Bahrain – Know Your Customer (KYC) Rules

 

 

Bahrain is a leading financial center in the Gulf region. In contrast with its Gulf Cooperation Council (GCC) neighbors, Bahrain has a primarily service-based economy, with the financial sector providing more than 20% of GDP. It hosts a diverse group of financial institutions, including 152 banks, 38 money changers and money brokers, and several other investment institutions, including 88 insurance companies. The greatest risk of money laundering stems from illicit foreign proceeds that transit the country. The vast network of Bahrain‘s banking system, along with its geographical location in the Middle East, as a transit point along the Gulf and into Southwest Asia, may attract money laundering activities. Bahrain does not have a significant black market of smuggled goods or known linkages to drug trafficking.

Bahrain hosts the largest concentration of Islamic financial institutions in the Middle East. There are 26 Islamic banks and 19 Islamic insurance companies (takaful) operating in the Kingdom.

Khalifa bin Salman Port, Bahrain‘s major port, provides a free transit zone to facilitate the duty-free import of equipment and machinery. Another free zone is located in the North Sitra Industrial Estate. Raw materials intended for processing in Bahrain, and machinery imported by Bahraini-owned firms, are also exempt from duty; the imported goods may be stored duty-free.

Bahrain Flag

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: YES

Bahrain – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Bahraini Law:

    • Banks and all other financial institutions
    • Investment houses
    • Insurance firms
    • Money exchangers
    • Brokers/dealers
    • Real estate brokers
    • Gold dealers
    • Financial intermediaries
    • Attorneys

Bahrain – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: Not available

Number of CTRs received and time frame: Not available

The following is a list of STR covered entities covered by Bahraini Law:

    • Banks and all other financial institutions
    • Investment houses
    • Insurance firms
    • Money exchangers
    • Brokers/dealers
    • Real estate brokers
    • Gold dealers
    • Automotive dealers
    • Financial intermediaries
    • Attorneys
    • Auction houses
    • Art galleries

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: None in 2011
Convictions: None in 2011

 

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

There is little awareness of trade-based money laundering. The informal and non-bank financial sector are regulated and investigated similarly to the formal sector.

There is an over-reliance on suspicious transaction reporting to initiate money laundering investigations. Awareness within the capital markets and designated non-financial businesses and professions regarding STR reporting obligations is inconsistent. Cash transaction reporting is not separated from suspicious transaction reporting requirements. Tipping off is not prohibited.