Executive Summary

Legal Basis

FC-A.2.1

This Module was first issued by the BMA in April 2005, together with the rest of Volume 3 (Insurance). Any material changes that have subsequently been made to this Module are annotated with the calendar quarter date in which the change was made: Chapter UG-3 provides further details on Rulebook maintenance and version control.

FC-A.2.2

When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 3 was updated in January 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.

FC-A.2.3

A list of recent changes made to this Module is detailed in the table below:

FC-A.2.3 [Deleted]

FC-A.2.4

Guidance on the implementation and transition to Volume 3 (Insurance) is given in Module ES (Executive Summary).

FC-B.1.1

Chapters FC-1 to FC-9 apply to all insurance firms and insurance brokers. These Chapters also apply to insurance managers where they manage a captive insurer. Chapters FC-1 to FC-9 do not apply to insurance consultants.

FC-B.1.2

Chapters FC-1 to FC-9 apply, as specified in Paragraph FC-B.1.1, to all insurance firms, insurance brokers and, where they manage a captive insurer, insurance managers, irrespective of whether they are a Bahraini insurance licensee or an overseas insurance licensee. Overseas insurance licensees, and Bahraini insurance licensees that are subsidiaries of an overseas group, may apply additional AML/CFT policies and procedures, provided they satisfy the minimum requirements contained in this Module.

FC-B.1.3

The Rules and Guidance in this Module are in addition to and supplement the requirements contained in Decree Law No. (4) of 2001 with respect to the prevention and prohibition of the laundering of money; this Law was subsequently updated, with the issuance of Decree Law No. 54 of 2006 with respect to amending certain provisions of Decree No. 4 of 2001 (collectively, 'the AML Law'). The AML Law imposes obligations generally in relation to the prevention of money laundering and the combating of the financing of terrorism, to all persons resident in Bahrain (including financial services firms such as insurance licensees). All insurance licensees are under the statutory obligations of that Law, in addition to the more specific requirements contained in this Module. Nothing in this Module is intended to restrict the application of the AML Law (a copy of which is contained in Part B of Volume 3 (Insurance), under 'Supplementary Information'). Also included in Part B is a copy of Decree Law No. 58 of 2006 with respect to the protection of society from terrorism activities ('the anti-terrorism law').

FC-B.1.4

Chapter FC-10, dealing with insurance fraud, applies to all insurance licensees.

FC-B.2.1

This Module applies to all types of insurance contracts, including general and long-term insurance, as well as to reinsurance and captive insurance business.

FC-B.2.2

International experience shows that all types of insurance (including general insurance and reinsurance) have been used as channels for illegal activities. However, the CBB also recognises that in the case of pure reinsurance transactions, these risks may exist to a lesser extent. Consequently, upon application by the licensee, the CBB will consider, on an individual basis, exemptions from specific requirements of this Module, in relation to the reinsurance activities of licensees. Normally, the CBB will consider granting such exemptions where the reinsurer concerned deals only with licensed insurance entities, that are subject to AML / CFT standards equivalent to those in this Module.

FC-B.3.1

Insurance licensees must apply the requirements in this Module to all their branches and subsidiaries, including those operating in another jurisdiction. Where local standards differ, the higher standard must be followed. Insurance licensees must pay particular attention to procedures in branches and subsidiaries in countries that do not or insufficiently apply the FATF Recommendations and Special Recommendations and do not have adequate AML/CFT procedures, systems and controls (see also Section FC-7.1).

FC-B.3.2

Where another jurisdiction's laws or Regulations prevent an insurance licensee (or any of its foreign branches or subsidiaries) from applying the same standards contained in this Module or higher, the licensee must immediately inform the CBB in writing.

FC-B.3.3

In such instances, the CBB will review alternatives with the insurance licensee. Should the CBB and the licensee be unable to reach agreement on the satisfactory implementation of this Module in a foreign subsidiary or branch, the insurance licensee may be required by the CBB to cease the operations of the subsidiary or branch in the foreign jurisdiction in question.

