Introduction

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.

FATF Findings & Bahrain’s Progress

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.

AMAN | A Government-Backed Solution for AML Compliance

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.

Legal Obligation to Report Suspicious Activity

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.

Importance of STRs & Role in Law Enforcement

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.

Best Practices for Submitting STRs

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.

Post-Reporting & Risk Management

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.

Consequences of Non-Compliance

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.

Conclusion

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.