Financial Crime World

Bahrain’s Anti-Money Laundering Regime Needs Strengthening

Overview

The Kingdom of Bahrain has made significant progress in combating money laundering and terrorist financing, but requires further development to fully meet international standards. A joint assessment by the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENAFATF) highlights areas where Bahrain’s Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) system needs improvement.

Key Findings

  • Risk Understanding: Bahrain has a moderate level of understanding of its money laundering and terrorist financing risks, which can be improved through the use of national risk assessments.
  • Terrorism Offence: The country’s terrorism offence is inconsistent with international standards and should be amended to bring it in line with the Terrorist Financing Convention.
  • Non-Profit Organisations: Bahrain has identified a subset of non-profit organisations that are at risk of being abused for terrorist financing purposes, but its measures to mitigate this risk are not commensurate with the threat.

Compliance Challenges

  • Financial Institutions: Bahrain’s financial institutions have shown a good understanding of money laundering and terrorist financing risks and can implement targeted financial sanctions quickly.
  • Designated Non-Financial Businesses: These businesses have a fragmented understanding of these risks and often fail to implement targeted financial sanctions in a timely manner.

Domestic Co-operation

Bahrain excels in its domestic co-operation and information exchange, responding promptly to formal requests for mutual legal assistance and informal requests for information.

Recommendations

The FATF’s assessment is based on the 2012 FATF Recommendations and the 2013 Methodology. Bahrain has been given recommendations to strengthen its AML/CFT regime, including:

  • Amending Terrorism Offence: Amend the country’s terrorism offence to bring it in line with international standards.
  • Implementing Mitigation Measures: Implement mitigation measures that are commensurate with Bahrain’s risk profile.

Conclusion

While Bahrain has made significant progress in combating money laundering and terrorist financing, it still requires strengthening of its measures to fully meet international standards. With the implementation of recommendations from the FATF assessment, Bahrain can further enhance its AML/CFT regime and play a more effective role in combating money laundering and terrorist financing in the region.