FC-B.3.4

Financial groups (e.g. an insurance firm with its subsidiaries) must implement groupwide programmes against money laundering and terrorist financing, including policies and procedures for sharing information within the group for AML/CFT purposes, which must also be applicable, and appropriate to, all branches and subsidiaries of the financial group. These must include:

FC-C.1.1

An insurance licensee must implement Risk Based Approach (RBA) in establishing an AML/CFT/CPF program and conduct ML/TF/PF risk assessments prior to and during the establishment of a business relationship and, on an ongoing basis, throughout the course of its relationship with the customer. The licensee must establish and implement policies, procedures, tools and systems commensurate with the size, nature and complexity of its business operations to support its RBA.

FC-C.1.2

An insurance licensee must perform enhanced measures where higher ML/TF/PF risks are identified to effectively manage and mitigate those higher risks.

FC-C.1.3

An insurance license must maintain and regularly review and update the documented risk assessment. The risk management and mitigation measures implemented by a licensee must be commensurate with the identified ML/TF/PF risks.

FC-C.1.4

Insurance licensees must allocate adequate financial, human and technical resources and expertise to effectively implement and take appropriate preventive measures to mitigate ML/TF/PF risks.

FC-C.2.1

An insurance licensee must ensure that it takes measures to identify, assess, monitor, manage and mitigate ML/TF/PF risks to which it is exposed and that the measures taken are commensurate with the nature, scale and complexities of its activities. The risk assessment must enable the licensee to understand how, and to what extent, it is vulnerable to ML/TF/PF.

FC-C.2.2

In the context of the risk assessment, “proliferation financing risk” refers to the potential breach, non-implementation or evasion of the targeted financial sanctions obligations referred to in FATF Recommendation 7.

FC-C.2.3

The risk assessment must be properly documented, regularly updated and communicated to the insurance licensee’s senior management. Licensees must have in place policies, controls and procedures, which are approved by senior management, to enable them to manage and mitigate the risks that have been identified. In conducting its risk assessments, the licensee must consider quantitative and qualitative information obtained from the relevant internal and external sources to identify, manage and mitigate these risks. This must include consideration of the risk and threat assessments using, national risk assessments, sectorial risk assessments, crime statistics, typologies, risk indicators, red flags, guidance and advisories issued by inter-governmental organisations, national competent authorities and the FATF, and AML/CFT/CPF mutual evaluation and follow-up reports by the FATF or associated assessment bodies.

FC-C.2.4

An insurance licensee must assess country/geographic risk, customer/investor risk, product/ service/ transactions risk and distribution channel risk taking into consideration the appropriate factors in identifying and assessing the ML/TF/PF risks, including the following:

Country/Geographic risk

Customer/Investor risk

Product/Service/Transactions risk

Distribution channel risk

Verification of Identity and Source of Funds

Verification of Third Parties

Anonymous and Nominee Accounts

Timing of Verification

Incomplete Customer Due Diligence

Non-Resident Accounts

Existing Customers

Natural Persons

Legal Entities or Legal Arrangements (such as trusts)

FC-1.3.1

Enhanced customer due diligence must be performed on those customers identified as having a higher risk profile, and additional inquiries made or information obtained in respect of those customers. If the insurance licensee determines that a beneficiary who is a legal person or a legal arrangement presents a higher risk, it must take enhanced measures which must include reasonable measures to identify and verify the identity of the beneficial owner of the beneficiary, at the time of payout.

FC-1.3.2

Licensees should examine, as far as reasonably possible, the background and purpose of all complex, unusual large transactions, and all unusual patterns of transactions, which have no apparent economic or lawful purpose. Where the risks of money laundering or terrorist financing are higher, licensees should conduct enhanced CDD measures, consistent with the risks identified. In particular, they should increase the degree and nature of monitoring of the business relationship, in order to determine whether those transactions or activities appear unusual or suspicious. The additional inquiries or information referred to in Paragraph FC-1.3.1 include:

FC-1.3.3

In addition to the general Rule contained in Paragraph FC-1.3.1 above, special care is required in the circumstances specified in Sections FC-1.4 to FC-1.5 inclusive.

FC-1.4.1

Insurance licensees must establish specific procedures for verifying customer identity where no face-to-face contact takes place.

