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Location: Central Bank of Bahrain Volume 1—Conventional Banks > Part A > Business Standards > FC Financial Crime
  • FC Financial Crime

    • FC-A Introduction

      • FC-A.1 Purpose

        • Executive Summary

          • FC-A.1.1

            This Module applies, to all conventional bank licenseesG , a comprehensive framework of Rules and Guidance aimed at combating money laundering and terrorist financing. In so doing, it helps implement the FATF Recommendations on combating money laundering and financing of terrorism and proliferation, issued by the Financial Action Task Force (FATF), and the requirements of the Basel Committee 'Customer Due Diligence for Banks' paper, that are relevant to conventional bank licenseesG . (Further information on these can be found in Chapter FC-10.)

            Amended: October 2014
            October 07

          • FC-A.1.2

            The Module requires conventional bank licenseesG to have effective anti-money laundering ('AML') policies and procedures, in addition to measures for combating the financing of terrorism ('CFT'). The Module contains detailed requirements relating to customer due diligence, reporting and the role and duties of the Money Laundering Reporting Officer (MLRO). Furthermore, examples of suspicious activity are provided, to assist conventional bank licenseesG monitor transactions and fulfil their reporting obligations under Bahrain law.

            October 07

        • Legal Basis

          • FC-A.1.3

            This Module contains the Central Bank of Bahrain's ('CBB') Directive (as amended from time to time) regarding the combating of financial crime, and is issued under the powers available to the CBB under Article 38 of the Central Bank of Bahrain and Financial Institutions Law 2006 ('CBB Law'). The Directive in this Module is applicable to all conventional bank licenseesG .

            Amended: January 2011
            October 07

          • FC-A.1.4

            For an explanation of the CBB's rule-making powers and different regulatory instruments, see Section UG-1.1.

            October 07

      • FC-A.2 Module History

        • Changes to the Module

          • FC-A.2.1

            This Module was first issued in July 2004 by the BMA as part of the conventional principles volume. 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.

            October 07

          • FC-A.2.2

            When the CBB replaced the BMA in September 2006, the provisions of this Module remained in force. Volume 1 was updated in October 2007 to reflect the switch to the CBB; however, new calendar quarter dates were only issued where the update necessitated changes to actual requirements.

            October 07

          • FC-A.2.3

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

            Module Ref. Change Date Description of Changes
            FC-1.11.1 01/01/06 New text for syndicated business
            FC-1.1.3, FC-1.2.8, FC-1.2.11, FC-3.1.4 01/01/06 Correction of minor typos
            FC-A.1 10/2007 Updated to reflect new CBB Law: new Rule FC-A.1.3 introduced Categorising this Module as a Directive.
            FC-5.3.1 10/2007 Updated new e-mail address for the Compliance Directorate.
            FC-7.1.1 10/2007 Guidance on customer instructions moved from OM-7.1
            FC-1.11.1 & FC-4.3.5 04/2008 Minor guidance changes
            FC-1.6.5–6 07/2009 New authorization requirement in respect of transfers of funds to and from foreign countries on behalf of charities.
            FC-4.1.4 10/2009 Appointment of Deputy MLRO to require CBB prior approval.
            FC-A.1.3 01/2011 Clarified legal basis.
            FC-1.6.4, FC-4.2.1 01/2011 Corrected name of Compliance Directorate.
            FC-1.10A 01/2011 Added Section on Enhanced due diligence: cross border cash transactions equal to an above BD 6,000 by courier.
            FC-4.3.5 and FC-4.3.6 01/2011 Corrected minor typo.
            FC-4.1.6 10/2011 Clarified requirements for MLRO.
            FC-4.3 10/2011 Amended Section to allow for CBB-approved consultancy firm to do required sample testing and report under Paragraph FC-4.3.1.
            FC-4.3.5 and FC-4.3.6 01/2012 Amended to reflect the addition of approved consultancy firm.
            FC-1.6 01/2013 Added requirement dealing with sport associations registered with the Bahrain Olympic Committee (BOC).
            FC-1.11.1 01/2013 Updated reference to Bahrain Bourse ('BHB').
            FC-1.1.10 to FC-1.1.16, and FC-1.3.4 10/2013 Amended and updated due diligence requirements, including requirements in dealing with non-resident accounts.
            FC-1.1.13 to FC-1.1.13C 04/2014 Added requirements regarding the opening of accounts for non-residents or companies under formation.
            FC 10/2014 Updated to reflect February 2012 update to FATF Recommendations
            FC-1.5 07/2016 Aligned definition of PEPs with FATF and moved to Glossary.
            FC-4.1.1 07/2016 Deleted reference for Appendix FC-4 as requirements are covered under Form 3.
            FC-5.2.3 07/2016 Updated instructions for STR.
            FC-B.2.4 10/2016 Deleted reference to Module PCD
            FC-1.2.9A 01/2017 Added guidance paragraph on CR printing
            FC-8.2.1AA 04/2017 Implementing and complying with the United Nations Security Council resolutions requirement.
            FC-1.1.2B 10/2017 Amended paragraph on CDD requirements.
            FC-1.1.13D — FC-1.1.13H 10/2017 Added guidance paragraphs on opening accounts for companies under formation.
            FC-1.2.7 10/2017 Amended paragraph.
            FC-1.2.8A 10/2017 Added new paragraph on legal entities or legal arrangements CDD.
            FC-1.12 10/2017 Added new Section on Simplified CDD: For entities Operating under Regulatory Sandbox.
            FC-2.2.10 — FC-2.2.11 10/2017 Amended paragraphs on On-going CDD and Transaction Monitoring.
            FC-4.1.3A 10/2017 Added paragraph on combining the MLRO or DMLRO position with any other position within the licensee.
            FC-B.2.4 01/2018 Amended paragraph.
            FC-1.8.1 01/2018 Amended paragraph.
            FC-1.9.1 01/2018 Amended paragraph.
            FC-1.11.1 01/2018 Deleted sub-paragraph (g).
            FC-5.2.6 01/2018 Amended paragraph.
            FC-8.1.4 01/2018 Amended paragraph.
            FC-8.2.2 01/2018 Deleted paragraph.
            FC-1.1.2 07/2018 Deleted sub-paragraph (g).
            FC-1.10A 07/2018 Amended Section title deleting the threshold.
            FC-1.10A.2 07/2018 Amended Paragraph deleting the threshold.
            FC-1.11.3 07/2018 Deleted Paragraph.
            FC-1.11.8 07/2018 Deleted Paragraph.
            FC-1.12.10 07/2018 Amended Paragraph number (f).
            FC-4.3.2C 10/2018 Amended Paragraph and changed from Guidance to Rule.
            FC-1.11.1 01/2019 Amended references.
            FC-4.3.2 - FC-4.3.5 01/2019 Amended references.
            FC-7.1.2 01/2019 Amended references.
            FC-1.6.1A 07/2019 Amended Paragraph (GOYS changed to Ministry of Youth & Sport Affairs).
            FC-1.6.2 07/2019 Amended Paragraph (GOYS changed to Ministry of Youth & Sport Affairs).
            FC-1.6.2A 07/2019 Added a new Paragraph on opening additional bank accounts for Clubs and Youth Centres.
            FC-1.6.5 07/2019 Amended Paragraph on Fund Transfers.

