FC-1.1 FC-1.1 General Requirements
Verification of Identity and Source of Funds
FC-1.1.1
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 thelicensee's senior management . They must be strictly adhered to.Amended: January 2020
Added: October 2010FC-1.1.2
Licensees must implement the customer due diligence measures outlined in Chapters 1, 2 and 3 when:(a) [This Sub-paragraph was deleted in July 2018];(b) Carrying out wire transfers (of the equivalent of US$1,000 or above) (particularly relevant formoney changers );(c) Establishing business relations with a new or existing customer;(d) A change to the signatory or beneficiary of an existing account or business relationship is made;(e)Customer documentation standards change substantially;(f) Thelicensee has doubts about the veracity or adequacy of previously obtained customer due diligence information;(g) Asignificant transaction takes place (see FC-2.2.3);(h) There is a material change in the way that an account is operated or in the manner in which the business relationship is conducted; or(i) There is a suspicion of money laundering or terrorist financing.Amended: January 2021
Amended: July 2018
October 2010FC-1.1.2A
Licensees must understand, and as appropriate, obtain information on the purpose and intended nature of the business relationship.Added: October 2017FC-1.1.2B
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.Added: October 2017FC-1.1.2C
Licensees must also review and update the customer’s risk profile based on their level of ML/TF/PF risk upon onboarding the customer and regularly throughout the life of the relationship. The risk management and mitigation measures implemented by alicensee must be commensurate with the risk profile of a particular customer or type of customer.Added: January 2022FC-1.1.3
Representative office licensees are not allowed to undertake business directly withcustomers . However, they may be assigned by the Head Office to contact new or existingcustomers on their behalf, in this case they must pay regard to (c) – (f) and (h-i) customer due diligence measures listed under FC-1.1.2 above.October 2010FC-1.1.4
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 apply. These simplified measures are set out in Section FC 1.10. For the representative office
licensees , 'customer' includes customers of the HO that the Representative office liaises with for general purposes. Examples might include general inquiries and inquiries regarding the accuracy of customer information.October 2010FC-1.1.5
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 and in the Guidance Notes (See Supplementary Information, FC-7 in Part B of the Rulebook). Enhanced requirements apply under certain high-risk situations: these requirements are contained in Sections FC-1.3 to FC-1.9 inclusive. Additional requirements apply where a
licensee is relying on a professional intermediary to perform certain parts of the customer due diligence process: these are detailed in Section FC-1.7. Simplified customer due diligence measures may apply in defined circumstances: these are set out in Section FC-1.10.October 2010FC-1.1.5A
[This Paragraph was deleted in October 2023].
Deleted: October 2023
Added: January 2021FC-1.1.5B
Money changers must not register persons identified as having high-risk profiles, including those whose CPR has expired, for the purposes of the use of online channels or applications, without conducting the enhanced due diligence requirements outlined in Section FC-1.3.Added: January 2021Verification of Third Parties
FC-1.1.6
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 2010FC-1.1.7
Where a customer is acting on behalf of a third party, the
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, thelicensee 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. Representative officelicensees must obtain a signed statement from all new customers confirming whether or not the customer is acting on their own behalf or not.October 2010FC-1.1.8
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 2010FC-1.1.9
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 business relations, thelicensee must establish the identity of that third party as well as the person conducting the business.October 2010Anonymous and Nominee Accounts
FC-1.1.10
Licensees must not establish or keep anonymous accounts or accounts in fictitious names. Wherelicensees 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 thelicensee and verified by it in accordance with the requirements specified in this Chapter.October 2010Timing of Verification
FC-1.1.11
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.Licensees must also adopt risk management procedures with respect to the conditions under which a customer may utilise the business relationship prior to verification. However, verification may be completed after receipt of funds in the case of non-face-to-face business, or the subsequent submission of CDD documents by the customer after undertaking initial customer due diligence provided that no disbursement of funds takes place until after the requirements of this Chapter have been fully met.Amended: January 2022
October 2010Incomplete Customer Due Diligence
FC-1.1.12
Where a
licensee is unable to comply with the requirements specified in Chapters 1, 2 and 3, it must consider whether to terminate the relationship or not proceed with the transaction. If it proceeds with the transaction (to avoid tipping off the customer), it should additionally consider whether it should file a suspicious transaction report.October 2010FC-1.1.13
See also Chapter FC-5, which covers the filing of suspicious transaction reports.
October 2010Non-Resident Accounts
FC-1.1.13A
Licensees that transact or deal with non-resident customers who are natural persons must have documented criteria for acceptance of business with such persons. For non-resident customers,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-1.1.14;(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 2022FC-1.1.13B
Licensees that transact or deal with non-resident customers who are natural persons 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 2022FC-1.1.13C
Licensees must not accept non-residents customers from high risk jurisdictions subject to a call for action by FATF.Added: January 2022FC-1.1.13D
Licensees must take adequate precautions and risk mitigation measures before onboarding non-resident customers from high risk jurisdictions. Thelicensees 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-1.1.13B; and(c) Countries that are the subject of any other sanctions.Added: January 2022FC-1.1.13E
[This Paragraph has been deleted in October 2023].
Deleted: October 2023
Added: January 2022FC-1.1.13F
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 2022FC-1.1.13G
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 non-resident customers.Added: January 2022FC-1.1.13H
Licensees must ensure that only the 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 2022FC-1.1.13I
[This Paragraph has been deleted in October 2023].
Deleted: October 2023
Added: January 2022FC-1.1.14
Licensees must follow the below CDD and customer on-boarding 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