FC-1.4.2

Where no face-to-face contact takes place, insurance licensees must take additional measures (to those specified in Section FC-1.2), in order to mitigate the potentially higher risk associated with such business. In particular, insurance licensees must take measures:

FC-1.4.3

There are a number of checks that can provide an insurance licensee with a reasonable degree of assurance as to the authenticity of the applicant. They include:

FC-1.4.4

Financial services provided using digital channels or internet pose greater challenges for customer identification and AML/CFT purposes. Insurance licensees must identify and assess the money laundering or terrorist financing risks relevant to any new technology or channel and establish procedures to prevent the misuse of technological developments in money laundering or terrorist financing schemes. The risk assessments must be consistent with the requirements in Section FC-C.2.

FC-1.4.5

Insurance licensees must identify and assess the money laundering or terrorist financing risks that may arise in relation to:

FC-1.4.6

For purposes of Paragraph FC-1.4.5, such a risk assessment consistent with the requirements in Section FC-C.2 and must take place prior to the launch of the new products, business practices or the use of new or developing technologies. Insurance licensees must take appropriate measures to manage and mitigate those risks.

Enhanced Monitoring

Licensee’s digital ID applications

Overseas branches

FC-1.5.1

Insurance licensees must have appropriate risk management systems to determine whether a customer or beneficial owner is a Politically Exposed Person ('PEP'), both at the time of establishing business relations and thereafter on a periodic basis. Licensees must utilise publicly available databases and information to establish whether a customer is a PEP.

FC-1.5.2

Insurance licensees must establish a client acceptance policy with regard to PEPs, taking into account the reputational and other risks involved. Senior management approval must be obtained before a PEP is accepted as a customer. Licensees must not accept a non-Bahraini PEP as a customer based on customer due diligence undertaken using digital ID applications.

FC-1.5.3

Where an existing customer is a PEP, or subsequently becomes a PEP, enhanced monitoring and customer due diligence measures must include:

FC-1.5.3A

In cases of higher risk business relationships with such persons, mentioned in Paragraph FC-1.5.1, insurance licensees must apply the measures referred to in Subparagraphs FC-1.5.3 (b), (d) and (e).

FC-1.5.3B

The requirements for all types of PEP must also apply to family or close associates of such PEPs.

FC-1.5.3C

For the purpose of Paragraph FC-1.5.3B, 'family' means spouse, father, mother, sons, daughters, sisters and brothers. 'Associates' are persons associated with a PEP whether such association is due to the person being an employee or partner of the PEP or of a firm represented or owned by the PEP, or family links or otherwise.

FC-1.5.4

[This Paragraph was deleted in July 2016 as definition is included under Part B in the Glossary.]

FC-1.5.5

In relation to life insurance policies, insurance licensees must take reasonable measures to determine whether the beneficiaries and/or, where required, the beneficial owner of the beneficiary, are PEPs. This must occur, at the latest, at the time of the payout.

FC-1.5.6

Where higher risks are identified, senior management must be informed before the payout of the policy proceeds, in order to conduct enhanced scrutiny on the whole business relationship with the policyholder, and to consider making a suspicious transaction report.

FC-1.5A.1

Financial services must not be provided to charitable funds and religious, sporting, social, cooperative and professional and other societies, until an original certificate authenticated by the relevant Ministry confirming the identities of those purporting to act on their behalf (and authorising them to obtain the said service) has been obtained. Charities should be subject to enhanced monitoring by insurance licensees.

FC-1.5A.2

For the purpose of Paragraph FC-1.5A.1, for clubs and societies registered with the Ministry of Youth and Sport Affairs, insurance licensees must contact the Ministry to clarify whether a policy may be issued in accordance with the rules of the Ministry. In addition, in the case of sport associations registered with the Bahrain Olympic Committee (BOC), insurance licensees must contact BOC to clarify whether the policy may be issued in accordance with the rules of BOC.

FC-1.6.1

Insurance licensees may apply simplified customer due diligence measures, as described in Paragraphs FC-1.6.2 to FC-1.6.8, if:

FC-1.6.2

For customers falling under the categories (a) to (e) specified in Paragraph FC-1.6.1, the information required under Paragraph FC-1.2.1 (for natural persons) or FC-1.2.7 (for legal entities or legal arrangements such as trusts) must be obtained. However, the verification and certification requirements in Paragraphs FC-1.2.3 and FC-1.2.8, and the due diligence requirements in Paragraph FC-1.2.11, may be dispensed with.

FC-1.6.3

[This Paragraph was deleted in July 2018].