        • Evolution of the Module

          • FC-A.2.4

            Prior to the introduction of Volume 1 (Conventional Banks) of the CBB Rulebook, the BMA had issued various circulars containing requirements covering different aspects of financial crime. These requirements were consolidated into Version 01 of this Module. Some of these requirements remain in their original form; others have since been updated. These circulars and their original location in this Module are listed below:

            Circular Ref. Date ofIssue Module Ref.(Version 01) Circular Subject
            BC/17/97 10 Nov 1997 FC-B.1 Money Laundering
            OG/308/89 14 Oct 1989 FC-B.1 Money Laundering
            EDBC/6/01 14 Oct 2001 FC-1, FC-4 — FC-7 Re: Money Laundering Regulation
            BC/1/02 27 Jan 2002 FC-3 FATF Special Recommendations on Terrorism Financing
            BC/3/00 5 Mar 2000 FC-1.5 Re: Accounts for Charity Organisations
            October 07

    • FC-B Scope of Application

      • FC-B.1 License Categories

        • FC-B.1.1

          This Module applies to all conventional bank licenseesG , including branches of banks incorporated outside of Bahrain, and Bahrain-incorporated subsidiaries of overseas groups.

          October 07

        • FC-B.1.2

          The requirements of 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. All conventional bank licenseesG 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 1 (conventional banks), 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').

          October 07

      • FC-B.2 Overseas Subsidiaries and Branches

        • FC-B.2.1

          Conventional bank licenseesG 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. Conventional bank licenseesG 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 FC-8.1).

          Amended: October 2014
          October 07

        • FC-B.2.2

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

          October 07

        • FC-B.2.3

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

          October 07

        • FC-B.2.4

          Financial groups (e.g. a bank with at least one financial entity as a subsidiary) 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:

          (a) The development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees;
          (b) An ongoing employee training programme;
          (c) An independent audit function to test the system;
          (d) Policies and procedures for sharing information required for the purposes of CDD and money laundering and terrorist financing risk management;
          (e) The provision at group-level compliance, audit, and/or AML/CFT functions of customer, account and transaction information from branches and subsidiaries when necessary for AML/CFT purposes; and
          (f) Adequate safeguards on the confidentiality and use of information exchanged.
          Amended: January 2018
          Amended: October 2016
          Added: October 2014

    • FC-1 Customer Due Diligence

      • FC-1.1 General Requirements

        • Verification of Identity and Source of Funds

          • FC-1.1.1

            Conventional bank licenseesG 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 Board of DirectorsG and senior managementG (as applicable) and must be strictly adhered to.

            Amended: October 2014
            October 07

          • FC-1.1.2

            Conventional bank licenseesG 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 licenseeG 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 licenseesG 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 licenseesG 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-1.1.3

            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 licenseeG 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 licenseesG must obtain a signed statement from all new customers confirming whether or not the customer is acting on their own behalf or not. This undertaking must be obtained prior to conducting any transactions with the customer concerned.

            October 07

          • FC-1.1.6

            Where a customer is acting on behalf of a third party, the conventional bank licenseeG 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 licenseeG 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 licenseesG 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, licenseeG s 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 licenseeG 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 licenseesG must not establish or keep anonymous accounts or accounts in fictitious names. Where conventional bank licenseesG 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 licenseeG and verified by it in accordance with the requirements specified in this Chapter.

            October 07

        • Timing of Verification — Companies under Formation or New Arrivals

          • FC-1.1.10

            Conventional bank licenseesG 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; or non face-to-face business, or the subsequent submission of CDD documents by the customer after initial face-to face contact, providing that no disbursement of funds takes place in any of the above cases until after the requirements of these Chapters have been fully met.

            Amended: October 2014
            Amended: October 2013
            October 07

        • Incomplete Customer Due Diligence

          • FC-1.1.11

            Where a conventional bank licenseeG 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-1.1.13

            Where a person who has not completed residence requirements in the Kingdom of Bahrain, presents a formal contract of employment from a company in Bahrain and is currently awaiting for his formal Bahraini identification documents, requests to open an account at a retail bank in Bahrain, the bank must open the requested account unless it has serious reasons to decline opening the account.

            Amended: April 2014
            Added: October 2013

          • FC-1.1.13A

            In complying with the requirements of Paragraph FC-1.1.13, 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: April 2014

          • FC-1.1.13B

            Where a company under formation in the Kingdom of Bahrain, which presents formal documents providing evidence that it has applied for and is awaiting its final commercial registration (CR), requests to open an account at a retail bank in Bahrain, the bank must open the requested account unless it has serious reasons to decline.

            Added: April 2014

          • FC-1.1.13C

            In complying with the requirements of Paragraph FC-1.1.13B, examples of serious reasons for denying the request for opening an account may include instances where a potential customer's conduct or activity appears suspicious or one of the principal's (shareholder or management) or the company under formation appears in one of the local, regional or international sanction lists.

            Added: April 2014

          • FC-1.1.13D

            Retail banks shall continue to open accounts for companies under formation, which have been granted a commercial registration but not yet completed all other formalities.

            Added: October 2017

          • FC-1.1.13E

            In order for the companies to operate the accounts, they shall be required to complete the KYC and other establishment requirements within a period of six months from the date of opening the account. The period of six months shall be extendable subject to a bilateral understanding between the two parties, taking into account the official required procedures of obtaining the license.

            Added: October 2017

          • FC-1.1.13F

            If the company under formation did not complete the license formalities nor submitted all required KYC documents to the subject bank within the agreed period and the company is not cooperating with the bank, the account of the company must be classified as dormant.

            Added: October 2017

          • FC-1.1.13G

            Retail banks must notify the Ministry of Industry, Commerce and Tourism when the account of companies under formation is classified as dormant and/or when the initial capital is withdrawn.

            Added: October 2017

          • FC-1.1.13H

            Closure of the accounts thereafter shall be subject to the discretion of the bank.

            Added: October 2017

          • FC-1.1.14

            Accounts opened for GCC nationals, not resident in Bahrain, are subject to the customer due diligence measures outlined in Sections FC-1.2 (face-to-face) or FC-1.4 (non face-to-face). Where a customer is resident outside of the GCC, the guidance provided in Section FC-1.3 should be referred to.

            Added: October 2013

          • FC-1.1.15

            Where a non-resident account is opened, the customer must be informed by the conventional bank licenseeG 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-1.2 Face-to-face Business

        • Natural Persons

          • FC-1.2.1

            If the customer is a natural person, conventional bank licenseesG must obtain and record the following information (in hard copy or electronic form), before providing financial services of any kind:

            (a) Full legal name and any other names used;
            (b) Full permanent address (i.e. the residential address of the customer; a post office box is insufficient);
            (c) Date and place of birth;
            (d) Nationality;
            (e) Passport number (if the customer is a passport holder);
            (f) CPR or Iqama number (for residents of Bahrain or GCC states);
            (g) Telephone/fax number and email address (where applicable);
            (h) Occupation or public position held (where applicable);
            (i) Employer's name and address (if self-employed, the nature of the self-employment);
            (j) Type of account, and nature and volume of anticipated business dealings with the conventional bank licenseeG ;
            (k) Signature of the customer(s)G ; and
            (l) Source of funds.
            October 07

          • FC-1.2.2

            See Part B, Volume 1 (Conventional Banks), for Guidance Notes on source of funds (FC-1.2.1 (1)) and requirements for residents of Bahrain (FC-1.2.1 (c) & (f)).

