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AML-C.1 and AML-C.2: Implementing a Risk-Based Approach to Combat Money Laundering, Terrorist Financing, and Proliferation Financing

The Central Bank of Bahrain requires capital market service providers (CMSPs) to implement a risk-based approach (RBA) to identify, assess, and mitigate money laundering (ML), terrorist financing (TF), and proliferation financing (PF) risks.

Key Requirements for CMSPs

• Ensure that policies and procedures are commensurate with the nature, scale, and complexities of their activities.
• Identify, assess, and understand ML/TF/PF risks related to:
  • Customers
  • Countries or jurisdictions
  • Products
  • Services
  • Transactions
  • Delivery channels

Risk Assessments

CMSPs must have processes in place to:

• Document risk assessments
• Consider all relevant risk factors
• Keep the assessment up-to-date
• Provide risk assessment information to the CBB
• Conduct additional risk assessments as required by the CBB

Customer Risk Profile

CMSPs must implement and maintain policies and procedures to conduct risk assessments of customers during:

• Establishment of business relationships
• Throughout the course of those relationships
• Key factors to consider:
  • Country risk
  • Customer risk
  • Products/services/transactions risk
  • Delivery/distribution channel risk

Key Responsibilities for CMSPs

• Identify, assess, monitor, manage, and mitigate ML/TF/PF risks
• Take measures to understand the nature, scale, and complexities of activities
• Ensure that risk assessments are commensurate with the nature, scale, and complexities of activities