FC-1.6.4

Insurance licensees wishing to apply simplified due diligence measures as allowed for under Paragraph FC-1.6.1 must retain documentary evidence supporting their categorisation of the customer.

FC-1.6.5

Examples of such documentary evidence may include a printout from a regulator's website, confirming the licensed status of an institution, and internal papers attesting to a review of the AML/CFT measures applied in a jurisdiction.

FC-1.6.6

For customers coming under Paragraph FC-1.6.1 (e), licensees must also obtain and retain a written statement from the parent institution of the subsidiary concerned, confirming that the subsidiary is subject to the same AML/CFT measures as its parent.

FC-1.6.7

[This Paragraph was deleted in January 2007]

FC-1.6.8

Simplified customer due diligence measures must not be applied where a licensee knows, suspects, or has reason to suspect, that the applicant is engaged in money laundering or terrorism financing or that the transaction is carried out on behalf of another person engaged in money laundering or terrorism financing.

FC-1.6.8A

Simplified customer due diligence measures must not be applied in situations where the licensee has identified high ML/TF/PF risks.

FC-1.6.9

[This Paragraph was deleted in July 2018].

FC-1.6.10

[This Paragraph was deleted in July 2018].

FC-1.7.1

Insurance licensees may only accept customers introduced to them by other financial institutions or intermediaries, if they have satisfied themselves that the financial institution or intermediary concerned is subject to FATF-equivalent measures and customer due diligence measures. Where an insurance licensee delegates part of the customer due diligence measures to another financial institution or intermediary, the responsibility for meeting the requirements of this Chapter remains with the insurance licensee, not the third party.

FC-1.7.2

Insurance licensees may only accept introduced business if all of the following conditions are satisfied:

FC-1.7.3

The insurance licensee must perform periodic reviews ensuring that any introducer on which it relies is in compliance with the FATF Recommendations. Where the introducer is resident in another jurisdiction, the insurance licensee must also require the introducer to perform periodic reviews to verify whether the jurisdiction is in compliance with the FATF Recommendations.

FC-1.7.4

Should the insurance licensee not be satisfied that the introducer is in compliance with the requirements of the FATF Recommendations, the licensee must conduct its own customer due diligence or not accept or continue the business relationship.

FC-1.8.1

Licensees are permitted to rely on third parties to perform elements of CDD measures and recordkeeping requirements stipulated in Chapter FC-1 related to customer and beneficial owner identity, verification of their identity and information on the purpose and intended nature of the business relationship with the licensee, subject to complying with the below:

FC-1.8.2

Where a licensee relies on a third-party that is part of the same financial group, the licensee can consider that:

FC-1.8.3

This Section does not apply to outsourcing or agency arrangements in which the outsourced entity applies the CDD measures on behalf of the delegating licensee, in accordance with its procedures.

FC-2.1.1

Insurance licensees must implement programmes against money laundering and terrorist financing which establish and maintain appropriate systems and controls for compliance with the requirements of this Module and which limit their vulnerability to financial crime. These systems and controls must be documented, and approved and reviewed annually by the Board of the licensee. The documentation, and the Board's review and approval, must be made available upon request to the CBB.

FC-2.1.2

Where the insurance licensee is an unincorporated entity, the annual review and approval should be undertaken by the most senior person with oversight responsibilities for the licensee, such as its General Manager or managing partner.

FC-2.1.3

The above systems and controls, and associated documented policies and procedures, should cover standards for customer acceptance, on-going monitoring of high-risk accounts, staff training and adequate screening procedures to ensure high standards when hiring employees.

FC-2.1.4

Insurance licensees must incorporate Key Performance Indicators (KPIs) to ensure compliance with AML/CFT requirements by all staff. The performance against the KPIs must be adequately reflected in their annual performance evaluation and in their remuneration (See also Paragraph HC-5.4.3).

FC-2.1.5

In implementing the policies, procedures and monitoring tools for ensuring compliance with Paragraph FC-2.1.4, insurance licensees should consider the following:

Risk-Based Monitoring

Automated Transaction Monitoring

Unusual Transactions or Customer Behaviour

On-going Monitoring

FC-3.1.1

Insurance firms (except captive insurance firms managed by an insurance manager), insurance brokers and insurance managers (that manage a captive insurance firm) must appoint a Money Laundering Reporting Officer ('MLRO'). In the case of insurance managers that manage captive insurance firms, the insurance manager must appoint a MLRO for each of the captive insurance firms under its management.