            October 07

          • FC-1.2.3

            Conventional bank licenseesG must verify the information in Paragraph FC-1.2.1 (a) to (f) by the following methods below; at least one of the copies of the identification documents mentioned in (a) and (b) below must include a clear photograph of the customer:

            (a) Confirmation of the date of birth and legal name, by taking a copy of a current valid official original identification document (e.g. birth certificate, passport, CPR or Iqama);
            (b) Confirmation of the permanent residential address by taking a copy of a recent utility bill, bank statement or similar statement from another licenseeG or financial institution, or some form of official correspondence or official documentation card, such as CPR, from a public/governmental authority, or a tenancy agreement or record of home visit by an official of the conventional bank licenseeG ; and
            (c) Where appropriate, direct contact with the customer by phone, letter or email to confirm relevant information, such as residential address information.
            October 07

          • FC-1.2.4

            Any document copied for the purpose of identification verification must be an original. An authorised official of the licenseeG must certify the copy, by writing on it the words 'original sighted', together with the date and his signature. Equivalent measures must be taken for electronic copies.

            October 07

          • FC-1.2.5

            Identity documents which are not obtained by an authorised official of the licenseeG in original form (e.g. due to a customer sending a copy by post following an initial meeting) must instead be certified (as per FC-1.2.4) by one of the following from a GCC or FATF member state:

            (a) A lawyer;
            (b) A notary;
            (c) A chartered/certified accountant;
            (d) An official of a government ministry;
            (e) An official of an embassy or consulate; or
            (f) An official of another licensed financial institution or of an associate company of the licenseeG .
            October 07

          • FC-1.2.6

            The individual making the certification under FC-1.2.5 must give clear contact details (e.g. by attaching a business card or company stamp). The conventional bank licenseeG must verify the identity of the person providing the certification through checking membership of a professional organisation (for lawyers or accountants), or through checking against databases/websites, or by direct phone or email contact.

            October 07

        • Legal Entities or Legal Arrangements (such as trusts)

          • FC-1.2.7

            If the customer is a legal entity or a legal arrangement such as a trust, the conventional bank licenseeG must obtain and record the following information from original identification documents, databases or websites, in hard copy or electronic form, to identify the customer and to take reasonable measures to verify its identity, legal existence and structure:

            (a) The entity's full name and other trading names used;
            (b) Registration number (or equivalent);
            (c) Legal form and proof of existence;
            (d) Registered address and trading address (where applicable);
            (e) Type of business activity;
            (f) Date and place of incorporation or establishment;
            (g) Telephone, fax number and email address;
            (h) Regulatory body or listing body (for regulated activities such as financial services and listed companies);
            (hh) The names of the relevant persons having a senior management position in the legal entity or legal arrangement;
            (i) Name of external auditor (where applicable);
            (j) Type of account, and nature and volume of anticipated business dealings with the conventional bank licenseeG ; and
            (k) Source of funds.
            Amended: October 2017
            October 07

          • FC-1.2.8

            The information provided under FC-1.2.7 must be verified by obtaining certified copies of the following documents, as applicable (depending on the legal form of the entity):

            (a) Certificate of incorporation and/or certificate of commercial registration or trust deed;
            (b) Memorandum of association;
            (c) Articles of association;
            (d) Partnership agreement;
            (e) Board resolution seeking the banking services (only necessary in the case of private or unlisted companies);
            (f) Identification documentation of the authorised signatories to the account (certification not necessary for companies listed in a GCC/FATF state);
            (g) Copy of the latest financial report and accounts, audited where possible (audited copies do not need to be certified); and
            (h) List of authorised signatories of the company for the account and a Board resolution (or other applicable document) authorising the named signatories or their agent to operate the account (resolution only necessary for private or unlisted companies).
            Amended: October 2014
            Amended: January 2012
            October 07

          • FC-1.2.8A

            For customers that are legal persons, conventional bank licenseesG must identify and take reasonable measures to verify the identity of beneficial ownersG through the following information:

            (a) The identity of the natural person(s) who ultimately have a controlling ownership interest in a legal person, and
            (b) To the extent that there is doubt under (a) as to whether the person(s) with the controlling ownership interest is the beneficial ownerG (s), or where no natural person exerts control of the legal person or arrangement through other means; and
            (c) Where no natural person is identified under (a) or (b) above, the identity of the relevant natural person who holds the position of senior managing official.
            Added: October 2017

          • FC-1.2.9

            Documents obtained to satisfy the requirements in FC-1.2.8 above must be certified in the manner specified in FC-1.2.4 to FC-1.2.6.

            October 07

          • FC-1.2.9A

            For the purpose of Paragraph FC-1.2.8(a), the requirement to obtain a certified copy of the commercial registration, may be satisfied by obtaining a commercial registration abstract printed directly from the Ministry of Industry, Commerce and Tourism's website, through "SIJILAT Commercial Registration Portal".

            Added: January 2017

          • FC-1.2.10

            The documentary requirements in FC-1.2.8 above do not apply in the case of FATF/GCC listed companies: see Section FC-1.11 below. Also, the documents listed in FC-1.2.8 above are not exhaustive: for customers from overseas jurisdictions, documents of an equivalent nature may be produced as satisfactory evidence of a customer's identity.

            October 07

          • FC-1.2.11

            LicenseesG must also obtain and document the following due diligence information. These due diligence requirements must be incorporated in the licenseeG 's new business procedures:

            (a) Enquire as to the structure of the legal entity or trust sufficient to determine and verify the identity of the ultimate beneficial owner of the funds, the ultimate provider of funds (if different), and the ultimate controller of the funds (if different);
            (b) Ascertain whether the legal entity has been or is in the process of being wound up, dissolved, struck off or terminated;
            (c) Obtain the names, country of residence and nationality of DirectorG s or partners (only necessary for private or unlisted companies);
            (d) Require, through new customer documentation or other transparent means, updates on significant changes to corporate ownership and/or legal structure;
            (e) Obtain and verify the identity of shareholderG s holding 20% or more of the issued capital (where applicable). The requirement to verify the identity of these shareholderG s does not apply in the case of FATF/GCC listed companies;
            (f) In the case of trusts or similar arrangements, establish the identity of the settlor(s), trustee(s), and beneficiaries (including making such reasonable enquiries as to ascertain the identity of any other potential beneficiary, in addition to the named beneficiaries of the trust); and
            (g) Where a licenseeG has reasonable grounds for questioning the authenticity of the information supplied by a customer, conduct additional due diligence to confirm the above information.
            October 07

          • FC-1.2.12

            For the purposes of Paragraph FC-1.2.11, acceptable means of undertaking such due diligence might include taking bank references; visiting or contacting the company by telephone; undertaking a company search or other commercial enquiries; accessing public and private databases (such as stock exchange lists); making enquiries through a business information service or credit bureau; confirming a company's status with an appropriate legal or accounting firm; or undertaking other enquiries that are commercially reasonable.

            October 07

          • FC-1.2.13

            Where a licenseeG is providing investment management services to a regulated mutual fund, and is not receiving investors' funds being paid into the fund, it may limit its CDD to confirming that the administrator of the fund is subject to FATF-equivalent customer due diligence measures (see FC-1.9 for applicable measures). Where there are reasonable grounds for believing that investors' funds being paid into the fund are not being adequately verified by the administrator, then the licenseeG should consider terminating its relationship with the fund.

            October 07

      • FC-1.3 Enhanced Customer Due Diligence: General Requirements

        • 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.

          October 07

        • FC-1.3.2

          The additional information referred to in Paragraph FC-1.3.1 might include documents (either in hard copy or electronic format) relating to the following:

          (a) Evidence of a person's permanent address through the use of a credit reference agency search or through independent verification by home visit;
          (b) A personal reference (e.g. by an existing customer of the conventional bank licenseeG );
          (c) Another licensed entity's reference and contact with the concerned licenseeG regarding the customer;
          (d) Documentation outlining the customer's source of wealth;
          (e) Documentation outlining the customer's source of income; and
          (f) Independent verification of employment, or public position held.
          October 07

        • 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-1.9 inclusive.

