Financial Crime World

Bahrain Enhances Regulatory Framework for Financial Institutions

The Central Bank of Bahrain (CBB) has introduced new regulatory requirements for financial institutions in the country, aiming to simplify and streamline the process for establishing and marketing collective investment undertakings (CIUs).

Evolving Nature of Fund Management Industry

The revised framework acknowledges the evolving nature of the fund management industry and seeks to reduce administrative burdens while maintaining a robust regulatory environment. The CBB has divided CIUs into two categories: retail and accredited/institutional investors.

Key Regulatory Focus Areas

  • Corporate Governance: Establishing clear guidelines for board composition, roles, and responsibilities.
  • Business Conduct Standards: Outlining requirements for conflict of interest management, client suitability assessments, and fair treatment of clients.
  • Safeguarding and Segregation of Investor Funds: Ensuring the secure storage and segregation of investor funds from operational funds.
  • Disclosure Requirements: Providing clear and transparent information to investors about fund risks, fees, and performance.

Growth in Bahrain’s Mutual Funds Industry

Bahrain’s mutual funds industry has experienced significant growth since the 1980s, with a current total of 1664 funds and a net asset value (NAV) of US$ 10.6 billion as of February 2022.

Support from Industry Leaders

Industry stakeholders have welcomed the new regulations, which are seen as a major step forward in Bahrain’s financial sector development strategy.

Quotes from Key Industry Figures

  • Ebtisam Al Arrayed, Director of Financial Institutions Supervision Directorate at the CBB: “The bank’s support for the fund industry and its commitment to creating an attractive environment for local, regional, and international investors.”
  • Shireen Al Sayed, Director of Regulatory Policy Unit at the CBB: “The revised CIU regulations aim to simplify and revise all CBB Rulebook Volumes, providing a more streamlined regulatory framework, boosting growth in the asset management industry.”
  • Musab Abdulla, Executive Director of Investment Development – Financial Services, Technology & Innovation at the Bahrain Economic Development Board: “Bahrain’s competitive advantage as a key driver of its financial sector expansion.”
  • Najla Al Shirawi, Chief Executive Officer of SICO B.S.C. (c): “The enhanced regulations have the potential to make Bahrain an attractive jurisdiction for fund domicile and launchpad for serving global markets.”
  • Brian Howard, Partner and Head of the International Funds Team at Trowers & Hamlins: “The new regulations offer speed, simplicity, and flexibility, making Bahrain a leading choice in the region for investment fund establishment.”