Anti-Money Laundering (AML) in Bahrain
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Money laundering continues to be a problem in Bahrain. In 2007, the Anti Money Laundering Unit (AMLU) reported its highest number of Suspicious Transaction Reports (STRs) since its inception.
In January 2001, the Government of Bahrain enacted an Anti-Money Laundering (AML) law that criminalizes the laundering of proceeds derived from any predicate offense. The law stipulates punishment of up to seven years imprisonment and a fine of up to one million Bahraini dinars (BD) for convicted launderers and those aiding or abetting them. If organized criminal affiliation, corruption, or disguise of the origin of proceeds is involved, the minimum penalty is a fine of at least 100,000 dinars and a prison term of not less than five years.
Notably, the AML law allows Bahrain to prosecute a money laundering violation regardless of whether the act is a crime in Bahrain. For example, there is no income tax in Bahrain, yet someone engaging in illicit financial transactions for the purpose of evading another nation’s tax system may be prosecuted for money laundering in Bahrain.
Following enactment of the law, Bahrain Monetary Agency (BMA)—Bahrain’s Central Bank principal financial sector regulator, issued regulations requiring financial institutions to file Suspicious Transaction Reports (STRs), to maintain records for a period of five years, and to provide ready access for law enforcement officials to account information. Immunity from criminal or civil action is given to those who report suspicious transactions. There is no minimum threshold required to file an STR.
In addition, the law provides for the creation of the Anti-Money Laundering Unit (AMLU) as Bahrain’s Financial Intelligence Unit (FIU). The AMLU, which is housed in the Ministry of Interior, is empowered to: receive reports of money laundering offenses, conduct preliminary investigations, implement procedures relating to international cooperation under the provisions of the law, and execute decisions, orders, and decrees issued by the competent courts in offenses related to money laundering. The AMLU became a member of the Egmont Group of FIUs in July 2003.
The AML law was amended in 2006.
AML Training in Bahrain
The Anti Money Laundering (AML) Law of 2001 requires Bahraini financial institutions to develop training programs to assist law enforcement in apprehending individuals who conduct illicit financial transactions.
The Economy of Bahrain
Bahrain has the second most free economy in the Middle East and North Africa region and is thirty-ninth overall in the world.
With its highly developed communication and transport facilities, Bahrain is home to numerous multinational firms with business in the Gulf. Petroleum production and refining account for over 60% of Bahrain's export receipts, over 70% of government revenues, and 11% of GDP (exclusive of allied industries), underpinning Bahrain's strong economic growth in recent years. Aluminum is Bahrain's second major export after oil. Other major segments of Bahrain's economy are the financial and construction sectors. Bahrain is focused on Islamic banking and is competing on an international scale with Malaysia as a worldwide banking center.
Bahrain is actively pursuing the diversification and privatization of its economy to reduce the country's dependence on oil. As part of this effort, in August 2006 Bahrain and the US implemented a Free Trade Agreement (FTA), the first FTA between the US and a Gulf state. Continued strong growth hinges on Bahrain's ability to acquire new natural gas supplies as feedstock to support its expanding petrochemical and aluminum industries. Unemployment, especially among the young, and the depletion of oil and underground water resources are long-term economic problems.
Banking in Bahrain
Before September 2006 the Bahrain Monetary Agency was the banking regulator in Bahrain. The Central Bank of Bahrain and Financial Institutions Law of 2006 changed that and made the Central Bank of Bahrain the new regulator.
The currency of Bahrain is the Bahraini Dinar (BD). It was first issued in 1965. The dinar replaced the Persian Gulf rupee. Dinar is issued in both banknotes and coins. The current series features 1, 5, 10, and 20 dinar in banknotes. Coins come in 5, 10, 25, 50, 100, and 500 fils.
Time Zone: UTC+3 (8 hours ahead of Washington, DC during Standard Time).
Location: Middle East, archipelago in the Persian Gulf, east of Saudi Arabia.
Population: 1.332 million (July 2013 est.)
Labor Force: Approximately 1% works in agriculture, 79% in industry and 20% in services industries. The unemployment rate is 15%.
Languages Spoken: Arabic, English, Farsi, Urdu.
Trade Organizations: Bahrain is a member of the World Trade Organization (WTO).