Financial Crime World

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Bahrain Struggles to Meet International Financial Regulations

A recent report by the Financial Action Task Force (FATF) has highlighted Bahrain’s difficulties in complying with international financial regulations, raising concerns about the country’s ability to prevent money laundering and terrorist financing.

According to the report, Bahrain scored poorly on several key areas, including:

Key Areas for Improvement

  • Regulation and Supervision of Financial Institutions: Bahrain’s regulatory framework is inadequate to effectively supervise and regulate its financial institutions.
  • Transparency and Beneficial Ownership of Legal Persons and Arrangements: The country has not yet implemented measures to ensure the transparency of beneficial ownership, making it difficult to track the true owners of companies and arrangements.
  • Powers of Supervisors: Bahrain’s supervisors lack the necessary powers to effectively enforce anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
  • AML/CFT Framework: Although Bahrain has made progress in implementing its AML/CFT framework, there are still gaps in its implementation.

Positive Developments

Despite these challenges, the report noted some positive developments in Bahrain’s efforts to comply with international regulations. For example:

  • Progress in Implementing AML/CFT Framework: Bahrain has strengthened its customer due diligence requirements for financial institutions, which is a critical step in preventing money laundering and terrorist financing.
  • Improved Customer Due Diligence Requirements: The country has implemented more stringent customer due diligence requirements, which will help to prevent illicit activities.

What Next?

The FATF report provides a roadmap for Bahrain to improve its compliance with international regulations. The government has announced plans to implement measures to address the concerns raised in the report, including:

  • Strengthening AML/CFT Framework: Bahrain will strengthen its AML/CFT framework to ensure that it is effective in preventing money laundering and terrorist financing.
  • Improving Customer Due Diligence Requirements: The country will continue to improve its customer due diligence requirements to prevent illicit activities.

However, it remains to be seen whether these efforts will be sufficient to meet the FATF’s expectations, and whether Bahrain can overcome its challenges in complying with international financial regulations.