Compliance

The activities of the Compliance Directorate include:

• Undertaking AML/CFT examinations of licensees.

• Analysing financial crime trends and developments.

• Promoting awareness of financial crime risks.

• Issuing AML/CFT regulations and guidance.

• Disseminating AML/CFT ‘black-lists’.

• Disseminating fraud and other investor alerts.

The Compliance Directorate may be contacted by E-mail, telephone (+973 17 547 956) or by fax (+973 17 535 673).

1.AML/CFT Key Features – 2005 Regulations:
A pamphlet on CBB’s AML/CFT regulation

The Kingdom of Bahrain’s primary legislation relevant to AML/CFT are:

1.Decree Law No. 4 of 2001 with Respect to the Prevention and Prohibition of the Laundering of Money
English / Arabic

2.Decree Law No. 54 of 2006 with Respect to Amending Certain Provisions of Legislative Decree No. 4 of 2001 with Respect to the Prevention and Prohibition of the Laundering of Money
English / Arabic

3.Decree Law no 25 of 2013 amending certain provisions of legislative decree law no 4 of 2001 with Respect to the Prevention and Prohibition of the Laundering of Money
English

4.Decree Law no 36 of 2017 amending article 3 of decree law no 4 of 2001 with Respect to the Prevention and Prohibition of the Laundering of Money
English

5.Decree Law No. 58 of 2006 with Respect to the Protection of Society from Terrorism Activities
English

More detailed requirements implementing the above laws with respect to financial institutions are contained in the Financial Crime Module of each relevant Rulebook Volume.

1. Combating the Financing of Terrorism- Guidance for all Financial Institutions
Letter / Guidance Paper

2. Risk Assessment – Guidance for all Financial Institutions
Letter / Guidance Paper

3. Money Laundering Terrorist Financing Risks during Covid-19
Letter / Guidance Paper

4. Countering Proliferation Financing – Guidance for all Financial Institutions
Letter / Guidance Paper

5. Virtual Assets – Red Flags and Indicators
Letter / Guidance Paper

6. Beneficial Ownership Guidance for Financial Institutions
Letter / Guidance Paper

7. Trade Based Money Laundering- Guidance for Financial Institutions
Letter / Guidance Paper

The AML/CFT National Policy Committee (NPC) was established in accordance with Decree Law No. (4) of 2001. The committee is chaired by the Executive Director of Financial Institutions Supervision at the Central Bank of Bahrain and is comprised of members from various national authorities including the Central Bank of Bahrain, Ministry of Interior, Ministry of Foreign Affairs, Public Prosecution, Ministry of Industry, Commerce, and Tourism, Survey and Land Registration Bureau Ministry of Finance, Ministry of Justice and Islamic Affairs, Ministry of Labor and Social Development, National Security Authority, Ministry of Youth and Sports Affair, Legislation and Legal Opinion Commission, and Custom Affairs. The relevant authorities are represented by senior level members such as undersecretaries and directors. As set out in Article (4) of Decree Law No. (4) of 2001, the responsibilities of the NPC include formulating AML policies and strategies, establishing general policies for combating Money Laundering, issuing guidelines on the reporting of suspicious transactions in co-ordination with relevant entities, studying any international and regional developments that would require updating current regulations, and coordinating with the relevant entities for the implementation of the applicable international conventions or treaties. Meetings of the committee are conducted on a regular basis where discussions over various Money Laundering issues are tackled and voted upon.

The Government of Bahrain (‘GOB’) may from time to time designate certain individuals and organizations as being linked to the financing of terrorism, for instance when so designated by the United Nations. These names are circulated to the financial sector by the Central Bank of Bahrain.

Bahrain was previously assessed by the International Monetary Fund in 2005  for the country’s compliance with the FATF standards. The assessment was conducted in accordance to the 2004 FATF methodology. The report was approved by the IMF in January 2006. The same report was subsequently discussed and endorsed by the MENA-FATF in November 2006.