          October 07

        • FC-1.3.4

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

          (a) References provided by a regulated bank from a FATF country;
          (b) Certified copies of bank statements for a recent 3-month period; or
          (c) References provided by a known customer of the conventional bank licenseeG .
          Added: October 2013

      • FC-1.4 Enhanced Customer Due Diligence: Non face-to-face Business and New Technologies

        • FC-1.4.1

          Conventional bank licenseesG must establish specific procedures for verifying customer identity where no face-to-face contact takes place.

          October 07

        • FC-1.4.2

          Where no face-to-face contact takes place, conventional bank licenseesG 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, conventional bank licenseesG must take measures:

          (a) To ensure that the customer is the person they claim to be; and
          (b) To ensure that the address provided is genuinely the customer's.
          October 07

        • FC-1.4.3

          There are a number of checks that can provide a conventional bank licenseeG with a reasonable degree of assurance as to the authenticity of the applicant. They include:

          (a) Telephone contact with the applicant on an independently verified home or business number;
          (b) With the customer's consent, contacting an employer to confirm employment, via phone through a listed number or in writing; and
          (c) Salary details appearing on recent bank statements.
          October 07

        • FC-1.4.4

          Financial services provided via post, telephone or internet pose greater challenges for customer identification and AML/CFT purposes. Conventional bank licenseesG must establish procedures to prevent the misuse of technological developments in money laundering or terrorist financing schemes. Specifically, banks which provide significant electronic and internet banking services to their customers, should connect a programme to such systems to highlight all unusual transactions so as to enable the concerned bank to report such transactions. Conventional bank licenseesG must also ensure that they comply with any e-commerce laws and/or CBB directives or regulations issued from time to time.

          October 07

        • FC-1.4.5

          Conventional bank licenseesG must identify and assess the money laundering or terrorist financing risks that may arise in relation to:

          (a) The development of new products and new business practices, including new delivery mechanisms; and
          (b) The use of new or developing technologies for both new and pre-existing products.
          Added: October 2014

        • FC-1.4.6

          For purposes of Paragraph FC-1.4.5, such a risk assessment must take place prior to the launch of the new products, business practices or the use of new or developing technologies. Conventional bank licenseesG must take appropriate measures to manage and mitigate those risks.

          Added: October 2014

      • FC-1.5 Enhanced Customer Due Diligence: Politically Exposed Persons ('PEPs')

        • FC-1.5.1

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

          Amended: July 2016
          Amended: October 2014
          October 07

        • FC-1.5.2

          Conventional bank licenseesG must establish a client acceptance policy with regard to PEPsG , taking into account the reputational and other risks involved. Senior management approval must be obtained before a PEPG is accepted as a customer.

          October 07

        • FC-1.5.3

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

          (a) Analysis of complex financial structures, including trusts, foundations or international business corporations;
          (b) A written record in the customer file to establish that reasonable measures have been taken to establish both the source of wealth and the source of funds;
          (c) Development of a profile of anticipated customer activity, to be used in on-going monitoring;
          (d) Approval of senior management for allowing the customer relationship to continue; and
          (e) On-going account monitoring of the PEP'sG account by senior management (such as the MLRO).
          October 07

        • FC-1.5.3A

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

          Added: October 2014

        • FC-1.5.3B

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

          Added: October 2014

        • 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 PEPG whether such association is due to the person being an employee or partner of the PEPG or of a firm represented or owned by the PEPG , or family links or otherwise.

          Added: October 2014

        • FC-1.5.4

          [This Paragraph was deleted in July 2016 and the definition moved to the Glossary under Part B.]

          Deleted: July 2016
          Amended: October 2014
          October 07

      • FC-1.6 Enhanced Due Diligence: Charities, Clubs and Other Societies

        • FC-1.6.1

          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.

          Amended: October 2014
          Amended: January 2013
          October 07

        • FC-1.6.1A

          For the purpose of Paragraph FC-1.6.1, for clubs and societies registered with the Ministry of Youth and Sport Affairs, conventional bank licenseesG must contact the Ministry to clarify whether the account may be opened in accordance with the rules of the Ministry. In addition, in the case of sport associations registered with the Bahrain Olympic Committee (BOC), conventional bank licenseesG must contact BOC to clarify whether the account may be opened in accordance with the rules of BOC.

          Amended: July 2019
          Added: January 2013

        • FC-1.6.2

          Conventional bank licenseesG are reminded that clubs and societies registered with the Ministry of Youth and Sport Affairs may only have one account with banks in Bahrain.

          Amended: July 2019
          Amended: January 2013
          October 07

        • FC-1.6.2A

          Pursuant to Article (20) of the Consolidated Financial Regulations for Sports Clubs issued in 2005, Conventional bank licenseesG must not change or open additional bank accounts for Clubs and Youth Centres without obtaining the prior approval of the Ministry of Youth and Sport Affairs.

          Added: July 2019

        • FC-1.6.3

          Charities should be subject to enhanced transaction monitoring by banks. Conventional bank licenseesG should develop a profile of anticipated account activity (in terms of payee countries and recipient organisations in particular).

          Amended: January 2013
          October 07

        • FC-1.6.4

          Conventional bank licenseesG 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 Directorate Unit (see FC-5.3 for contact address), giving details of the amount transferred, account name, number and beneficiary name account and bank details. Conventional bank licenseesG must ensure that such transfers are in accordance with the spending plans of the charity (in terms of amount, recipient and country).

          Amended: January 2013
          Amended: January 2011
          October 07

        • FC-1.6.5

          Article 20 of Decree Law No. 21 of 1989 (issuing the Law of Social and Cultural Societies and Clubs and Private Organizations Operating in the Area of Youth and Sport and Private Institutions) provides that Conventional bank licenseesG must not accept or process any incoming or outgoing fund transfers in any form (wire transfer, cheques, etc.) from or to any foreign association on behalf of charity and non-profit organisations, societies and clubs licensed by the Ministry of Labour and Social Development or the Ministry of Youth and Sport Affairs without the prior approval of the relevant Ministry.

          Amended: July 2019
          Amended: October 2014
          Added July 09

        • FC-1.6.6

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

          Added July 09

      • FC-1.7 Enhanced Due Diligence: 'Pooled Funds'

        • FC-1.7.1

          Where conventional bank licenseesG receive pooled funds managed by professional intermediaries (such as investment and pension fund managers, stockbrokers and lawyers or authorised money transferors), they must apply CDD measures contained in Section FC-1.9 to the professional intermediary. In addition, conventional bank licenseesG must verify the identity of the beneficial owners of the funds where required as shown in Paragraphs FC-1.7.2 or FC-1.7.3 below.

          October 07

        • FC-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 conventional bank licenseeG , and their identity verified in accordance with the requirements in Section FC-1.2.

          Amended: October 2014
          October 07

        • FC-1.7.3

          For accounts held by intermediaries resident in Bahrain, where such funds are co-mingled, the conventional bank licenseeG 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 authorised 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 conventional bank licenseeG has undertaken reasonable measures to determine that the intermediary has engaged in a sound customer due diligence process, consistent with the requirements in Section FC-1.8.

          Amended: October 2014
          October 07

        • FC-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 bank must obtain documentary evidence to support the case for not carrying out customer due diligence measures beyond identifying the intermediary. The bank 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. The due diligence process contained in Section FC-1.8 must be followed.

          Amended: October 2014
          October 07

        • FC-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 bank 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.

