Financial Crime World

Bahrain Falls Short in Compliance with Global Financial Regulations

Bahrain’s efforts to combat money laundering and terrorist financing have been deemed “largely compliant” by the Financial Action Task Force (FATF), a global anti-money laundering watchdog. However, the country still has room for improvement in several areas.

Progress and Shortcomings in Implementing FATF Recommendations

The FATF’s 2022 report on Bahrain highlights both progress and shortcomings in implementing the international organization’s recommendations. While Bahrain has made significant strides in addressing some of the key concerns, it remains non-compliant or partially compliant in others.

Areas of Progress

  • Risk Assessment and Risk-Based Approach (Recommendation R.1): Bahrain has demonstrated substantial compliance in this area.
  • National Cooperation and Coordination Mechanisms (R.2): The country has shown significant progress in establishing national cooperation and coordination mechanisms.

Areas of Concern

  • Money Laundering Offense (R.3): Bahrain still faces challenges in implementing key regulations, including the money laundering offense.
  • Confiscation and Provisional Measures (R.4): The country has been deemed non-compliant or partially compliant in this area.
  • Targeted Financial Sanctions: Bahrain’s compliance with recommendations related to terrorism and terrorist financing (R.6), proliferation (R.7), and new technologies (R.15) is a concern.
  • DNFBPs and Beneficial Ownership Transparency: The country faces challenges in implementing regulations related to DNFBPs (non-financial businesses and professions) and the transparency of beneficial ownership of legal persons and arrangements (Recommendations R.22-R.25).

Conclusion

While Bahrain has made significant strides in combating money laundering and terrorist financing, it still has work to do to fully comply with international regulations. The country must prioritize addressing its remaining compliance gaps to prevent financial crimes and maintain its position as a global financial hub.