Executive Summary

Legal Basis

Evolution of Module

Superseded Requirements

AML-A.3.1

All Capital Market Licensees must comply with all the other relevant Modules in Volume 6 in addition to other applicable laws, rules and regulations.

AML-B.1.1

This Module contains the CBB's Directive relating to Anti-Money Laundering and Combating of Financial Crime and is issued under the powers available to the CBB under Article 38 of the CBB Law. The Directive under this Module is applicable to all Capital Market Licensees and relevant Persons, including but not limited to issuers of Securities or any Person acting on their behalf, licensed exchanges, licensed market operators, licensed clearing houses, depositories, investment firms, collective investment undertakings, business trusts, listed companies, crypto-asset licensees, any Person acting for or on behalf of listed companies, Persons accredited with receiving money relating to the subscription of Securities, custodian of Securities, settlement banks, dealers in Securities, share registrars, lead managers, underwriters, professional advisors, listing agents, auditors, financial analysts, credit rating agencies and any other Person concerned with dealing in Securities, irrespective of whether such Person is a Capital Market Licensees or not. These rules are issued by way of a legally-binding Directive.

AML-B.1.2

Capital Market Licensees that are subsidiaries of an overseas based group may apply additional AML/CFT policies and procedures, provided they satisfy the minimum requirements contained in this Module.

AML-B.1.3

[This Paragraph was deleted in January 2020].

AML-B.1.4

The requirements of this Module are in addition to and supplement 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 Capital Market Licensees). All Capital Market Licensees are therefore 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 6 Capital Markets), 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').

AML-B.2.1

Capital Market Licensees must apply the requirements in this Module to all their branches and subsidiaries operating both in the Kingdom of Bahrain and in foreign jurisdictions. Where local standards differ, the higher standard must be followed. Capital Market Licensees must pay particular attention to procedures in branches or subsidiaries in countries that do not or insufficiently apply the FATF Recommendations and do not have adequate AML/CFT procedures, systems and controls (see also Section AML-9.1).

AML-B.2.2

Where another jurisdiction's laws or regulations prevent a Capital Market Licensee (or any of its foreign branches or subsidiaries) from applying the same standards contained in this Module or higher, the Capital Market Licensee must immediately inform the CBB in writing.

AML-B.2.3

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

AML-B.2.4

Financial groups 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:

AML-B.3.1

[This Paragraph was deleted in January 2020].

AML-B.3.2

[This Paragraph was deleted in January 2020].

AML-B.3.3

[This Paragraph was deleted in January 2020].

AML-B.3.4

[This Paragraph was deleted in January 2020].

AML-B.3.5

[This Paragraph was deleted in January 2020].

AML-B.3.6

[This Paragraph was deleted in January 2020].

AML-B.3.7

[This Paragraph was deleted in January 2020].

AML-B.3.8

[This Paragraph was deleted in January 2020].

AML-B.3.9

[This Paragraph was deleted in January 2020].

AML-B.3.10

[This Paragraph was deleted in January 2020].

AML-C.1.1

[This Paragraph was deleted in January 2022].

AML-C.1.2

[This Paragraph was deleted in January 2022].

AML-C.1.3

[This Paragraph was deleted in January 2022].

AML-C.1.4

[This Paragraph was deleted in January 2022].

AML-C.1.6

Capital Market Licensees must perform enhanced measures where higher ML/TF/PF risks are identified to effectively manage and mitigate those higher risks.

AML-C.1.7

Capital Market Licensees must maintain and regularly review and update the documented risk assessment. The risk management and mitigation measures implemented by a Capital Market Licensee must be commensurate with the identified ML/TF/PF risks.

AML-C.1.8

Capital Market 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.

AML-C.2.1

[This Paragraph was deleted in January 2022].

AML-C.2.2

[This Paragraph was deleted in January 2022].

AML-C.2.3

[This Paragraph was deleted in January 2022].

AML-C.2.4

[This Paragraph was deleted in January 2022].

AML-C.2.5

[This Paragraph was deleted in January 2022].

AML-C.2.6

[This Paragraph was deleted in January 2022].

AML-C.2.7

Capital Market Licensees 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.

AML-C.2.8

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.

AML-C.2.9

The risk assessment must be properly documented, regularly updated and communicated to the capital market licensees 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 capital market licensees 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.

AML-C.2.10

Capital Market Licensees 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

AML-C.3.1

[This Paragraph was deleted in January 2022].