          October 07

      • FC-1.8 Enhanced Due Diligence for Correspondent Banking Relationships

        • FC-1.8.1

          Conventional bank licenseesG which intend to act as correspondent banks must gather sufficient information (e.g. through a questionnaire) about their respondent banks to understand the nature of the respondent's business. Factors to consider to provide assurance that satisfactory measures are in place at the respondent bank include:

          (a) Information about the respondent bank's ownership structure and management;
          (b) Major business activities of the respondent and its location (i.e. whether it is located in a FATF compliant jurisdiction) as well as the location of its parent (where applicable);
          (c) Where the customers of the respondent bank are located;
          (d) The respondent's AML/CFT controls;
          (e) The purpose for which the account will be opened;
          (f) Confirmation that the respondent bank has verified the identity of any third party entities that will have direct access to the correspondent banking services without reference to the respondent bank (e.g. in the case of 'payable through' accounts);
          (g) The extent to which the respondent bank performs on-going due diligence on customers with direct access to the account, and the condition of bank regulation and supervision in the respondent's country (e.g. from published FATF reports). Banks should take into account the country where the respondent bank is located and whether that country abides by the FATF Recommendations when establishing correspondent relationships with foreign banks. Banks should obtain where possible copies of the relevant laws and regulations concerning AML/CFT and satisfy themselves that respondent banks have effective customer due diligence measures consistent with the FATF Recommendations;
          (h) Confirmation that the respondent bank is able to provide relevant customer identification data on request to the correspondent bank; and
          (i) Whether the respondent bank has been subject to a money laundering or terrorist financing investigation.
          Amended: January 2018
          Amended: October 2014
          Amended: April 2011
          October 07

        • FC-1.8.2

          Conventional bank licenseesG must implement the following additional measures, prior to opening a correspondent banking relationship:

          (a) Complete a signed statement that outlines the respective responsibilities of each institution in relation to money laundering detection and monitoring responsibilities; and
          (b) Ensure that the correspondent banking relationship has the approval of senior management.
          Amended: April 2011
          October 07

        • FC-1.8.3

          Conventional bank licenseesG must refuse to enter into or continue a correspondent banking relationship with a bank incorporated in a jurisdiction in which it has no physical presence and which is unaffiliated with a regulated financial group (i.e. 'shell banks', see Section FC-1.10). Banks must pay particular attention when entering into or continuing relationships with respondent banks 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.

          October 07

      • FC-1.9 Introduced Business from Professional Intermediaries

        • FC-1.9.1

          A conventional bank licenseeG may only accept customers introduced to it by other financial institutions or intermediaries, if it has satisfied itself that the financial institution or intermediary concerned is subject to FATF-equivalent measures and customer due diligence measures. Where conventional bank licenseesG delegate part of the customer due diligence measures to another financial institution or intermediary, the responsibility for meeting the requirements of Chapters 1 and 2 remains with the conventional bank licenseeG , not the third party.

          Amended: January 2018
          October 07

        • FC-1.9.2

          Conventional bank licenseesG may only accept introduced business if all of the following conditions are satisfied:

          (a) The customer due diligence measures applied by the introducer are consistent with those required by the FATF Recommendations;
          (b) A formal agreement is in place defining the respective roles of the licenseeG and the introducer in relation to customer due diligence measures. The agreement must specify that the customer due diligence measures of the introducer will comply with the FATF Recommendations;
          (c) The introducer immediately provides all necessary information required in Paragraph FC-1.2.1 or FC-1.2.7 and FC-1.1.2A pertaining to the customer's identity, the identity of the customer and beneficial owner of the funds (where different), the purpose of the relationship and, where applicable, the party/parties on whose behalf the customer is acting; also, the introducer has confirmed that the conventional bank licenseeG will be allowed to verify the customer due diligence measures undertaken by the introducer at any stage; and
          (d) Written confirmation is provided by the introducer confirming that all customer due diligence measures required by the FATF Recommendations have been followed and the customer's identity established and verified. In addition, the confirmation must state that any identification documents or other customer due diligence material can be accessed by the conventional bank licenseeG and that these documents will be kept for at least five years after the business relationship has ended.
          Amended: October 2014
          October 07

        • FC-1.9.3

          The conventional bank licenseeG 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 conventional bank licenseeG must also perform periodic reviews to verify whether the jurisdiction is in compliance with the FATF Recommendations.

          Amended: October 2014
          October 07

        • FC-1.9.4

          Should the conventional bank licenseeG not be satisfied that the introducer is in compliance with the requirements of the FATF Recommendations, the licenseeG must conduct its own customer due diligence on introduced business, or not accept further introductions, or discontinue the business relationship with the introducer.

          Amended: October 2014
          October 07

      • FC-1.10 Shell Banks

        • FC-1.10.1

          Conventional bank licenseesG must not establish business relations with banks, which have no physical presence or 'mind and management' in the jurisdiction in which they are licensed and which is unaffiliated with a regulated financial group ('shell banks'). Banks must not knowingly establish relations with banks that have relations with shell banks.

          October 07

        • FC-1.10.2

          Conventional bank licenseesG must make a suspicious transaction report to the Anti-Money Laundering Unit and the Compliance Directorate if they are approached by a shell bank or an institution they suspect of being a shell bank.

          October 07

      • FC-1.10A Enhanced Due Diligence: Cross Border Cash Transactions by Courier

        Amended: July 2018

        • FC-1.10A.1

          The cross-border movement of cash funds warrants special attention under the FATF Recommendations where transactions are large in value (Recommendation 12), in addition to the general requirement under Recommendation 32 to verify monitor, declare and keep records of all cross-border transfers of cash. Cash shipments are therefore subject to inspection and investigation procedures by the Customs Directorate of the Kingdom of Bahrain. There are also certain specific legal measures mentioned below which are relevant to cross-border cash shipments. Under Article 4 of Decree Law No. 4 of 2001, licenseesG of the CBB are required to comply with the CBB's Rules and Regulations concerning the prevention and prohibition of money laundering, which include regulations concerning the cross-border movement of cash. Also, licenseesG ' attention is drawn to the disclosure provisions of Decree Law No 54 of 2006 and Ministerial Order No 6 of 2008 with respect to cross-border transportation of funds (see Part B of the Rulebook for Decree Law No 54). LicenseesG are also reminded of the rules of the unified customs arrangements of the Gulf Cooperation Council as laid out in Decree Law No 10 of 2002. With respect to the above Law No. 4 of 2001 and the concerned parts of other legislation mentioned above, all money changers must implement the enhanced measures below in respect of all cash received from foreign countries or sold/transferred to foreign countries.

          Amended: October 2014
          Adopted: January 2011

        • FC-1.10A.2

          Cash coming into Bahrain via courier (whether a representative of a Bahrain money changer or a foreign institution) must be accompanied by original documentation stating the source of funds and identity of the originator of the funds. Furthermore, the documentation must state the full name and address of the beneficiary of the funds. This documentation must be signed in original by (a representative) of the originator of the cash. This means that where a courier is importing cash via any customs point of entry (e.g. via the Causeway or the Airport), the aforementioned courier must carry original documentation which clearly shows the source of funds and identity of the originator of the funds and the intended beneficiaries' names and address.

          Amended: July 2018
          Adopted: January 2011

        • FC-1.10A.3

          In the case of incoming cash, the courier must carry original documentation signed by the originator stating whether the cash shipment is for local use or for onward transmission.

          Adopted: January 2011

        • FC-1.10A.4

          If the imported cash is for onward transmission, the original documentation must provide the full name and address of the final beneficiaries, as well as the local recipient (e.g. the bank).

