Bahrain’s Efforts to Combat Money Laundering Come Under Scrutiny

A recent report by the Financial Action Task Force (FATF) has highlighted several areas where Bahrain needs to improve its efforts to combat money laundering. The report, which assessed Bahrain’s compliance with FATF recommendations, found that while the country has made significant progress in some areas, there are still concerns about its ability to detect and prevent money laundering.

Bahrain Received a Mixed Review from the FATF

The FATF review found that Bahrain is largely compliant with several key recommendations, including:

• Establishment of a Money Laundering Offence: Bahrain has made significant progress in this area.
• Confiscation and Provisional Measures: The country has also shown improvement in this aspect.

However, in other areas, such as:

• Customer Due Diligence: Bahrain was found to be partially compliant.
• Record Keeping: The country’s record-keeping practices were found to be non-compliant.
• Reporting of Suspicious Transactions: Bahrain’s reporting of suspicious transactions was also found to be partially compliant.

Bahrain’s Banking System is Vulnerable to Money Laundering

The report highlighted concerns about the vulnerability of Bahrain’s banking system to money laundering. The country has a large number of correspondent banking relationships with other countries, which can make it difficult to track and monitor transactions. Additionally, the report noted that:

• Bahrain’s Financial Intelligence Unit (FIU) is not yet fully operational: This limits its ability to identify and investigate suspicious transactions.

Bahrain Needs to Improve Its Anti-Money Laundering Laws

The FATF report also found that Bahrain’s anti-money laundering laws are in need of improvement. The country’s laws do not provide sufficient penalties for money laundering offences, and there is a lack of clarity around the definition of beneficial ownership. Additionally:

• Bahrain’s laws do not provide adequate protection for whistleblowers: Those who report suspicious transactions may face consequences.

Bahrain’s Efforts to Combat Money Laundering are Ongoing

Despite the challenges identified in the FATF report, Bahrain has made efforts to improve its anti-money laundering regime. The country has:

• Established task forces and working groups: To address specific areas of concern.
• Increased funding for its FIU: To support its operations.

However, more work needs to be done to ensure that Bahrain’s banking system is fully compliant with international standards.

The FATF will Continue to Monitor Bahrain’s Progress

The Financial Action Task Force (FATF) will continue to monitor Bahrain’s progress in combating money laundering. The country will need to demonstrate significant improvements in order to avoid being placed on a list of countries that are considered high-risk for money laundering.