AML-C.3.2

[This Paragraph was deleted in January 2022].

AML-C.3.3

[This Paragraph was deleted in January 2022].

Verification of Identity and Source of Funds

Verification of Third Parties

Anonymous and Nominee Accounts

Timing of Verification

Incomplete Customer Due Diligence

Suspicious Wallet Addresses

Non-Resident Accounts

Natural Persons

Legal Entities or Legal Arrangements (such as trusts)

AML-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.

AML-1.3.2

Capital Market 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, capital Market 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 AML-1.3.1 include:

AML-1.3.3

In addition to the general rule contained in rule AML-1.3.1 above, special care is required in the circumstances specified in sections AML-1.4 to AML-1.8 inclusive.

AML-1.3.4

Additional enhanced due diligence measures for non-resident account holders may include the following:

AML-1.4.1

Capital Market Licensees must establish specific procedures for verifying customer identity where no face-to-face contact takes place.

AML-1.4.2

Where no face-to-face contact takes place, Capital Market Licensees must take additional measures (to those specified in section AML-1.2), in order to mitigate the potentially higher risk associated with such business. In particular, Capital Market Licensees must take measures:

AML-1.4.3

There are a number of checks that can provide a Capital Market Licensees with a reasonable degree of assurance as to the authenticity of the applicant. They include:

AML-1.4.4

Capital market services provided using digital channels or internet pose greater challenges for customer identification and AML/CFT purposes. Capital Market 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 AML-C.2. Capital Market Licensees which provide screen based trading or online services to their customers must set-up programmes or systems to highlight unusual transactions to enable the Capital Market Licensees to report all such transactions.

New Products, Practices and Technologies

Enhanced Monitoring

Licensee’s digital ID applications

Overseas branches

AML-1.5.1

Capital Market 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. Capital Market Licensees must utilise publicly available databases and information to establish whether a customer is a PEP.

AML-1.5.2

Capital Market 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. Capital Market Licensees must not accept a non-Bahraini PEP as a customer based on customer due diligence undertaken using digital ID applications.

AML-1.5.3

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

AML-1.5.3A

In cases of higher risk business relationships with such persons, mentioned in Paragraph AML-1.5.1, Capital Market Licensees must apply, at a minimum, the measures referred to in (b), (d) and (e) of Paragraph AML-1.5.3.

AML-1.5.3B

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

AML-1.5.3C

For the purpose of Paragraph AML-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.

AML-1.5.4

[This Paragraph was deleted in January 2020].

AML-1.6.1

Capital market 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. For clubs and societies registered with the General Organisation for Youth and Sports (GOYS), Capital Market Licensees must contact GOYS to clarify whether the account may be opened in accordance with the rules of GOYS.

AML-1.6.2

Capital Market Licensees are reminded that clubs and societies registered with GOYS may only have one account with banks in Bahrain.

AML-1.6.3

Charities should be subject to enhanced transaction monitoring by Capital Market Licensees. Capital Market Licensees should develop a profile of anticipated account activity (in terms of payee countries and recipient organizations in particular).

AML-1.6.4

Capital Market Licensees must provide a monthly report of all payments and transfers of BD3,000 (or equivalent in foreign currencies) and above, from accounts held by charities registered in Bahrain. The report must be submitted to the CBB's Compliance Unit (see section AML-4.4 for contact address), giving details of the amount transferred, account name, number and beneficiary name account and bank details. Capital Market Licensees must ensure that such transfers are in accordance with the spending plans of the charity (in terms of amount, recipient and country).

AML-1.6.5

Article 20 of Decree Law No. 21 of 1989 (issuing the Law of Social and Cultural Societies and Clubs and Private Organisations Operating in the Area of Youth and Sport and Private Institutions) provides that Capital Market Licensees may not accept or process any incoming or outgoing wire transfers from or to any foreign country on behalf of charity and non-profit organisations licensed by the Ministry of Social Development, until an official letter by the Ministry authorising the receipt or remittance of the funds has been obtained by the concerned Capital Market Licensees.

AML-1.6.6

The receipt of a Ministry letter mentioned in rule AML-1.6.5 above does not exempt the concerned Capital Market Licensees from conducting normal CDD measures as outlined in other parts of this Module.