          Adopted: January 2011

        • FC-1.10A.5

          Failure to provide complete and detailed original signed documentation by the originator of the funds referred to in Paragraph FC-1.10A.2 may cause the cash shipment to be blocked, whereupon the blocking costs will be borne by the concerned money changer in Bahrain. Licensees are also reminded of the penalties and enforcement measures in Law No. 4 of 2001, Decree Law No. 54 of 2006, Ministerial Order No. 7 of 2001 issued by the Minister of Finance and National Economy, the rules of the unified customs arrangements of the Gulf Cooperation Council as laid out in Decree Law No. 10 of 2002 and the CBB Law No. 64 of 2006.

          Adopted: January 2011

      • FC-1.11 Simplified Customer Due Diligence

        • FC-1.11.1

          Conventional bank licenseesG may apply simplified customer due diligence measures, as described in Paragraphs FC-1.11.2 to FC-1.11.7, if:

          (a) The customer is the Central Bank of Bahrain ('CBB'), the Bahrain Bourse ('BHB') or a licenseeG of the CBB;
          (b) The customer is a Ministry of a Gulf Cooperation Council ('GCC') or Financial Action Task Force ('FATF') member state government, a company in which a GCC or FATF government is a majority shareholderG , or a company established by decree in the GCC;
          (c) The customer is a company listed on a GCC or FATF member state stock exchange (where the FATF state stock exchange has equivalent disclosure standards to those of the BHB);
          (d) The customer is a financial institution whose entire operations are subject to AML/CFT requirements consistent with the FATF Recommendations and it is supervised by a financial services supervisor in a FATF or GCC member state for compliance with those requirements;
          (e) The customer is a financial institution which is a subsidiary of a financial institution located in a FATF or GCC member state, and the AML/CFT requirements applied to its parent also apply to the subsidiary;
          (f) The customer is a borrower in a syndicated transaction where the agent bank is a financial institution whose entire operations are subject to AML/CFT requirements consistent with the FATF Recommendations and it is supervised by a financial services supervisor in a FATF or GCC member state for compliance with those requirements; or
          (g) [This sub-paragraph was deleted in January 2018].
          Amended: January 2019
          Amended: January 2018
          Amended: October 2014
          Amended: April 2013
          Amended: January 2013
          Amended: April 2008
          October 07

        • FC-1.11.2

          For customers falling under categories a-f specified in Paragraph FC-1.11.1, 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. Where the account is a correspondent banking relationship, enhanced due diligence applies. Refer to Section FC-1.8.

          October 07

        • FC-1.11.3

          [This Paragraph was deleted in July 2018.]

          Deleted: July 2018

        • FC-1.11.4

          Conventional bank licenseesG wishing to apply simplified due diligence measures as allowed for under Paragraph FC-1.11.1 must retain documentary evidence supporting their categorisation of the customer.

          October 07

        • FC-1.11.5

          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.

          October 07

        • FC-1.11.6

          Conventional bank licenseesG may use authenticated SWIFT messages as a basis for confirmation of the identity of a financial institution under FC-1.11.1 (d) and (e) where it is dealing as principal. For customers coming under Paragraph FC-1.11.1 (d) and (e), conventional bank licenseesG 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.

          October 07

        • FC-1.11.7

          Simplified customer due diligence measures must not be applied where a conventional bank licenseeG 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.

          October 07

        • FC-1.11.8

          [This Paragraph was deleted in July 2018.]

          Deleted: July 2018

      • FC-1.12 Simplified CDD: For entities Operating under Regulatory Sandbox

        • General Requirements

          • FC-1.12.1

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

            Added: October 2017

          • FC-1.12.2

            Conventional bank licenseesG must establish specific procedures for verifying the identity of their customers and the source of their funds where no face to face contact takes place.

            Added: October 2017

          • FC-1.12.3

            Conventional bank licenseesG must not commence a business relationship or undertake a transaction with a customer before completion of the relevant customer due diligence measures specified in this Section.

            Added: October 2017

          • FC-1.12.4

            Conventional bank licenseesG must conduct ongoing due diligence on the business relationship and scrutiny of 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.

            Added: October 2017

        • Face to Face Business

          • FC-1.12.5

            Conventional bank licenseesG must obtain and record the following information from original identification documents, databases or websites, in hard copy or electronic form, to verify the customer's legal existence and structure:

            (a) The entity's full name and other trading names used;
            (b) Registration number (or equivalent);
            (c) Legal form;
            (d) Registered address and trading address (where applicable);
            (e) Type of business activity;
            (f) Date and place of incorporation or establishment;
            (g) Telephone, fax number and email address;
            (h) Type of account, and nature and volume of anticipated business dealings with the licenseeG ; and
            (i) Source of funds.
            Added: October 2017

          • FC-1.12.6

            The information provided under Paragraph FC-1.12.5 must be verified by obtaining certified copies of the following documents, as applicable (depending on the legal form of the entity):

            (a) Certificate of incorporation and/or electronic certificate of commercial registration or trust deed;
            (b) Partnership agreement;
            (c) Identification documentation of the authorised signatories of the account; and
            (d) Where applicable, copy of the latest financial report and accounts, audited (audited copies do not need to be certified);
            (e) Copy of CBB's approval to operate under the CBB's Regulatory Sandbox.
            Added: October 2017

          • FC-1.12.7

            Documents obtained to satisfy the requirements in Paragraph FC- 1.12.6 above must be certified in the manner specified in Paragraphs FC-1.12.9 to FC-1.12.10 below.

            Added: October 2017

          • FC-1.12.8

            For the purpose of Paragraph FC-1.12.6(a), the requirement to obtain a certified copy of the commercial registration, may be satisfied by obtaining a commercial registration abstract printed directly from the Ministry of Industry, Commerce and Tourism's website, through "SIJILAT Commercial Registration Portal".

            Added: October 2017

          • FC-1.12.9

            Any document copied for the purpose of identification verification must be an original. An authorised official of the licenseeG must certify the copy, by writing on it the words 'original sighted', together with the date and his signature. Equivalent measures must be taken for electronic copies.

            Added: October 2017

          • FC-1.12.10

            Identity documents which are not obtained by an authorised official of the licenseeG in original form (e.g. due to a customer sending a copy by post following an initial meeting) must instead be certified (as per FC-1.12.11) by one of the following from a GCC or FATF member state:

            (a) A lawyer;
            (b) A notary;
            (c) A chartered/certified accountant;
            (d) An official of a government ministry;
            (e) An official of an embassy or consulate; or
            (f) An official of another licensed financial institution or of an associate company of the licenseeG .
            Amended: July 2018
            Added: October 2017

          • FC-1.12.11

            The individual making the certification under FC-1.12.10 must give clear contact details (e.g. by attaching a business card or company stamp). The conventional bank licenseeG must verify the identity of the person providing the certification through checking membership of a professional organisation (for lawyers or accountants), or through checking against databases/websites, or by direct phone or email contact.

            Added: October 2017

        • Non Face To Face Business and Technologies

          • FC-1.12.12

            Where no face-to-face contact takes place, conventional bank licenseesG must take additional measures in order to mitigate the potentially higher risk associated with such business. In particular, licenseesG must take measures:

            (a) To ensure that the customer is the person they claim to be (this can be done through video conferencing); and
            (b) To ensure that the address provided is genuinely the customer's.
            Added: October 2017

          • FC-1.12.13

            There are a number of checks that can provide a conventional bank licenseeG with a reasonable degree of assurance as to the authenticity of the applicant. They include:

            (a) Telephone contact with the applicant on an independently verified home or business number;
            (b) With the customer's consent, contacting an employer to confirm employment, via phone through a listed number or in writing; and
            (c) Salary details appearing on recent bank statements.
            Added: October 2017

          • FC-1.12.14

            Financial services provided via post, telephone or internet pose greater challenges for customer identification and AML/CFT purposes. LicenseesG must establish procedures to prevent the misuse of technological developments in money laundering or terrorist financing schemes. LicenseesG must also ensure that they comply with any ecommerce laws and/or CBB Modules issued from time to time.

