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  • FC-1.1 FC-1.1 General Requirements

    • Verification of Identity and Source of Funds

      • FC-1.1.1

        Conventional bank licensees must establish effective systematic internal procedures for establishing and verifying the identity of their customers and the source of their funds. Such procedures must be set out in writing and approved by the licensee's senior management and must be strictly adhered to.

        Amended: January 2020
        Amended: October 2014
        October 07

      • FC-1.1.2

        Conventional bank licensees must implement the customer due diligence measures outlined in Chapters 1, 2 and 3 when:

        (a) Establishing business relations with a new or existing customer;
        (b) A change to the signatory or beneficiary of an existing account or business relationship is made;
        (c) A significant transaction takes place;
        (d) There is a material change in the way that the bank account is operated or in the manner in which the business relationship is conducted;
        (e) Customer documentation standards change substantially;
        (f) The conventional bank licensee has doubts about the veracity or adequacy of previously obtained customer due diligence information;
        (g) [This Sub-paragraph was deleted in July 2018];
        (h) Carrying out wire transfers irrespective of amount; or
        (i) There is a suspicion of money laundering or terrorist financing.
        Amended: July 2018
        October 07

      • FC-1.1.2A

        Conventional bank licensees must understand, and as appropriate, obtain information on the purpose and intended nature of the business relationship.

        Added: October 2014

      • FC-1.1.2B

        Conventional bank licensees must conduct ongoing due diligence on the business relationship, including:

        a) Scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the institution's knowledge of the customer, their business and risk profile, including, where necessary, the source of funds; and
        b) Ensuring that documents, data or information collected under the CDD process is kept up-to-date and relevant, by undertaking reviews of existing records, particularly for higher risk categories of customers.
        Amended: October 2017
        Added: October 2014

      • FC-1.1.2C

        A conventional bank licensee must also review and update the customers’ risk profile based on their level of ML/TF/PF risk upon onboarding and regularly throughout the life of the relationship. The risk management and mitigation measures implemented by a licensee must be commensurate with the risk profile of the customer or type of customer.

        Added: January 2022

      • FC-1.1.3

        For the purposes of this Module, 'customer' includes counterparties such as financial markets counterparties, except where financial institutions are acting as principals where simplified due diligence measures may sometimes apply. These simplified measures are set out in Section FC 1.11.

        October 07

      • FC-1.1.4

        The CBB's specific minimum standards to be followed with respect to verifying customer identity and source of funds are contained in Section FC-1.2. Enhanced requirements apply under certain high-risk situations: these requirements are contained in Sections FC-1.3 to FC-1.8 inclusive. Additional requirements apply where a conventional bank licensee is relying on a professional intermediary to perform certain parts of the customer due diligence process: these are detailed in Section FC-1.9. Simplified customer due diligence measures may apply in defined circumstances: these are set out in Section FC-1.11.

        October 07

    • Verification of Third Parties

      • FC-1.1.5

        Conventional bank licensees must obtain a signed statement, in hard copy or through digital means from all new customers confirming whether or not the customer is acting on his own behalf or not. This undertaking must be obtained prior to conducting any transactions with the customer concerned.

        Amended: January 2022
        October 07

      • FC-1.1.6

        Where a customer is acting on behalf of a third party, the conventional bank licensee must also obtain a signed statement from the third party, confirming they have given authority to the customer to act on their behalf. Where the third party is a legal person, the conventional bank licensee must have sight of the original Board resolution (or other applicable document) authorising the customer to act on the third party's behalf, and retain a certified copy.

        October 07

      • FC-1.1.7

        Conventional bank licensees must establish and verify the identity of the customer and (where applicable) the party/parties on whose behalf the customer is acting, including the Beneficial Owner of the funds. Verification must take place in accordance with the requirements specified in this Chapter.

        October 07

      • FC-1.1.8

        Where financial services are provided to a minor or other person lacking full legal capacity, the normal identification procedures as set out in this Chapter must be followed. In the case of minors, licensees must additionally verify the identity of the parent(s) or legal guardian(s). Where a third party on behalf of a person lacking full legal capacity wishes to open an account, the licensee must establish the identity of that third party as well as the intended account holder.

        October 07

    • Anonymous and Nominee Accounts

      • FC-1.1.9

        Conventional bank licensees must not establish or keep anonymous accounts or accounts in fictitious names. Where conventional bank licensees maintain a nominee account, which is controlled by or held for the benefit of another person, the identity of that person must be disclosed to the conventional bank licensee and verified by it in accordance with the requirements specified in this Chapter.

