Understanding Bahrain’s Growing Fraud Problem

Introduction

In 2024, a Bahraini court sentenced a young man to three years in prison for orchestrating a cryptocurrency investment fraud that preyed on unsuspecting investors. Presenting himself as a seasoned crypto trader, he persuaded victims to hand over their savings with promises of exceptional returns through "exclusive" trading opportunities. When the scheme collapsed, he claimed the losses resulted from genuine trading errors rather than criminal intent. But his lack of professional credentials and required licensing told a different story—revealing a venture that was fundamentally flawed and likely fraudulent from the outset.

This case serves as a cautionary tale for businesses, investors, and individuals: in today’s increasingly open yet complex investment landscape, promises of quick riches are seldom genuine—and often conceal far more deceptive intentions. Like elsewhere across the globe, fraud is surging in Bahrain—with investment schemes often involving crypto or other online opportunities becoming all too common place.  

In the Kingdom's 2025 National Risk Assessment (NRA), fraud was identified as a major threat and key predicate offence to money laundering, placing it among the nation’s most significant criminal risks, alongside drug trafficking. Investment fraud was highlighted as the predominant type of fraud in the country. To put the scale of threat into context, a 2024 study by Visa found that more than half of consumers in the Kingdom had fallen for a scam, with 12% falling victim more than once.

Despite growing public awareness around these schemes and how to spot suspicious communications, fraudsters aren’t backing down—instead, they are simply shifting tactics and scaling operations, with financial and reputational consequences mounting.

The Hidden Threats Behind Modern Investment Schemes

In an age of digital finance and social connectivity, investing has never seemed more accessible—or more treacherous. While new technologies and online platforms have democratised financial opportunities for millions, they've also unleashed a wave of sophisticated investment fraud that preys on aspiration, urgency, and digital trust. From cryptocurrency scams to social media pump-and-dump schemes, Bahrain has seen a worrying rise in investment fraud wrapped in layers of digital deception.

Some Interesting Stats:

‍The Rise of the Crypto Ponzi: According to research by Chainalysis, high- and low-tech fraud scams involving crypto have become prolific—with high-yielding investment scams and so called “pig butchering” representing the most successful type of crypto fraud. In all, $14.5 billion worth of cryptocurrency was stolen globally through scams and fraud in 2024, with Ponzi and pyramid schemes involving fake crypto investments scamming over 1.2 million people. Just last month, US law enforcement indicted Chen Zhi, the head of an international business conglomerate, for running one of the largest cryptocurrency investment fraud schemes ever, highlighting the scale of the risk today. In Bahrain, the 2025 NRA identified the crypto sector as a high-risk area for financial crimes, citing vulnerabilities that stem from its speed, global reach, and privacy-enhancing features, which can be exploited by criminals.

Social Media as a Fraud Breeding Ground: Platforms like Telegram, Instagram, and TikTok have become breeding grounds where fake influencers peddle fraudulent schemes using doctored screenshots, fabricated testimonials, and even fake endorsements from celebrities and business leaders. There is also a striking convergence between crypto and social media—53% of cryptocurrency fraud schemes uncovered in 2024 were linked to social media platforms. Fraudsters use the veneer of social proof and the illusion of insider access to incentivize victims to invest. In Bahrain, this threat is particularly concerning given the country’s high digital connectivity and active online investment community. Fraudsters can easily target Bahraini residents through social media and messaging platforms, exploiting trust in digital financial opportunities and the growing interest in online trading and cryptocurrency investments.  ‍

A More Professionalised Form of Fraud: While investment fraud is not new, the growing professionalisation of such schemes is deeply concerning. Many now operate like legitimate businesses, with criminal syndicates leveraging digital tools and professional services to commit crimes at scale—a model often termed “fraud-as-a-service.” In Bahrain, this trend poses a serious threat given the country’s highly digitalised financial sector and role as a regional fintech hub. The rise of online investment platforms and cross-border services provides new avenues for sophisticated networks to target investors and institutions, and to exploit financial technologies and services for fraudulent ends.

Investment Fraud in Bahrain - What Recent Cases Reveal

Bahrain has witnessed a sharp rise in investment fraud cases in recent years. While each case differs in its details, together they highlight important lessons and red flags to be on the lookout for.