            Added: October 2017

    • FC-2 AML / CFT Systems and Controls

      • FC-2.1 General Requirements

        • FC-2.1.1

          Conventional bank licenseesG 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 licenseeG . The documentation, and the Board's review and approval, must be made available upon request to the CBB.

          Amended: October 2014
          October 07

        • FC-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.

          October 07

      • FC-2.2 On-going Customer Due Diligence and Transaction Monitoring

        • Risk Based Monitoring

          • FC-2.2.1

            Conventional bank licenseesG must develop risk-based monitoring systems appropriate to the complexity of their business, their number of clients and types of transactions. These systems must be configured to identify significant or abnormal transactions or patterns of activity. Such systems must include limits on the number, types or size of transactions undertaken outside expected norms; and must include limits for cash and non-cash transactions.

            October 07

          • FC-2.2.2

            Conventional bank licensees'G risk-based monitoring systems should therefore be configured to help identify:

            (a) Transactions which do not appear to have a clear purpose or which make no obvious economic sense;
            (b) Significant or large transactions not consistent with the normal or expected behaviour of a customer; and
            (c) Unusual patterns of activity (relative to other customers of the same profile or of similar types of transactions, for instance because of differences in terms of volumes, transaction type, or flows to or from certain countries), or activity outside the expected or regular pattern of a customer's account activity.
            October 07

        • Automated Transaction Monitoring

          • FC-2.2.3

            Conventional bank licenseesG must consider the need to include automated transaction monitoring as part of their risk-based monitoring systems to spot abnormal or unusual flows of funds. In the absence of automated transaction monitoring systems, all transactions above BD 6,000 must be viewed as 'significant' and be captured in a daily transactions report for monitoring by the MLRO or a relevant delegated official, and records retained by the conventional bank licenseeG for five years after the date of the transaction.

            October 07

          • FC-2.2.4

            CBB would expect larger conventional bank licenseesG to include automated transaction monitoring as part of their risk-based monitoring systems. See also Chapters FC-4 and FC-7, regarding the responsibilities of the MLRO and record-keeping requirements.

            October 07

        • Unusual Transactions or Customer Behaviour

          • FC-2.2.5

            Where a conventional bank licensee'sG risk-based monitoring systems identify significant or abnormal transactions (as defined in FC-2.2.2 and FC-2.2.3), it must verify the source of funds for those transactions, particularly where the transactions are above the occasional transactions threshold of BD 6,000. Furthermore, conventional bank licenseesG must examine the background and purpose to those transactions and document their findings.

            October 07

          • FC-2.2.6

            The investigations required under FC-2.2.5 must be carried out by the MLRO (or relevant delegated official). The documents relating to these findings must be maintained for five years from the date when the transaction was completed (see also FC-7.1.1 (b)).

            October 07

          • FC-2.2.7

            Conventional bank licenseesG must consider instances where there is a significant, unexpected or unexplained change in customer activity.

            October 07

          • FC-2.2.8

            When an existing customer closes one account and opens another, the conventional bank licenseeG must review its customer identity information and update its records accordingly. Where the information available falls short of the requirements contained in Chapter FC-1, the missing or out of date information must be obtained and re-verified with the customer.

            October 07

          • FC-2.2.9

            Once identification procedures have been satisfactorily completed and, as long as records concerning the customer are maintained in line with Chapters FC-1 and FC-7, no further evidence of identity is needed when transactions are subsequently undertaken within the expected level and type of activity for that customer, provided reasonably regular contact has been maintained between the parties and no doubts have arisen as to the customer's identity.

            October 07

        • On-going Monitoring

          • FC-2.2.10

            Conventional bank licenseesG must take reasonable steps to:

            (a) Scrutinize transactions undertaken throughout the course of that relationship to ensure that transactions being conducted are consistent with the conventional bank licensee'sG knowledge of the customer, their business risk and risk profile; and
            (b) Ensure that they receive and maintain up-to-date and relevant copies of the identification documents specified in Chapter FC-1, by undertaking reviews of existing records, particularly for higher risk categories of customers. Conventional bank licenseesG must require all customers to provide up-to-date identification documents in their standard terms and conditions of business.
            Amended: October 2017
            October 07

          • FC-2.2.11

            Conventional bank licenseesG must review and update their customer due diligence information at least every three years, particularly for higher risk categories of customers. If, upon performing such a review, copies of identification documents are more than 12 months out of date, the conventional bank licenseeG must take steps to obtain updated copies as soon as possible.

            Amended: October 2017
            October 07

    • FC-3 Money Transfers and Alternative Remittances

      • FC-3.1 Electronic Transfers

        • Outward Transfers

          • FC-3.1.1

            Conventional bank licenseesG must include all required originator information and required beneficiary information details with the accompanying electronic transfers of funds they make on behalf of their customers. Non-routine transfers must not be batched, if batching increases the risks of money laundering or terrorist financing. This obligation does not apply where the transfer is made by a bank acting as principal or acting on behalf of another bank as principal such as in the case of payment of spot FX transactions.

            Amended: October 2014
            October 07

          • FC-3.1.2

            [This Paragraph has been deleted in October 2014 and its contents moved to Paragraph FC-3.1.5.]

            Deleted: October 2014

          • FC-3.1.3

            [This paragraph has been deleted in October 2014 and its contents moved to Paragraph FC-3.1.10.]

            Deleted: October 2014

        • Inward Transfers

          • FC-3.1.4

            Banks must:

            (a) Maintain records (in accordance with Chapter FC-7 of this Module) of all originator information received with an inward transfer; and
            (b) Carefully scrutinise inward transfers which do not contain originator information (i.e. full name, address and account number or a unique customer identification number). LicenseesG must presume that such transfers are 'suspicious transactions' and pass them to the MLRO for review for determination as to possible filing of an STR, unless (a), the originating institution is able to promptly (i.e. within two business days) advise the licenseeG in writing of the originator information upon the licenseeG 's request; or (b) the originating institution and the licenseeG are acting on their own behalf (as principals).
            Amended: October 2014
            Amended: April 2011
            October 07

        • Cross-Border Wire Transfers

          • FC-3.1.5

            Information accompanying all wire transfers must always contain:

            (a) The name of the originator;
            (b) The originator account number or IBAN where such an account is used to process the transaction;
            (c) The originator's address, or national identity number, or customer identification number, or date and place of birth;
            (d) The name of the beneficiary; and
            (e) The beneficiary account number where such an account is used to process the transaction.
            Added: October 2014

          • FC-3.1.6

            In the absence of an account, a unique transaction reference number should be included which permits traceability of the transaction.

            Added: October 2014

          • FC-3.1.7

            Where several individual cross-border wire transfers from a single originator are bundled in a batch file for transmission to beneficiaries, they may be exempted from the requirements of Paragraph FC-3.1.5 in respect of originator information, provided that they include the originator's account number or unique transaction reference number (as described in Paragraph FC-3.1.6), and the batch file contains required and accurate originator information, and full beneficiary information, that is fully traceable within the beneficiary country.

            Added: October 2014

        • Domestic Wire Transfers

          • FC-3.1.8

            Information accompanying domestic wire transfers must also include originator information as indicated for cross-border wire transfers, unless this information can be made available to the beneficiary financial institution and the CBB by other means. In this latter case, the originating financial institution need only include the account number or a unique transaction reference number, provided that this number or identifier will permit the transaction to be traced back to the originator or the beneficiary.

