Financial Crime World

Customer Due Diligence Requirements for Islamic Banks in Bahrain

Introduction

The Central Bank of Bahrain’s Rulebook Volume 2 on Islamic Banks outlines comprehensive guidelines for Customer Due Diligence (CDD) requirements. This article summarizes key points from Chapter FC-1, focusing on the identification and verification of customers in face-to-face business interactions.

Original Identification Documents

Obtaining Original Documents

  • When conducting a face-to-face CDD process, obtain the original document and certify it by an authorized official.
  • For electronic copies, equivalent measures must be taken to ensure authenticity.

Certification of Copies

  • If documents are not obtained in their original form (e.g., from a previous meeting), they must be certified by specific individuals:
    • Lawyers
    • Notaries
    • Chartered/certified accountants
    • Government ministry officials
    • Embassy/consulate officials
    • Licensed financial institution officials

Contact Information and Verification

  • The person providing the certification must provide clear contact details, which are to be verified through:
    • Membership checks in professional organizations
    • Database/websites verification
    • Direct phone/email contact

For legal entities (like trusts), Islamic banks must obtain specific information from original documents or databases, including:

  • Full name and trading names
  • Registration number
  • Legal form and proof of existence
  • Registered address
  • Type of business activity
  • Date and place of incorporation or establishment
  • Contact details (telephone, fax, email)
  • Regulatory body or listing body (for regulated activities)

Certification of Documents

The information provided must be verified through certified copies of specific documents, depending on the legal form of the entity.

Document Types

  • Certificate of incorporation
  • Memorandum of association
  • Articles of association

Beneficial Owners Identification

For customers that are legal persons, Islamic banks must identify and verify the identity of beneficial owners through specific information about natural persons having controlling ownership interests or senior managing officials.

Additional Information for Risk Assessments

In assessing ML/TF risk profiles, Islamic banks may consider obtaining:

  • Audited financial statements (if available)
  • Unaudited financial statements

Certification for Commercial Registration

For commercial registration abstracts, it’s possible to obtain them directly from the Ministry of Industry, Commerce and Tourism’s website through the “SIJILAT Commercial Registration Portal”.

Exemptions

The documentary requirements do not apply in certain cases (e.g., FATF/GCC listed companies) or for customers from overseas jurisdictions where equivalent documents may be produced.

This section provides a detailed framework for Islamic banks in Bahrain to conduct customer due diligence, ensuring compliance with financial regulations and mitigating the risks associated with money laundering and terrorist financing.