Subsequent to the updated FATF recommendations in 2012, an evaluation team from FATF/MENAFATF conducted a mutual evaluation on the Kingdom of Bahrain to assess the country’s AML/CFT legal framework and effectiveness of its systems and controls.  The Mutual Evaluation was based on the FATF 2013 Methodology  and discussed and approved by FATF in June 2018.

• Mutual Evaluation Report

Since its creation by the G7 in 1989, the Financial Action Task Force (‘FATF’) has spearheaded the effort to adopt and implement measures designed to counter the use of the financial system by criminals. The FATF now includes 33 members, including the Gulf Cooperation Council (‘GCC’), which represents its six member states.

The FATF 40 Recommendations on money laundering and terrorism financing, and the financing of proliferation of weapons of mass destruction provide the most widely recognised standards in this area; they form the basis for the Government of Bahrain’s actions with respect to AML/CFT.

FATF Recommendations

For further information on AML/CFT issues, please view the Financial Action Task Force (FATF) website.

EDFS – Directive

The following lists a selection of websites relevant to AML/CFT. Please note that the CBB is not responsible for the content of external internet sites.

The Kingdom of Bahrain:

The Anti-Money Laundering Unit: www.amlu.gov.bh
The Ministry of Industry and Commerce: www.commerce.gov.bh

International Organizations:

The Financial Action Task Force: www.fatf-gafi.org
The Middle-East North Africa Financial Action Task Force: www.menafatf.org
The Egmont Group: www.egmontgroup.org
The United Nations: www.un.org/terrorism
The International Monetary Fund: www.imf.org
The UN Counter-Terrorism Committee: www.un.org/Docs/sc/committees/1373/

The Wolfsberg Group: www.wolfsberg-principles.com
The Association of Certified Anti-Money Laundering Specialists: www.acams.org
Moneylaundering.com: www.moneylaundering.com

Common Reporting Standard (“CRS”) is a global standard for the Automatic Exchange of Financial Account Information that was developed by the Organization for Economic Cooperation and Development (“OECD”) in response to the G20 request. The aim of CRS is to allow tax authorities, annually, to obtain information on the financial assets held abroad by their residents, for tax purposes. The government of the Kingdom of Bahrain is among many countries across the globe that have committed to the CRS.

The Kingdom of Bahrain has chosen the Wider Approach reporting standard stipulating that all licensed financial institutions are required to perform customer due diligence procedures on all accounts held by accountholders resident for tax purposes.

The Convention on Mutual Administrative Assistance in Tax Matters as amended by the 2010 Protocol (“MAC”) and the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (“CRS MCAA”) have been ratified as per law No. (13) and (14) of 2018.

For information on CRS compliance, kindly refer to the CRS and its Commentaries contained in the  Standard for Automatic Exchange of Financial Account Information in Tax Matters (the “Standard”) approved by the Council of the OECD on 15th July 2014 (Link)

CRS Directives

1. OG/53/2017 – Common Reporting Standard
30th January 2017

2. OG/212/2017 – Automatic Exchange of Information for Tax Purposes (“AEOI”) Common Reporting Standards (“CRS”)
30th April 2017

3. EDFIS/C/052/2017 – Re: Common Reporting Standard
25th December 2017

4. OG/273/2018 – Re: Automatic Exchange of Information for Tax Purposes (“AEOI”) Common Reporting Standards (“CRS”) Reporting Deadline
20th June 2018

5. OG/277/2018 – Re: Automatic Exchange of Information for Tax Purposes (“AEOI”) Common Reporting Standards (“CRS”)
21st June 2018

6. OG/341/2018 – Re: Automatic Exchange of Information for Tax Purposes (“AEOI”) Common Reporting Standards (“CRS”) Revised List of Reportable Jurisdictions
7th August 2018

7. EDFIS/C/081/2018 – Re: Common Reporting Standard
12th December 2018

8. OG/144/2019 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
24th March 2019

9. OG/161/2020 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
16th April 2020

10. EDFIS/C/055/2020 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
1st June 2020

11. OG/124/2021 – Automatic Exchange of Information (“AEOI”)- Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
8th April 2021

12. OG/140/2022 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
30th March 2022

13. OG/153/2023 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
17th April 2023

14. OG/100/2024 Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
24th March 2024

FATCA is a United States (“US”) legislation that primarily aims to prevent tax evasion by US taxpayers by using non-US financial institutions and offshore investment instruments.

