What is the AML law for Bahrain?

The AML law for Bahrain is the Central Bank of Bahrain and Financial Institutions Law 2006, which provides the legal framework for AML/CFT regulation and supervision in Bahrain. The CBB is the main regulatory body responsible for enforcing AML/CFT regulations in Bahrain and issuing guidance to financial institutions on how to comply with these regulations.

The AML/CFT regulations aim to prevent the use of financial institutions for illicit activities such as money laundering and terrorist financing. Financial institutions in Bahrain are required to implement AML/CFT policies and procedures.

What do the regulations entail?

  • PEPs and EDD measures
    To comply with the Enhanced Due Diligence requirements mandated by Bahraini regulations, it is necessary for financial institutions to identify if a customer is a Politically Exposed Person (PEP). PEPs are individuals who hold or have held significant public positions or exhibit a higher risk profile due to their association with politically exposed individuals or organizations. It is crucial to identify and monitor PEPs as they are at a higher risk of being involved in financial crimes such as money laundering and corruption.
  • Record keeping
    Financial institutions must maintain records of transactions and customer information for a specified period of time.
  • Internal controls and compliance
    Financial institutions must establish and maintain internal controls and compliance programs to ensure they are complying with AML/CFT regulations.
  • Due Diligence
    Persons engaged in audit and accountancy, legal practice and advocacy, and real estate buying/selling and leasing, collectively known as DNFBPs, are required to conduct customer due diligence measures such as verifying the source of funds and performing identity checks for verifying customer identities.
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Why it’s important to comply with the regulations?

It is important to comply with Anti-Money Laundering (AML) regulations for several reasons. First and foremost, AML regulations aim to prevent financial institutions from being used as a tool for criminal activities such as money laundering and terrorism financing. By complying with AML regulations, financial institutions can help to safeguard the integrity of the financial system and prevent criminal activities.

Secondly, non-compliance with AML regulations can result in significant legal and reputational risks for financial institutions. Financial institutions that fail to comply with AML regulations may be subject to fines, penalties, and legal action. In addition, non-compliance can damage the institution’s reputation, leading to a loss of customer trust and a decline in business.

Thirdly, AML regulations are often part of international standards and conventions. Compliance with these standards is essential for financial institutions to maintain access to international financial markets and to conduct cross-border transactions.

In summary, compliance with AML regulations is important for financial institutions to prevent financial crime, mitigate legal and reputational risks, and maintain access to international financial markets.

How does Idenfo Direct help?

Given that Idenfo Direct offers an automated name screening solution, it can help financial institutions in Bahrain comply with AML/CFT regulations by streamlining the name screening process and reducing the risk of compliance violations. Idenfo Direct’s advanced algorithms can screen customer names against global sanctions and watchlists in real-time, generating alerts if a match is found. This allows compliance teams to investigate potential matches and determine whether or not to proceed with the transaction, reducing the workload on compliance teams and minimizing the risk of errors.

Overall, by using an automated name screening solution like Idenfo Direct, financial institutions in Bahrain can improve their AML/CFT compliance processes and enhance their ability to identify and prevent financial crime.

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