Financial Crime World

Regulatory Requirements for Financial Institutions in Bahrain: Central Bank Introduces New Category of Investment Firms

Overview

The Central Bank of Bahrain (CBB) has introduced a new category of investment firms, designed specifically for family offices operating in the kingdom. This move aims to provide regulated investment and wealth management services to these entities while maintaining strict governance and internal controls.

Key Features of the New Category License

  • Allows family office licensees to offer a range of services, including:
    • Wealth management advice
    • Investment management
    • Custody services
    • Trust services
    • Fund management
    • Insurance advice
  • Provides a one-stop solution for family offices in Bahrain, catering to their diverse wealth management needs

Regulatory Framework

According to Ms. Abeer Al Saad, Executive Director of Financial Institutions Supervision at the CBB, “The introduction of this new category license will enable these licensees to provide services that cater to family office business models while ensuring they meet regulatory requirements related to governance and internal controls.”

Industry Response

Bahrain’s financial services sector has welcomed the move as a significant step forward in enhancing the kingdom’s reputation as an attractive investment destination.

  • Enhanced Reputation: The Bahrain Economic Development Board (EDB) notes that this new category license will support the integration of prominent family offices into the Kingdom, further solidifying its position as a hub for wealth management and asset management.
  • World-Class Innovation Ecosystem: Dalal Buhejji, Executive Director for Business Development – Financial Services at the EDB, commented: “This new category license is a testament to Bahrain’s agile, collaborative regulatory framework, offering a world-class innovation ecosystem right in the heart of the Gulf.”

Regulatory Review

The CBB has emphasized that these regulations do not apply to existing family offices unless they expand their activities by providing investment services to other parties, which would require obtaining a CBB license under the new regime.

  • Continuous Review: In related news, the Central Bank is continuously reviewing its regulations to cater to the evolving needs of the financial sector in Bahrain.
  • Reducing Regulatory Burdens: The move follows similar initiatives aimed at revising all CBB Rulebook Volumes and reducing regulatory burdens for financial institutions with emerging business models.

Conclusion

Ms. Ebtisam Al Arrayed, Director of Financial Institutions Supervision Directorate at the CBB, highlighted: “We are delighted to unveil this comprehensive license for family offices in Bahrain, offering them a one-stop solution for their wealth management needs.”

As Bahrain continues to solidify its position as a major player in the regional financial services sector, regulatory bodies such as the Central Bank will remain focused on ensuring that all stakeholders operate within a robust and client-centric framework.