AML-1.7.1

Where Capital Market Licensees receive pooled funds managed by professional intermediaries (such as investment and pension fund managers, stockbrokers and lawyers or authorized money transferors), they must apply CDD measures contained in section AML-1.8 to the professional intermediary. In addition, Capital Market Licensees must verify the identity of the beneficial owners of the funds where required as shown in rules AML-1.7.2 and AML-1.7.3 below.

AML-1.7.2

Where funds pooled in an account are not co-mingled (i.e. where there are 'sub-accounts' attributable to each beneficiary), all beneficial owners must be identified by the Capital Market Licensees and their identity verified in accordance with the requirements in section AML-1.2.

AML-1.7.3

For accounts held by intermediaries, where such funds are co-mingled, the Capital Market Licensees must make a reasonable effort (in the context of the nature and amount of the funds received) to look beyond the intermediary and determine the identity of the beneficial owners or underlying clients, particularly where funds are banked and then transferred onward to other financial institutions (e.g. in the case of accounts held on behalf of authorized money transferors). Where, however, the intermediary is subject to equivalent regulatory and Money Laundering regulation and procedures (and, in particular, is subject to the same due diligence standards in respect of its client base) the CBB will not insist upon all beneficial owners being identified, provided the bank has undertaken reasonable measures to determine that the intermediary has engaged in a sound customer due diligence process, consistent with the requirements in section AML-1.8.

AML-1.7.4

For accounts held by intermediaries from foreign jurisdictions, the intermediary must be subject to requirements to combat Money Laundering and terrorist financing consistent with the FATF Recommendations and the intermediary must be supervised for compliance with those requirements. The Capital Market Licensees must obtain documentary evidence to support the case for not carrying out customer due diligence measures beyond identifying the intermediary. The Capital Market Licensees must satisfy itself that the intermediary has identified the underlying beneficiaries and has the systems and controls to allocate the assets in the pooled accounts to the relevant beneficiaries.

AML-1.7.5

Where the intermediary is not empowered to provide the required information on beneficial owners (e.g. lawyers bound by professional confidentiality rules) or where the intermediary is not subject to the same due diligence standards referred to above, a Capital Market Licensees must not permit the intermediary to open an account or allow the account to continue to operate, unless specific permission has been obtained in writing from the CBB.

AML-1.8.1

A Capital Market Licensees must only accept customers introduced to it by other Capital Market Licensees, financial institutions or intermediaries, if it has satisfied itself that the introducer concerned is subject to FATF-equivalent measures and customer due diligence measures. Where Capital Market Licensees delegate part of the customer due diligence measures to an introducer, the responsibility for meeting the requirements of Chapters 1 and 2 remains with the Capital Market Licensee, not the introducer.

AML-1.8.2

Capital Market Licensees may only accept introduced business if all of the following conditions are satisfied:

AML-1.8.3

The Capital Market Licensees 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 Capital Market Licensees must also perform periodic reviews to verify whether the jurisdiction is in compliance with the FATF Recommendations.

AML-1.8.4

Should the Capital Market Licensees not be satisfied that the introducer is in compliance with the requirements of the FATF Recommendations, the Capital Market Licensees must not accept further introductions or discontinue the business relationship with the introducer.

Accounts with Shell Financial Institutions

AML-1.10.1

Capital Market Licensees may apply simplified customer due diligence measures, as described in paragraphs AML-1.10.2 to AML-1.10.8, if:

AML-1.10.2

For customers falling under category (b) in rule AML-1.10.1, the customer's name and contact information must be recorded. However, the verification, certification and due diligence requirements (contained in rules AML-1.2.3, AML-1.2.5, AML-1.2.6, AML-1.2.8, AML-1.2.9 and AML-1.2.11), may be dispensed with.

AML-1.10.3

[This Paragraph was deleted in July 2018].

AML-1.10.4

For customers falling under categories (c) to (g) in rule AML-1.10.1, the information required under rule AML-1.2.7 (for legal entities) must be obtained. However, the verification, certification and due diligence requirements (contained in rules AML-1.2.3, AML-1.2.5, AML-1.2.6, AML-1.2.8, AML-1.2.9 and AML-1.2.11), may be dispensed with.

AML-1.10.5

Capital Market Licensees wishing to apply simplified due diligence measures as allowed for under categories (c) to (g) of rule AML-1.10.1 must retain documentary evidence supporting their categorization of the customer.

AML-1.10.6

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.

