This Guide is designed to help Bahraini businesses strengthen their Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) compliance. With increasing regulatory expectations and evolving financial crime threats, organisations must ensure they have the right processes, tools, and knowledge to meet their legal obligations. This guide provides clear, actionable insights into suspicious transaction reporting (STRs), due diligence practices, and risk mitigation strategies, empowering businesses to protect themselves from regulatory penalties, financial losses, and reputational damage.
Bahrain’s Commitment to AML/CFT Excellence
The Role of the Private Sector in Financial Crime Prevention
2018 FATF Mutual Evaluation
2022 Enhanced Follow-up Report
Identified Shortcomings and Areas for Improvement
Features and Capabilities
Role in Supporting Private Sector Compliance
Legislative Decree No. 4 of 2001
Legal Obligations for Businesses
The Role of Suspicious Transaction Reports (STRs)
Impact on National Security and Law Enforcement
Key Components of a Good STR Report
Content and Formatting Tips
Ensuring Compliance and Confidentiality
Risk Classification and Enhanced Due Diligence
Business Actions After Submitting an STR
Case Studies of Non-Compliance
Legal and Financial Consequences
Bahrain aims to be a leader in AML (Anti-Money Laundering) and CFT (Combatting the Financing of Terrorism). Given its position as a financial hub, the country faces significant risks from financial crime. Businesses, both financial and non-financial, are legally required to implementAML/CFT measures in alignment with Financial Action Task Force (FATF) recommendations.
The 2018 FATF Mutual Evaluation Report highlighted that Bahrain had a strong framework for AML/CFT but needed improvement in risk-based compliance. By 2022, Bahrain had made significant strides, achieving Compliant or Largely Compliant ratings for 39 out of 40 FATF recommendations. However, issues remained, particularly in the Designated Non-Financial Businesses and Professions (DNFBPs) sector and Suspicious Transaction Reporting (STR) quality and quantity.
To address these challenges, AMAN, powered by Themis, was developed. This AI-driven AML/CFT platform helps Bahraini businesses streamline compliance, conduct due diligence, and report suspicious activities effectively. It integrates with government authorities to ensure STRs are submitted efficiently and securely.
Under Legislative Decree No. 4 of 2001, all businesses inBahrain must report suspicious financial activities. Failure to comply can lead to imprisonment (up to two years) and fines up to BD 50,000.
STRs play a crucial role in financial crime prevention by helping authorities track illicit financial flows. The Financial Intelligence National Centre (Bahrain’s FIU) analyses these reports and coordinates with law enforcement agencies. A notable example in 2016 involved STRs uncovering an international cyber fraud case affecting 118 victims across 10 countries.
To maximise the effectiveness of STRs, businesses should ensure:
Accurate and detailed descriptions of suspicious activities.
Structured and logical narratives, answering who, what, when, where, why, and how.
Avoidance of jargon, ensuring clarity for law enforcement.
Strict confidentiality to prevent tipping off suspects, a legal offense.
After submitting an STR, businesses should classify the related customer or transaction as high-risk, triggering enhanced due diligence (EDD) and ongoing monitoring. Companies must strike a balance between compliance and avoiding tipping off individuals under investigation.
Failure to report suspicious activities can lead to regulatory penalties. A 2021 case saw a Bahraini audit firm fined BD 20,000 for failing to implement AML/CFT measures. With Bahrain’s next FATF evaluation in2026, businesses must enhance compliance efforts to avoid scrutiny.
With increasing government and international focus on AML/CFT compliance, businesses in Bahrain must prioritise STR reporting and risk management. Solutions like AMAN offer innovative tools to simplify compliance, protect businesses from financial crime, and support national security efforts.