FC-3.1.2

Insurance managers may nominate the same individual to act as MLRO for more than one captive insurance firm, providing this person can meet in full the responsibilities of MLRO for each captive insurance firm in question.

FC-3.1.3

The position of MLRO is a controlled function and the MLRO is an approved person.

FC-3.1.4

For details of the CBB's requirements regarding controlled functions and approved persons, see Section AU-1.2. Amongst other things, approved persons require CBB approval before being appointed, which is granted only if they are assessed as 'fit and proper' for the function in question. A completed Form 3 must accompany any request for CBB approval.

FC-3.1.5

The position of MLRO must not be combined with functions that create potential conflicts of interest, such as an internal auditor or business line head. The position of MLRO may not be outsourced.

FC-3.1.6

Subject to Paragraph FC-3.1.5, however, the position of MLRO may otherwise be combined with other functions in the insurance licensee, such as that of Compliance Officer, in cases where the volume and geographical spread of the business is limited and, therefore, the demands of the function are not likely to require a full time resource. Paragraph FC-3.1.9 requires that the MLRO is a Director or employee of the licensee, so the function may not be outsourced to a third party employee.

FC-3.1.6A

For purposes of Paragraphs FC-3.1.5 and FC-3.1.6 above, insurance licensees must clearly state in the Application for Approved Person Status — Form 3 — when combining the MLRO or DMLRO position with any other position within the insurance licensee.

FC-3.1.7

Insurance licensees must appoint at least one deputy MLRO (or more depending on the scale and complexity of the licensee's operations). The deputy MLRO(s) must be resident in Bahrain unless otherwise agreed with the CBB.

FC-3.1.7A

The deputy MLRO should be able to support the MLRO discharge his responsibilities and to deputise for him in his absence. In the case of insurance licensees undertaking significant overseas business, the CBB would normally expect to see one or more deputy MLRO(s) residing in the jurisdiction(s) where the bulk of the customer business is processed. In such cases, the CBB would normally agree to an application for an exemption from the residency requirement in Rule FC-3.1.7.

FC-3.1.8

Insurance licensees should note that although the MLRO may delegate some of his functions, either to other employees of the licensee or even (in the case of larger groups) to individuals performing similar functions for other group entities, that the responsibility for compliance with the requirements of this Module remains with the licensee and the designated MLRO.

FC-3.1.9

So that he can carry out his controlled function effectively, insurance licensees must ensure that their MLRO:

FC-3.1.10

In addition, insurance licensees must ensure that their MLRO is able to:

FC-3.1.11

If the position of MLRO falls vacant, the insurance licensee must appoint a permanent replacement (after obtaining CBB approval), within 120 calendar days of the vacancy occurring. Pending the appointment of a permanent replacement, the licensee must make immediate interim arrangements (including the appointment of an acting MLRO) to ensure continuity in the MLRO function's performance. These interim arrangements must be approved by the CBB.

FC-3.2.1

The MLRO is responsible for:

Annual Compliance Review

FC-4.1.1

Insurance licensees must implement procedures to ensure that staff who handle customer business (or are managerially responsible for such staff) make a report promptly to the MLRO if they know or suspect that a customer (or a person on whose behalf a customer may be acting) is engaged in money laundering or terrorism financing, or if the transaction or customer's conduct otherwise appears unusual or suspicious. These procedures must include arrangements for disciplining any member of staff who fails, without reasonable excuse, to make such a report.

FC-4.1.2

Suspicious transaction or conduct may include a claim made in suspicious circumstances, a policy surrendered soon after inception or in circumstances that would otherwise appear contrary to the interests of a reasonable policyholder. If a prospective policyholder does not pursue an application, this may be considered suspicious in itself. Item FC (iv) in Part B of Volume 3 (Insurance) provides further examples of transactions that may be suspicious or unusual.

FC-4.1.3

Where insurance licensees' internal processes provide for staff to consult with their line managers before sending a report to the MLRO, such processes must not be used to prevent reports reaching the MLRO, where staff have stated that they have knowledge or suspicion that a transaction may involve money laundering or terrorist financing.

