Financial Crime World

Customer Due Diligence Requirements for Face-to-Face Business Dealings

Key Points

The Central Bank of Bahrain’s Rulebook, Volume 2, outlines strict regulations for Islamic banks in Bahrain regarding customer due diligence to prevent money laundering and terrorist financing activities. The following are the key points:

Original Identification Documents

  • In face-to-face meetings, customers must provide original identification documents.
  • These documents must be certified by an authorized official of the licensee or a designated third party (e.g., lawyer, notary, chartered accountant, government official, embassy/consulate official, or licensed financial institution official).
  • For legal entities or arrangements (like trusts), Islamic bank licensees must obtain and verify specific information from original documents, databases, or websites to identify the entity, its existence, structure, and beneficial owners.

Beneficial Ownership Identification

  • Licensees must take reasonable measures to identify and verify the identity of beneficial owners in legal persons through their controlling ownership interests or, if unclear, through senior managing officials.

Document Certification

  • Documents obtained for customer due diligence must be certified by writing on them “original sighted” along with the date and signature of an authorized official or a designated third party, as applicable.

Electronic Copies and Verification

  • Equivalent measures are taken for electronic copies, and verification can involve checking membership in professional organizations (for lawyers or accountants), databases/websites, or direct contact by phone or email.

Exemptions

  • Documentary requirements do not apply to FATF/GCC listed companies.
  • Equivalent documents may be accepted from overseas jurisdictions.

Audited Financial Statements

  • For risk assessments under the Risk-Based Approach (RBA), licensees should consider obtaining audited financial statements for legal persons to assess their money laundering/terrorist financing (ML/TF) risk profiles.

Commercial Registration

  • A commercial registration abstract printed directly from the Ministry of Industry, Commerce and Tourism’s website can satisfy the requirement for a certified copy of commercial registration under certain circumstances.