Bahrain’s Central Bank Tightens Anti-Money Laundering Measures
The Central Bank of Bahrain has introduced revised regulations to enhance anti-money laundering (AML) and combating of financial crime (CFC) measures for capital market service providers. This move aims to protect the integrity of the financial system and prevent the misuse of financial instruments for illegal activities.
Risk-Based Approach
Under the new regulations, capital market service providers must adopt a risk-based approach in their AML/CFC efforts. This involves identifying, assessing, monitoring, managing, and mitigating money-laundering and terrorist financing risks that are commensurate with the nature, scale, and complexities of their activities.
Key Requirements
- Conduct risk assessments on customers, countries or jurisdictions they operate in, products and services offered, and delivery channels.
- Document and keep risk assessments up-to-date through periodic reviews conducted at least annually.
- Implement policies and procedures for conducting customer due diligence during the establishment of business relationships as well as throughout the course of those relationships.
- Consider country risk, with high-risk jurisdictions posing a higher risk profile.
- Take into account product, service, and transaction risks, including services that provide anonymity or cash-based transactions.
Compliance Deadline
Capital market service providers have been given a deadline of six months to comply with the new regulations. The Central Bank has emphasized the importance of these measures in preventing financial crime and promoting transparency and stability in the financial sector.
Importance of Customer Due Diligence
Customer due diligence is a critical component of the new regulations. Capital market service providers must implement policies and procedures for conducting risk assessments of their customers during the establishment of business relationships as well as throughout the course of those relationships.
Conclusion
The introduction of these revised regulations marks a significant step forward in Bahrain’s efforts to combat financial crime and promote transparency and stability in the financial sector. By adopting a risk-based approach, capital market service providers can ensure that they have adequate measures in place to identify, assess, monitor, manage, and mitigate money-laundering and terrorist financing risks.