Countries/Jurisdictions of Primary Concern - Bahrain
Bahrain is a leading financial center in the Gulf region. In contrast to its Gulf Cooperation Council neighbors, Bahrain has a primarily service-based economy, with the financial sector providing nearly 20 percent of GDP. It hosts a diverse group of financial institutions, including 111 banking licenses, 18 money changers, and several other investment institutions, including 159 insurance organizations. The greatest risk of money laundering stems from illicit proceeds of foreign origin 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 for smuggled goods or known linkages to drug trafficking.
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. These free zones are not a significant source for money laundering or terrorism financing. The informal and non-bank financial sectors are regulated and investigated similarly to the formal sector.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN THE U.S.; OR ILLEGAL DRUG SALES THAT OTHERWISE SIGNIFICANTLY AFFECT THE U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
KNOW-YOUR-CUSTOMER (KYC) RULES:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks, investment houses, insurance firms, money exchangers, brokers/dealers, real estate brokers, gold dealers, financial intermediaries, and attorneys
Number of STRs received and time frame: 609 in 2013
Number of CTRs received and time frame: Not applicable
STR covered entities: Banks, investment houses, insurance firms, money exchangers, brokers and dealers, real estate brokers, gold dealers, car dealers, financial intermediaries, attorneys, auction houses, and galleries
MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:
Prosecutions: 2 in 2013
Convictions: 0 in 2013
RECORDS EXCHANGE MECHANISM:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Bahrain is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.menafatf.org/Linkcounter.asp?rid=656&attached=MutualEvaluationReportOfBahrain.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:
Awareness within the capital markets and designated non-financial businesses and professions regarding suspicious transaction report (STR) reporting obligations is inconsistent. Tipping off is not prohibited and should be criminalized. According to authorities, the informal and non-bank financial sectors are regulated and investigated. Cash transaction reporting is not separated from STR reporting requirements. There is little awareness of trade based money laundering. The Government of Bahrain should strengthen the implementation of its AML/CFT regime, which will lead to increased investigations and prosecutions.