        October 07

    • Timing of Verification

      • FC-1.1.10

        Conventional bank licensees must not commence a business relationship or undertake a transaction with a customer before completion of the relevant customer due diligence measures specified in Chapters 1, 2 and 3. However, verification may be completed after receipt of funds in the case of: Bahrain companies under formation which are being registered with the Ministry of Industry and Commerce; or newly arrived persons in Bahrain who are taking up employment or residence.

        Amended: January 2024
        Amended: January 2022
        Amended: October 2014
        Amended: October 2013
        October 07

      • FC-1.1.10A

        Conventional bank licensees must ensure they adopt adequate risk management procedures and perform risk assessments with respect to the conditions under which a customer may utilise the business relationship prior to verification.

        Added: Jan 2024

    • Companies under Formation

      • FC-1.1.10B

        Conventional bank licensees may open a bank account for the purpose of injection of initial capital (bank account for depositing capital) for a company under formation. No transfers or disbursement of funds must take place from such bank account until all the CDD requirements have been fully met.

        Added: Jan 2024

      • FC-1.1.10C

        Conventional bank licensees should only deny a request for opening accounts due to serious reasons or in case of suspicions arising from AML/CFT risk assessments. An example of a serious reason includes the detection of the fact that one of the shareholders of the company under formation appears in local, regional or international sanction lists.

        Added: Jan 2024

      • FC-1.1.10D

        Conventional bank licensees may open a separate bank account for the purpose of payment of formation expenses under conditions to be agreed with the customer.

        Added: Jan 2024

      • FC-1.1.10E

        All bank accounts of the company under formation must be closed and funds returned (see Paragraph FC-1.1.11) or suspended if the final CR is not received and the customer has not completed the customer due diligence requirements within a period of six months from the date of opening the account. The six-month period may be extended subject to a bilateral arrangement between the licensee and the customer.

        Added: Jan 2024

      • FC-1.1.10F

        For the purposes of account mentioned in Paragraph FC-1.1.10D, conventional bank licensees should follow the guidance below:

        (a) Licensees should receive from the customer, information regarding the nature of transactions, volume and prospective vendors during the formation stages;
        (b) Licensees may agree with the customer a limit for maximum payments to be made out of this account;
        (c) Licensees should ensure that payments from such accounts are only through EFTS; and
        (d) Licensees should integrate their systems with Sijilat system of the Ministry of Industry and Commerce for real-time access to allow opening of accounts in a timely and efficient manner.
        Added: Jan 2024

    • New Arrivals

      • FC-1.1.10G

        In the case of newly arrived persons in Bahrain who are taking up employment or residence, an account may be opened after undertaking initial customer due diligence and obtaining and verifying the identity information of the customer. However, no transfers or disbursement of funds must take place from such bank account until all the CDD requirements have been fully met.

        Added: Jan 2024

      • FC-1.1.10H

        In complying with the requirements of Paragraph FC-1.1.10G, examples of serious reasons for denying the request for opening an account may include failure to provide a valid passport. It may also include instances where a potential customer’s conduct or activity appears suspicious, or the customer’s name appears in one of the local, regional or international sanction lists.

        Added: Jan 2024

    • Incomplete Customer Due Diligence

      • FC-1.1.11

        Where a conventional bank licensee is unable to comply with the requirements specified in Chapters 1, 2 and 3, it must consider whether: it should freeze any funds received and file a suspicious transaction report; or to terminate the relationship; or not proceed with the transaction; or to return the funds to the counterparty in the same method as received.

        Amended: October 2013
        October 07

      • FC-1.1.12

        See also Chapter FC-5, which covers the filing of suspicious transaction reports. Regarding the return of funds to the counterparty, if funds are received in cash, funds should be returned in cash. If funds are received by wire transfer, they should be returned by wire transfer.

