Central Bank of Bahrain Outlines Rules for Capital Market Service Providers

The Central Bank of Bahrain has issued a set of rules and guidelines for Capital Market Service Providers (CMSPs) in Volume 6: Capital Markets of their Rulebook. Specifically, Chapter AML-C: Risk-Based Approach deals with Anti-Money Laundering (AML) and Combating of Financial Crime.

Understanding the Risk-Based Approach

The RBA is central to the effective implementation of FATF Recommendations. It ensures CMSPs identify, assess, and understand money laundering, terror financing, and proliferation financing risks.

Key Components of the Risk-Based Approach

• The RBA recognizes varying ML/TF/PF threats across customers, geographies, products, services, transactions, and distribution channels.
• CMSPs must take steps to identify, assess, and understand their ML/TF/PF risks in relation to customers, countries of origin or operation, and product/service types.

Conducting Customer Risk Profiles

CMSPs must conduct risk assessments for customers during the establishment of a business relationship and throughout its course. This includes:

• Documenting risk assessments and findings
• Considering all relevant risk factors before determining the level of overall risk profile and appropriate mitigation
• Keeping the assessment up-to-date through periodic reviews conducted at least annually

By following these guidelines, CMSPs can effectively manage and mitigate their ML/TF/PF risks, ensuring compliance with AML regulations.