AML-1.10.7

Capital Market Licensees may use authenticated SWIFT messages as a basis for confirmation of the identity of a financial institution under rule AML-1.10.1 (d) and (e) where it is dealing as principal. For customers coming under rule AML-1.10.1 (d) and (e), Capital Market 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.

AML-1.10.8

Simplified customer due diligence measures must not be applied where a Capital Market 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.

AML-1.10.8A

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

AML-1.10.9

[This Paragraph was deleted in July 2018].

AML-1.11.1

This Section, AML1.11, applies to a Capital Market Licensee when it provides correspondent account services or characteristic similar to correspondent account services.

AML-1.11.2

When providing correspondent account services, Capital Market Licensee, must gather sufficient information (e.g. through a questionnaire) about their respondent financial institution to understand the nature of the respondent's business. Factors to consider to provide assurance that satisfactory measures are in place at the respondent financial institution includes:

AML-1.11.3

Capital Market Licensees must implement the following additional measures, prior to opening a correspondent account:

AML-1.11.4

Where the correspondent account services involve a payable through account, Capital Market Licensees must be satisfied that:

AML-1.11.5

Capital Market Licensees must document the basis for their satisfaction that the requirements in Paragraphs AML-1.11.2, AML-1.11.3 and AML-1.11.4 are met.

AML-1.11.6

Capital Market Licensees must not enter into or continue correspondent account services relationship with another financial institution that does not have adequate controls against money laundering or terrorism financing activities, is not effectively supervised by the relevant authorities or is a shell financial institution. Capital Market Licensees must pay particular attention when entering into or continuing relationships with respondents located in jurisdictions that have poor KYC standards or have been identified by the FATF as being ‘non-cooperative’ in the fight against money laundering/terrorist financing.

AML-1.11.7

Capital Market Licensees must also take appropriate measures when establishing a correspondent account services relationship, to satisfy themselves that their respondent financial institutions do not permit their accounts to be used by shell financial institutions.

AML-1.11.8

In the case of correspondent account services relationships, the Capital Market Licensee generally does not have direct relationships with the customers of the respondent financial institution. Therefore, there is no expectation or requirement for the Capital Market Licensee to apply CDD on a respondent financial institution’s customer, which is, instead the responsibility of the respondent financial institution. Nonetheless, it is consistent with the risk-based approach for the Capital Market Licensee to have some general sense of the respondent financial institution’s customer base as part of ascertaining the risks associated with the respondent financial institution itself.

AML-1.12.1

Licensees are permitted to rely on third parties to perform elements of CDD measures and recordkeeping requirements stipulated in Chapter AML-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:

AML-1.12.2

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

AML-1.12.3

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.

AML-2.1.1

Capital Market 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 Capital Market Licensees. The documentation, and the Board's review and approval, must be made available upon request to the CBB.

AML-2.1.2

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.

AML-2.1.3

Capital Market Service Providers 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-10.5.3).

AML-2.1.4

In implementing the policies, procedures and monitoring tools for ensuring compliance with Paragraph AML-2.1.3, Capital Market Service Providers should consider the following:

Risk Based Monitoring

Automated Transaction Monitoring

Unusual Transactions or Customer Behaviour

Ongoing Monitoring

AML-2A.1 AML-2A.1 Applicability and CBB’s Approach to Transfer of Accepted Crypto-assets

AML-2A.2 AML-2A.2 Transfer of Accepted Crypto-assets and Wire Transfer

AML-3.1.1

Capital Market Licensees must appoint a Money Laundering Reporting Officer ("MLRO"). The position of the MLRO is a controlled function and the MLRO is an approved Person.

AML-3.1.2

For details of CBB's requirements regarding controlled functions and approved Persons, see the relevant licensing Module, such as MAE, CSD, or MIR Module. 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.

AML-3.1.3

The position of the 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 the MLRO may not be outsourced.

AML-3.1.4

Subject to rule AML-3.1.3, however, the position of the MLRO may otherwise be combined with other functions in the Capital Market Licensees, 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. Rule AML-3.1.7 requires that the MLRO is a Director or employee of the Capital Market Licensees, so the function may not be outsourced to a third-party employee.

AML-3.1.4A

For purposes of Paragraphs AML-3.1.3 and AML-3.1.4 above, Capital Market 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 Capital Market Licensees.

AML-3.1.5

Unless exempted by the CBB, a Capital Market Licensees must appoint deputy MLRO to act for the MLRO in his/her absence. The deputy MLRO must be resident in Bahrain unless otherwise agreed with the CBB.

