, then the Licensed Person must submit its response within thirty (30) calendar days from date of issue of the Transmittal Letter; and
4. 5.4.4The response to the Transmittal Letter must be submitted in original hard copy under the signature of the authorized signatory of the Licensed Person to the Supervision & Examination Division of the Banking Supervision Department.

1. 5.5.1The Central Bank shall review responses and action plans received from the Licensed Person; and
2. 5.5.2The Central Bank reserves the right to conduct follow up examinations in order to assess the progress of the Licensed Person in resolving the examination findings.

1. 5.6.1The Central Bank reserves the right to call the Manager in Charge, Compliance Officer, Functional Heads, Directors of the Board or Shareholders/the Owner/Partners of the Licensed Person for a meeting to discuss the examination findings;
2. 5.6.2Such meetings may be held either before the issue of Transmittal Letters (known as Exit Meetings) or after the issue of Transmittal Letters (known as Follow-up Meetings); and
3. 5.6.3The Licensed Person must attend such meetings without fail.