Financial Crime World

Bahrain Leads the Way in Compliance with International Financial Regulations

As the Gulf Cooperation Council (GCC) seeks to create a financial sector that balances innovation with stability, regulatory frameworks have become increasingly crucial. In Bahrain, the Central Bank has developed a tried and tested system that enables innovation while maintaining the integrity of the economy.

Consistent Regulation through a Single Regulator

A single regulator for financial services ensures consistent regulation across the island nation, reducing operating costs and promoting a holistic approach to risk management. This approach has proven successful in managing risk and fostering growth, particularly in the wholesale banking, funds, and insurance sectors.

  • Wholesale Banking: Bahrain established itself as the first regional hub for wholesale banking in the 1970s.
  • Islamic Finance: The Central Bank of Bahrain contributed significantly to the development of Islamic finance standards and regulations, which have grown into a $2 trillion industry.

Innovative Regulatory Framework

Bahrain has continued to innovate with new regulations and initiatives:

Regulatory Sandbox

  • Introduces a regulatory sandbox that allows firms to test FinTech products and services in a controlled environment.
  • Enables startups and SMEs to access alternative funding sources through new crowdfunding regulations.

Enhanced Security and Reduced Costs

  • Financial institutions can store data on the Cloud, enhancing security and reducing costs.

New Company Structures

  • Investment limited partnerships
  • Protected cell companies
  • Enhanced Trust law that puts it on par with international financial centers.
  • Bahrain is the only nation in the MENA region with onshore and nationwide Trust Laws.

Looking Ahead

Bahrain’s priorities include:

  • Enhancements to crowdfunding regulations
  • Electronic fulfillment of Know Your Customer requirements
  • A new bankruptcy law
  • Regulations supporting blockchain development

These initiatives will continue to position Bahrain as a leader in compliance with international financial regulations.