        Amended: October 2013
        October 07

    • Non-Resident Accounts

      • FC-1.1.12A

        Conventional retail bank licensees that open bank accounts or otherwise transact or deal with non-resident customers must have documented criteria for acceptance of business from such persons. For non-resident customers, conventional retail bank licensees must ensure the following:

        (a) Ensure there is a viable economic reason for the business relationship;
        (b) Perform enhanced due diligence where required in accordance with Paragraph FC-1.1.17;
        (c) Obtain and document the country of residence for tax purposes where relevant;
        (d) Obtain evidence of banking relationships in the country of residence;
        (e) Obtain the reasons for dealing with licensee in Bahrain;
        (f) Obtain an indicative transaction volume and/or value of incoming funds; and
        (g) Test that the persons are contactable without unreasonable delays.
        Amended: October 2023
        Added: January 2022

      • FC-1.1.12B

        Conventional retail bank licensees that open bank accounts or otherwise transact or deal with non-resident customers must have documented approved policies in place setting out the products and services which will be offered to non-resident customers. Such policy document must take into account a comprehensive risk assessment covering all risks associated with the products and services offered to non-residents. The licensee must also have detailed procedures to address the risks associated with the dealings with non-resident customers including procedures and processes relating to authentication, genuineness of transactions and their purpose.

        Added: January 2022

      • FC-1.1.12C

        Conventional bank licensees must not accept non-residents customers from high risk jurisdictions subject to a call for action by FATF.

        Added: January 2022

      • FC-1.1.12D

        Conventional bank licensees must take adequate precautions and risk mitigation measures before onboarding non-resident customers from high risk jurisdictions. The licensees must establish detailed assessments and criteria that take into consideration FATF mutual evaluations, FATF guidance, the country national risk assessments (NRAs) and other available guidance on onboarding and retaining non-resident customers from the following high risk jurisdictions:

        (a) Jurisdictions under increased monitoring by FATF;
        (b) Countries upon which United Nations sanctions have been imposed except those referred to in Paragraph FC-1.1.12C; and
        (c) Countries that are the subject of any other sanctions.
        Added: January 2022

      • FC-1.1.12E

        [This Paragraph was deleted in October 2023].

        Added: January 2022
        Deleted: October 2023

      • FC-1.1.12F

        All conventional bank licensees must establish systems and measures that are proportional to the risk relevant to each jurisdiction and this must be documented. Such a document must show the risks, mitigation measures for each jurisdiction and for each non-resident customer.

        Added: January 2022

      • FC-1.1.12G

        All conventional bank licensees must establish a comprehensive documented policy and procedures describing also the tools, methodology and systems that support the licensee’s processes for:

        (a) The application of RBA;
        (b) Customer due diligence;
        (c) Ongoing transaction monitoring; and
        (d) Reporting in relation to their transactions or dealings with nonresident customers.
        Added: January 2022

      • FC-1.1.12H

        Conventional bank licensees must ensure that only official/government documents are accepted for the purpose of information in Subparagraphs FC-1.2.1 (a) to (f) in the case of non-resident customers.

        Added: January 2022

      • FC-1.1.13

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Amended: January 2022
        Amended: April 2014
        Added: October 2013

      • FC-1.1.13A

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: April 2014
         

      • FC-1.1.13B

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: April 2014
         

      • FC-1.1.13C

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: April 2014
         

      • FC-1.1.13D

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: October 2017
         

      • FC-1.1.13E

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: October 2017
         

      • FC-1.1.13F

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: October 2017

      • FC-1.1.13G

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: October 2017

      • FC-1.1.13H

        [This Paragraph was deleted in January 2024].

        Deleted: January 2024
        Added: October 2017

      • FC-1.1.14

        [This Paragraph was deleted in October 2023].

        Deleted: October 2023
        Amended: January 2023
        Amended: April 2021
        Amended: January 2021
        Added: October 2013

      • FC-1.1.14A

        [This Paragraph was deleted in October 2023].

        Added: July 2022
        Deleted: October 2023

      • FC-1.1.14B

        [This Paragraph was deleted in October 2023].

        Added: January 2023
        Deleted: October 2023

      • FC-1.1.15

        Where a non-resident account is opened, the customer must be informed by the conventional bank licensee of any services which may be restricted or otherwise limited, as a result of their non-resident status.

        Added: October 2013

      • FC-1.1.16

        For purposes of Paragraph FC-1.1.15, examples of limitations or restrictions for non-resident accounts may include limitations on banking services being offered including the granting of loans or other facilities, including credit cards or cheque books.

        Added: October 2013

      • FC-1.1.17

        Conventional bank licensees must follow the below CDD and customer onboarding requirements:

          Enhanced Due Diligence Digital Onboarding
        Bahrainis and GCC nationals (wherever they reside) and expatriates resident in Bahrain No Yes
        Others Yes Yes
        Added: October 2023