Title: Bahrain’s Real Estate Sector Bolsters AML/CFT Compliance Amid Global Crackdown

Bahrain’s Commitment to AML/CFT Compliance

In the Kingdom of Bahrain, the Real Estate Regulatory Authority (RERA) is taking robust measures against money laundering (AML) and terrorist financing (CFT) in the real estate sector. As a full member of the Financial Action Task Force (FATF) via the Gulf Cooperation Council, Bahrain is committed to international AML/CFT standards and hosts the MENA-FATF secretariat.

The Importance of AML/CFT Compliance in Real Estate Sector

RERA emphasizes the significance of all real estate brokers, developers, and licensees adhering to both national and international AML/CFT laws. [resolution-no-3] [Resolution No.(3) of 2019] outlines the responsibilities related to Money Laundering and Terrorism Financing Prevention in Licensed Real Estate Activities.

Understanding Money Laundering

Money laundering refers to the process of concealing the origins of criminally gained proceeds.

Bahrain’s Legal Framework to Address AML/CFT Issues

Bahrain’s legal framework includes several legislations to address AML/CFT issues:

• Decree Law No. 4 of 2001
• Decree Law No. 54 of 2006
• Decree Law no 25 of 2013
• Decree Law no 36 of 2017
• Decree Law No. 58 of 2006
• Resolution No. 3 of 2019

These legislations introduce penalties for money laundering and terrorist financing offenses.

Risk Mitigation Measures in Bahrain’s Real Estate Sector

Real estate transactions pose potential risks for money laundering due to large transactions, anonymous ownership, inflated property values, and other methods. RERA uses various measures to minimize these risks within the Kingdom:

1. All real estate transactions must be conducted through designated Escrow Accounts, except for market research licenses.
2. Individual licensees can only accept cash amounts up to BD200 for deals and BD2000 for payments.
3. Stricter KYC (Know Your Customer) measures.
4. The Bahrain Valuation Standards based on international best practices.

Potential Money Laundering Methods in Real Estate

Third-party purchases, loans and mortgages, under-and over-valuation, renovation, and leasing are some potential methods used for money laundering in real estate.

Ongoing Compliance Efforts

RERA continues its efforts to ensure ongoing AML/CFT compliance within the real estate sector through:

• Guidelines and internal procedures
• Periodic circulars
• Collaboration with all licensees

Reporting Suspicious Transactions

All licensees are required to adhere to the guidelines of [resolution-no-3] and report any suspicious or extraordinary transactions to the Financial Intelligence Directorate and RERA’s Enforcement and Anti-Money Laundering Unit. Failure to report such cases may result in criminal charges against the licensee.