FC-4.2.1

Insurance licensees must take reasonable steps to ensure that all reports made under Section FC-4.1 are considered by the MLRO (or his duly authorised delegate). Having considered the report and any other relevant information, if the MLRO (or his duly authorised delegate) still suspects that a person has been engaged in money laundering or terrorism financing, or the activity concerned is otherwise still regarded as suspicious, he must report the fact promptly to the relevant authorities. Where no report is made, the MLRO must document the reasons why.

FC-4.2.2

To take reasonable steps, as required under Paragraph FC-4.2.1, insurance licensees must:

FC-4.2.3

Reports to the relevant authorities made under Paragraph FC-4.2.1 must be sent to the Financial Intelligence Directorate at the Ministry of Interior and the CBB's Compliance Directorate using the Suspicious Transaction Reporting Online System (Online STR system). STRs in paper format will not be accepted.

FC-4.2.4

Insurance licensees must report all suspicious transactions or attempted transactions. This reporting requirement applies regardless of whether the transaction involves tax matters.

FC-4.2.5

Insurance licensees must retain all relevant details of STRs submitted to the relevant authorities, for at least five years.

FC-4.2.6

In accordance with the AML Law, insurance licensees, their Directors, officers and employees:

FC-4.3.1

Reports made by the MLRO or his duly authorised delegate under Section FC-4.2 must be sent electronically using the Suspicious Transaction Reporting Online System (Online STR system).

FC-4.3.2

The relevant authorities are:

Financial Intelligence Directorate (FID)
Ministry of Interior
P.O. Box 26698
Manama, Kingdom of Bahrain
Telephone: + 973 17 749397
Fax: + 973 17 715502
E-mail: bahrainfid@moipolice.bh

Director of the Compliance Directorate
Central Bank of Bahrain
P.O. Box 27
Manama, Kingdom of Bahrain
Telephone: 17 547107
Fax: 17 535673
E-mail: Compliance@cbb.gov.bh

FC-5.1.1

An insurance licensee must take reasonable steps to provide periodic training and information to ensure that staff who handle customer transactions, or are managerially responsible for such transactions, are made aware of:

FC-5.1.2

The information referred to in Paragraph FC-5.1.1 must be brought to the attention of relevant new employees of insurance licensees, and must remain available for reference by staff during their period of employment and by the CBB.

FC-5.1.3

Relevant new employees must be given AML/CFT training within three months of joining an insurance licensee.

FC-5.1.4

Insurance licensees must ensure that their AML/CFT training for relevant staff remains up-to-date, and is appropriate given the licensee's activities and customer base.

FC-5.1.5

The CBB would normally expect AML/CFT training to be provided to relevant staff at least once a year.

FC-5.1.6

Insurance licensees must develop adequate screening procedures to ensure high standards when hiring employees. These procedures must include controls to prevent criminals or their associates from being employed by licensees.

FC-5.1.6A

[This Paragraph was deleted in January 2022].

Policyholder/Transaction Records

Compliance Records

Training Records

Access

FC-7.1.1

Insurance licensees must give special attention to any dealings they may have with entities or persons domiciled in countries or territories which are:

FC-7.1.2

Whenever transactions with such parties have no apparent economic or visible lawful purpose, their background and purpose must be re-examined and the findings documented. If suspicions remain about the transaction, these must be reported to the relevant authorities in accordance with Section FC-4.2.

FC-7.1.3

Insurance licensees must apply enhanced due diligence measures to business relationships and transactions with natural and legal persons, and financial institutions, from countries where such measures are called for by the FATF. The type of enhanced due diligence measures applied must be effective and proportionate to the risks.

FC-7.1.4

With regard to jurisdictions identified as NCCTs or those which in the opinion of the CBB, do not have adequate AML/CFT systems, the CBB reserves the right to:

FC-7.2.1AA

Insurance licensees must implement and comply with United Nations Security Council resolutions relating to the prevention and suppression of terrorism and terrorist financing. Insurance licensees must freeze, without delay, the funds or other assets of, and to ensure that no funds or other assets are made available, directly or indirectly, to or for the benefit of, any person or entity either (i) designated by, or under the authority of, the United Nations Security Council under Chapter VII of the Charter of the United Nations, including in accordance with resolution 1267(1999) and its successor resolutions as well as Resolution 2178(2014) or (ii) designated as pursuant to Resolution 1373(2001).