AML-3.1.5A

Where a Capital Market Licensees seeks an exemption from appointment of Deputy MLRO, from the CBB, it must provide in writing, to the satisfaction of the CBB, the nature, scale and complexity of their business and the alternative arrangements that the Capital Market Licensees shall implement when the MLRO is not available to carry out the controlled function.

AML-3.1.6

Capital Market Licensees should note that although the MLRO may delegate some of his functions, either to other employees of the Capital Market Licensees or even (in the case of larger groups) to individuals performing similar functions for other group entities, the responsibility for compliance with the requirements of this Module remains with the Capital Market Licensees and the designated MLRO. The deputy MLRO should be able to support the MLRO discharge his responsibilities and to deputise for him in his absence.

AML-3.1.7

So that he can carry out his functions effectively, Capital Market Licensees must ensure that their MLRO:

AML-3.1.8

In addition, Capital Market Licensees must ensure that their MLRO is able to:

AML-3.1.9

If the position of the MLRO falls vacant, the Capital Market 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 Capital Market Licensees 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. Any action taken by the Deputy MLRO will be regarded as having the same authority as if it had been done by the MLRO.

AML-3.2.1

The MLRO is responsible for:

Annual Compliance Review

AML-4.1.1

Capital Market 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 the 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.

AML-4.1.2

Where Capital Market 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.

AML-4.2.1

Capital Market Licensees must take reasonable steps to ensure that all reports made under section AML-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.

AML-4.2.2

To take reasonable steps, as required under rule AML-4.2.1, Capital Market Licensees must:

AML-4.2.3

Reports to the Relevant Authorities made under rule AML-4.2.1 must be sent to the Financial Intelligence Directorate at the Ministry of the 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.

AML-4.2.4

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

AML-4.2.5

Capital Market Licensees must retain all relevant details of STRs submitted to the Relevant Authorities, for at least five years.

AML-4.2.6

In accordance with the AML Law, Capital Market Licensees, their Directors, officers and employees:

AML-4.3.1

The MLRO, whenever he becomes aware or believes, or has reason to believe that a client is involved in a Money Laundering offence, shall in addition to the reporting in section AML-4.2, inform the SRO on which the transaction is taking place, or where the Securities or cash is being held, in which case the SRO must, unless instructed otherwise by a Relevant Authority, stop the execution of the suspicious transaction and any Security deposited with the SRO or other Capital Market Licensee.

AML-4.4.1

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

AML-4.4.2

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 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

AML-5.1.1

Capital Market Licensees 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:

AML-5.1.2

The information referred to in rule AML-5.1.1 must be brought to the attention of relevant new employees of Capital Market Licensees and must remain available for reference by staff during their period of employment.

AML-5.1.3

Relevant new employees must be given AML/CFT training within three months of joining a Capital Market Licensee.

AML-5.1.4

Capital Market Licensees must ensure that their AML/CFT training for relevant staff remains up-to-date and is appropriate given the Capital Market Licensee's activities and customer base.

AML-5.1.5

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

AML-5.1.6

Capital Market 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 Capital Market Licensees.

AML-5.1.6A

[This Paragraph was deleted in January 2022].

CDD and Transaction Records

Compliance Records

Training Records

Access

AML-7.1.1

Any Person whose ownership alone or his ownership together with that of his minor children, or any other accounts under his disposal, or the ownership of any of his associate or affiliate companies amounts to 5% or more of any listed Security of a joint stock company, must notify the licensed exchange forthwith, which must in turn notify the CBB of this fact and the CBB may declare the name of the Person who owns such stake.

AML-7.1.2

[This Paragraph was deleted in October 2019].

AML-7.1.3

All persons must obtain CBB prior written approval to execute any order that will bring their ownership alone or their ownership together with their minor children, or the accounts standing under their disposal to 10% or more in any listed security. Any further increase of 1% or more shall also be subject to CBB prior written approval.

AML-7.1.4

Without prejudice to any greater penalty prescribed under the Prevention and Prohibition of the Money Laundering Law or any other law, a breach of the provisions of section AML-7.1 shall result in the cancellation of the transaction, and the Person in breach must bear all costs arising in this connection.

AML-7.2.1

No local or foreign company shall be listed on a Licensed Exchange, unless their documents of incorporation are complete and satisfy all legal requirements applicable in the Kingdom, or in their countries of incorporation to the extent that these are comparable to this Module, as the case may be.