The Intergovernmental Agreement (“IGA”) entitled, “Agreement between the Government of the United States of America and the Government of the Kingdom of Bahrain to Improve International Tax Compliance and to Implement FATCA” and its Annexures has been ratified as per Law No. (4) of 2018.

For information on FATCA compliance, please refer to IGA and its Annexures on the following link.

FATCA Competent Authority Arrangement

For the Competent Authority Arrangement Between The Competent Authorities Of The United States of America and The Kingdom Of Bahrain, please click here.

FATCA Directives

1. EDBS/KH/84/2012 – Foreign Account Tax Compliance Act (“FATCA”)
21st May 2012

2. EDFIS/C/032/2013- Foreign Account Tax Compliance Act
29th August 2013

3. OG/62/2013 – Foreign Account Tax Compliance Act (“FATCA”)
19th February 2013

4. OG/182/2014 – Re: Foreign Account Tax Compliance Act (“FATCA”) Registration
24th April 2014

5. OG/287/2014 – Re: Foreign Account Tax Compliance Act (“FATCA”)
15th July 2014

6. EDFIS/C/050/2016 – Re: Foreign Account Tax Compliance Act (“FATCA”) Reporting
6th October 2016

7. EDFIS/C/017/2017 – Re: Foreign Account Tax Compliance Act (“FATCA”)
3rd May 2017

8. OG/356/2017 – Re: Foreign Account Tax Compliance Act Reporting Deadline
7th August 2017

9. OG/329/2018 – Re: Automatic Exchange of Information for Tax Purposes (“AEOI”) Foreign Account Tax Compliance Act (“FATCA”) Reporting Deadline
29th July 2018

10. OG/144/2019 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
24th March 2019

11. OG/161/2020 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
16th April 2020

12. EDFIS/C/055/2020 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
1st June 2020

13. OG/124/2021 – Automatic Exchange of Information (“AEOI”)- Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
8th April 2021

14. OG/140/2022 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
30th March 2022

15. OG/153/2023 – Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
17th April 2023

16. OG/100/2024 Automatic Exchange of Information (“AEOI”) – Common Reporting Standard (“CRS”) and Foreign Account Tax Compliance Act (“FATCA”) Reporting Window
24th March 2024

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“IF-BEPS”) project seeks to increase transparency and exchange of information in tax matters, as well as address weaknesses of the international tax system that create opportunities for BEPS. The initiative seeks to close gaps and eliminate mismatches in tax rules that allow artificial shift of profits to low or no-tax locations where there is little or no economic activity.

The BEPS package consists of reports on 15 actions, and sets out a variety of measures ranging from new minimum standards, the revision of existing standards, as well as common approaches which will facilitate the convergence of national practices, and guidance drawing on best practices.

As per the Cabinet Resolution No. 07–2456 on its session on 7th May 2018, the Cabinet approved the Kingdom’s ratification of the IF-BEPS.

The move is perceived to be in line with Kingdom of Bahrain’s keenness to affirm its full and permanent commitment to the highest degrees of transparency in the field of taxation, as well as to international cooperation in this regard, and desire to ensure that international companies do not evade the payment of their taxes.

For more information on BEPS, Click here

BEPS Directives

1. OG/499/2018 – Directive Concerning Economic Substance Requirments for certain Financial Institutions in the Kingdom of Bahrain
22nd November 2018
OG/499/2018 Reporting Template and Guidance Notes

2. EDFIS/C/020/2021- Directive concerning the Country-by-Country Reporting (CbCR)
21st March 2021
Ministerial Order No. (28) of (2021)
English / Arabic