FC-7.2.1

Insurance licensees must comply in full with the provisions of the UN Security Council Anti-terrorism Resolution No. 1373 of 2001 ('UNSCR 1373').

FC-7.2.2

[This Paragraph was deleted in January 2018].

FC-7.2.3

A copy of UNSCR 1373 is included in Part B of Volume 3 (Insurance), under 'Supplementary Information'.

FC-7.2.4

Insurance licensees must report to the CBB details of:

FC-7.2.5

For the purposes of Paragraph FC-7.2.4, 'funds or other financial resources' includes (but is not limited to) shares in any undertaking owned or controlled by the persons and entities referred to in Article 1, Paragraph (c) and (d) of UNSCR 1373, and any associated dividends received by the licensee.

FC-7.2.6

All reports or notifications under this Section must be made to the CBB's Compliance Directorate.

FC-7.2.7

See Section FC-4.3 for the Compliance Directorate's contact details.

FC-7.3.1

Without prejudice to the general duty of all insurance licensees to exercise the utmost care when dealing with persons or entities who might come under Article 1, Paragraphs (c) and (d) of UNSCR 1373, insurance licensees must not deal with any persons or entities designated by the CBB as potentially linked to terrorist activity.

FC-7.3.2

The CBB from time to time issues to licensees lists of designated persons and entities believed linked to terrorism. Licensees are required to verify that they have no dealings with these designated persons and entities, and report back their findings to the CBB. Names designated by the CBB include persons and entities designated by the United Nations, under UN Security Council Resolution 1267 ("UNSCR 1267").

FC-7.3.3

Insurance licensees must report to the relevant authorities, using the procedures contained in Section FC-4.2, details of any accounts or other dealings with designated persons and entities, and comply with any subsequent directions issued by the relevant authorities.

FC-8.1.1

The requirements in this Module are legally binding. Without prejudice to any other penalty imposed by the CBB Law, the Decree Law No. 4 or the Penal Code of the Kingdom of Bahrain, failure by a licensee to comply with this Module or any direction given hereunder shall result in the levying by the CBB, without need of a court order and at the CBB's discretion, of a fine of up to BD 20,000.

FC-8.1.2

Module EN provides further information on the assessment of financial penalties and the criteria taken into account prior to imposing such fines (reference to Paragraph EN-5.2.3). Other enforcement measures may also be applied by the CBB in response to a failure by a licensee to comply with this Module; these other measures are also set out in Module EN.

FC-8.1.3

The CBB will endeavour to assist insurance licensees to interpret and apply the requirements of this Module. Insurance licensees may seek clarification on any issue by contacting the Compliance Directorate (see Section FC-4.3 for contact details).

FC-8.1.4

Without prejudice to the CBB's general powers under the law, the CBB may amend, clarify or issue further directions on any provision of this Module from time to time, by notice to its licensees.

FATF Recommendations

IAIS: Guidance Paper on Anti-Money Laundering and Combating the Financing of Terrorism

Other Website References Relevant to AML/CFT

FC-10.1.1

Insurance licensees must ensure that they allocate appropriate resources and have in place systems and controls to deter, detect, and record instances of fraud or attempted fraud.

FC-10.1.2

Fraud may arise from internal sources originating from changes or weaknesses to processes, products and internal systems and controls. Fraud can also arise from external sources, such as claims fraud.

FC-10.1.3

Any actual or attempted fraud incident (however small) must be reported to the appropriate authorities (including the CBB) and followed up. Monitoring systems must be designed to measure fraud patterns that might reveal a series of related fraud incidents.

FC-10.1.4

Insurance licensees must ensure that a person is given overall responsibility for the prevention, detection and remedy of fraud, at a senior level of the organisation.

FC-10.1.5

Insurance licensees must ensure the effective segregation of functions and responsibilities, between different individuals and departments, such that the possibility of financial crime is reduced and that no single individual is able to initiate, process and control a transaction.

FC-10.1.6

Insurance licensees must provide regular training to their management and staff, to make them aware of potential fraud risks.

Advance Fee Fraud

Guidance Provided by the IAIS