AML-7.3.1

No Security shall be offered for public subscription in the Kingdom unless the issuing company is duly incorporated under the laws of the Kingdom, or the laws of its country of incorporation, as the case may be, satisfying all terms and conditions governing the public offering of Securities in the Kingdom, and abiding by the conditions and requirements stipulated under the Commercial Companies Law and the Disclosure Standards in force in the Kingdom.

No Security issued to the bearer shall be offered, listed, traded or deposited on a Licensed Exchange.

AML-7.4.1

A Security shall not be accepted in the Central Depository System unless its authenticity is approved by the concerned shares registrar and the client shall provide the Central Depository System with any amendment or change which may occur in such particulars.

AML-8.1.1

[This Paragraph was deleted in January 2020].

AML-8.1.1A

A Capital Market Licensee, whether at the commencement of or during a business relationship, must not accept cash from a customer, whether for investment purpose or as payment for services provided by the Capital Market Licensee except for payment of one time or non-recurring fees (symbolic fees) with a value not exceeding Two Hundred Bahraini Dinars for the services provided by the Capital Market Licensee such as account opening fees, fees for providing statements, fees for printing documents and certificates of various types and such other services.

AML-9.1.1

Capital Market Licensees must give special attention to any dealings they may have with entities or Persons domiciled in countries or territories which are:

AML-9.1.2

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 AML-4.2.

AML-9.1.3

Capital Market 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.

AML-9.1.4

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:

AML-9.2.1AA

Capital Market Licensees must implement and comply with United Nations Security Council resolutions relating to the prevention and suppression of terrorism and terrorist financing. Capital Market 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).

AML-9.2.1

Capital Market Licensees must comply in full with the provisions of the UN Security Council Anti-Terrorism Resolution No. 1373 of 2001 ('UNSCR 1373').

AML-9.2.2

[This Paragraph was deleted in January 2018].

AML-9.2.3

A copy of UNSCR 1373 is included in Part B of Volume 6 (Capital Markets), under 'Supplementary Information' on the CBB Website.

AML-9.2.4

Capital Market Licensees must report to the CBB details of:

AML-9.2.5

For the purposes of rule AML-9.2.4, '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, Paragraphs (c) and (d) of UNSCR 1373, and any associated dividends received by the Capital Market Licensees.

AML-9.2.6

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

AML-9.2.7

See section AML-4.3 for the Compliance Directorate's contact details.

AML-9.3.1

Without prejudice to the general duty of all Capital Market 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, Capital Market Licensees must not deal with any Persons or entities designated by the CBB as potentially linked to terrorist activity.

AML-9.3.2

The CBB from time-to-time issues to Capital Market Licensees lists of designated Persons and entities believed linked to terrorism. Capital Market 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').

AML-9.3.3

Capital Market Licensees must report to the Relevant Authorities, using the procedures contained in section AML-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.

AML-10.1.1

Without prejudice to any other penalty imposed by the CBB Law, the AML Law No. 4 or the Penal Code of the Kingdom of Bahrain, failure by a Capital Market Licensees 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 BD20,000.

AML-10.1.2

Module MIE provides further information on the CBB's general approach to enforcement and the criteria taken into account prior to imposing such fines (see section MIE-3.1). Other enforcement measures may also be applied by the CBB in response to a failure by a Capital Market Licensees to comply with this Module; these other measures are also set out in Module MIE.

AML-10.1.3

The CBB will endeavour to assist Capital Market Licensees to interpret and apply the requirements of this Module. Capital Market Licensees may seek clarification on any issue by contacting the Compliance Directorate (see section AML-4.3 for contact details).

AML-10.1.4

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 Capital Market Licensees.

FATF Recommendations

Other Website References Relevant to AML/CFT

AML-12.1.1

Capital Market 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.

AML-12.1.2

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, for instance through false invoicing or advance fee frauds. Further guidance — and occasional investor alerts — can be found on the CBB's website (www.cbb.gov.bh).

AML-12.1.3

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.

AML-12.1.4

Capital Market Licensees must ensure that a Person of sufficient seniority is given overall responsibility for the prevention, detection and remedying of fraud within the organisation.

AML-12.1.5

Capital Market 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.

AML-12.1.6

Capital Market Licensees must provide regular training to their management and staff, to make them aware of potential fraud risks.