• In August, three expatriates were arrested for operating a fraudulent investment scheme using social media advertisements to lure victims into investing in fake gold, petrol, and cryptocurrency opportunities. They reportedly set up a marketing and management company as a front to launder their illicit gains, also presenting fabricated portfolio images to victims before converting the proceeds into cryptocurrency to conceal the origin of the funds.
• In April, reports emerged that the crypto investment platform PCEX was targeting Bahrainis, offering investment opportunities through Telegram groups—some of which had upwards of 4,000 members. The platform has a troubling history, with multiple websites warning that it may be a scam. Thousands of investors reportedly have lost their funds.
• In another case from this year, Bahrain’s government had to issue a warning regarding a deepfake video of the Finance Minister HE Shaikh Salman bin Khalifa Al Khalifa talking about a potential investment scheme. The video was professionally edited to mimic his likeness and voice, lending it a deceptive air of authenticity. Despite the government's prompt clarification that the video was fabricated, the incident highlights a concerning trend: the use of deepfakes to impersonate government officials in fraudulent investment schemes.
• Last year, a man was accused of defrauding 60 investors of more than BD 1 million by promising unusually high returns. The defendant, previously convicted on similar charges in 2020, presented himself as a successful entrepreneur running an investment support company. In reality, he lacked the required licenses to operate such a business in Bahrain and allegedly used the investors’ funds to cover his personal expenses amid mounting financial difficulties.
• In another case, a European con artist was sentenced to eight years in prison for defrauding investors of more than BD 3 million through fake autographs of football stars Cristiano Ronaldo and Lionel Messi. Operating an unlicensed firm, he ran a Ponzi-style scheme that lured backers with promises of exclusive sports memorabilia. Authorities said the man had a criminal record abroad and lived in Bahrain under a false identity. The man forged documents, conducted unlicensed fundraising, and established shell companies to sustain the scam.

What Red Flags Do These Cases Raise?

• Unrealistic Returns: Investment fraud schemes often lure victims with promises of unusually high or guaranteed returns, claiming undeniable profits with little or no risk, when in reality there are no profits to be had.

• Unlicensed Operations: Many perpetrators operate without proper licenses, creating front companies, shell companies, or using false credentials to appear legitimate. It is important to check for licensing before engaging in potential investment opportunities.  

• Online Recruitment: Fraudsters increasingly rely on social media and online platforms to recruit investors, sometimes forming large Telegram or WhatsApp groups with thousands of members. In these cases, the ability to reach many potential victims at once is appealing to these fraudsters, as is the ability to build relationships with the potential victims online.

• Fabricated Evidence: They often present fake portfolios, forged documents, or even deepfake videos of government officials to create a false sense of credibility. It is important to do due diligence on any documentation provided in potential investment opportunities.  

• Fund Concealment: Schemes frequently use complex methods to conceal or launder funds, including cryptocurrency or multiple layered accounts, making it difficult to trace investments.

• History of Fraudulent Behavior: Many scammers have a documented history of fraud or prior convictions, and some operate under false identities to evade authorities, indicating a high risk of repeated offenses. This makes it crucial to conduct thorough due diligence on individuals and their networks before doing business with them.

• Aggressive Marketing: These scammers also use high-pressure pitches and promises of exclusive investment opportunities, such as celebrity memorabilia. Feeling rushed or pressured is not normal under a legitimate investment opportunity, so this is a major red flag.

How AMAN Can Help

AMAN offers a robust platform for detecting and preventing potential links to financial crimes, including investment fraud. Our advanced tools enable individuals and businesses to screen people, companies, and entire networks for past fraudulent behavior, suspicious activity, or high-risk associations. Leveraging AI-powered analysis, AMAN rapidly maps complex corporate structures and relationships, helping investors steer clear of connections to fraudsters and their criminal networks.

Our expert-led investigations and threat-focused research provide an extra layer of protection against fraud, enabling clients to identify emerging trends, jurisdiction-specific risks, and operational vulnerabilities that could expose their businesses or themselves to new crimes.

In addition, AMAN supports regulatory compliance by facilitating reporting, offering specialised training in financial crime prevention, and delivering outsourced KYC/CDD and MLRO services. This comprehensive approach empowers all Bahrainis to proactively detect, prevent, and mitigate fraud in real time.