            Added: October 2014

          • FC-3.1.9

            For purposes of Paragraph FC-3.1.8, the information should be made available by the originating financial institution within three business days of receiving the request either from the beneficiary financial institution or from the CBB.

            Added: October 2014

          • FC-3.1.10

            It is not necessary for the recipient institution to pass the originator information on to the beneficiary. The obligation is discharged simply by notifying the beneficiary financial institution of the originator information at the time the transfer is made.

            Added: October 2014

        • Responsibilities of Originating, Intermediary and Beneficiary Banks

          • Originating Bank

            • FC-3.1.11

              The originating bank must ensure that wire transfers contain required and accurate originator information, and required beneficiary information.

              Added: October 2014

            • FC-3.1.12

              The originating bank must maintain all originator and beneficiary information collected in accordance with Paragraph FC-7.1.1.

              Added: October 2014

            • FC-3.1.13

              The originating bank must not execute the wire transfer if it does not comply with the requirements of Paragraphs FC-3.1.11 andFC-3.1.12}.

              Added: October 2014

          • Intermediary Bank

            • FC-3.1.14

              For cross-border wire transfers, banks processing an intermediary element of such chains of wire transfers must ensure that all originator and beneficiary information that accompanies a wire transfer is retained with it.

              Added: October 2014

            • FC-3.1.15

              Where technical limitations prevent the required originator or beneficiary information accompanying a cross-border wire transfer from remaining with a related domestic wire transfer, a record must be kept, for at least five years, by the receiving intermediary bank of all the information received from the originating bank or another intermediary bank.

              Added: October 2014

            • FC-3.1.16

              An intermediary bank must take reasonable measures to identify cross-border wire transfers that lack required originator information or required beneficiary information. Such measures must be consistent with straight-through processing.

              Added: October 2014

            • FC-3.1.17

              An intermediary bank must have effective risk-based policies and procedures for determining:

              (a) When to execute, reject, or suspend a wire transfer lacking required originator or required beneficiary information; and
              (b) The appropriate follow-up action.
              Added: October 2014

          • Beneficiary Bank

            • FC-3.1.18

              A beneficiary bank must take reasonable measures to identify cross-border wire transfers that lack required originator or required beneficiary information. Such measures may include post-event monitoring or real-time monitoring where feasible.

              Added: October 2014

            • FC-3.1.19

              For wire transfers, a beneficiary bank must verify the identity of the beneficiary, if the identity has not been previously verified, and maintain this information in accordance with Paragraph FC-7.1.1.

              Added: October 2014

            • FC-3.1.20

              A beneficiary bank must have effective risk-based policies and procedures for determining:

              (a) When to execute, reject, or suspend a wire transfer lacking required originator or required beneficiary information; and
              (b) The appropriate follow-up action.
              Added: October 2014

      • FC-3.2 Remittances on behalf of Money or Value Transfer Service (MVTS) Providers

        • FC-3.2.1

          Whenever a conventional bank licenseeG uses the services of Authorised Money or Value Transfer Service ProvidersG to effect the transfer of funds for a customer to a person or organisation in another country, that licenseeG must, in respect of the amount so transferred, maintain records of:

          (a) The identity of its customer(s) in accordance with Chapters FC-1 and FC-7 of this Module; and
          (b) The exact amount transferred for each such customer (particularly where a single transfer is effected for more than one customer).
          Amended: October 2014
          Amended: April 2011
          October 07

        • FC-3.2.1A

          For purposes of this Section, money or value transfer service (MVTS) refers to financial services that involve the acceptance of cash, cheques, other monetary instruments or other stores of value and the payment of a corresponding sum in cash or other form to a beneficiary by means of a communication, message, transfer, or through a clearing network to which the MVTS provider belongs. Transactions performed by such services can involve one or more intermediaries and a final payment to a third party, and may include new payment methods.

          Added: October 2014

        • FC-3.2.2

          Conventional bank licenseesG must be able to produce this information for inspection immediately upon request by the CBB.

          October 07

        • FC-3.2.3

          Conventional bank licenseesG must not transfer funds for customers to a person or organisation in another country by any means other than through an authorised MVTS providerG . Where a licenseeG is found to be in contravention of this rule, the Central Bank will not hesitate to impose sanctions upon that licenseeG (and in serious cases may revoke that licenseeG 's license).

          Amended: October 2014
          October 07

        • FC-3.2.4

          In the case of an authorised MVTS providerG that controls both the ordering and the beneficiary side of a wire transfer, the authorised MVTS providerG :

          (a) Must take into account all the information from both the ordering and beneficiary sides in order to determine whether an STR has to be filed; and
          (b) Must file an STR in any country affected by the suspicious wire transfer, and make relevant transaction information available to the Financial Intelligence Unit.
          Added: October 2014

    • FC-4 Money Laundering Reporting Officer (MLRO)

      • FC-4.1 Appointment of MLRO

        • FC-4.1.1

          Conventional bank licenseesG must appoint a Money Laundering Reporting Officer ('MLRO') who is an approved personG . The MLRO must be approved by CBB prior to his appointment. The licensee must submit to the CBB a completed Form 3, in accordance with Chapter LR-1A.

          Amended: July 2016
          October 07

        • FC-4.1.2

          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.

          October 07

        • FC-4.1.3

          Subject to Paragraph FC-4.1.2, however, the position of MLRO may otherwise be combined with other functions in the conventional bank licenseeG , 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-4.1.6 requires that the MLRO is a DirectorG or employee of the licenseeG , so the function may not be outsourced to a third party employee.

          October 07

        • FC-4.1.3A

          For the purpose of Paragraphs FC-4.1.2 and FC-4.1.3 above, conventional bank licenseesG 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 conventional bank licenseeG .

          Added: October 2017

        • FC-4.1.4

          Conventional bank licenseesG must appoint at least one deputy MLRO (or more depending on the scale and complexity of the licensee's operations) to act for the MLRO in his absence. The position of Deputy MLRO is a controlled functionG and the DMLRO is an approved personG . The DMLRO must be approved by CBB prior to his appointment. The DMLRO must satisfy the conditions outlined in Subparagraphs FC-4.1.6 (d) to (g).

          Amended: July 2016
          Amended: October 2009
          October 2007

        • FC-4.1.5

          Conventional bank licenseesG should note that although the MLRO may delegate some of his functions, either within the licenseeG or even possibly (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 licenseeG and the designated MLRO.

          October 07

        • FC-4.1.6

          So that he can carry out his functions effectively, conventional bank licenseesG must ensure that their MLRO:

          (a) Is a member of senior management of the licenseeG ;
          (b) Has a sufficient level of seniority within the conventional bank licenseeG , has the authority to act without interference from business line management and has direct access to the Board and senior management (where necessary);
          (c) Has sufficient resources, including sufficient time and (if necessary) support staff, and has designated a replacement to carry out the function should the MLRO be unable to perform his duties;
          (d) Has unrestricted access to all transactional information relating to any financial services provided by the conventional bank licenseeG to a customer, or any transactions conducted by the conventional bank licenseeG on behalf of that customer;
          (e) Is provided with timely information needed to identify, analyse and effectively monitor customer accounts;
          (f) Has access to all customer due diligence information obtained by the conventional bank licenseeG ; and
          (g) Is resident in Bahrain.
          Amended: October 2011
          October 2007

        • FC-4.1.7

          [This Paragraph is left blank].

          Added: July 2012

        • FC-4.1.8

          In addition, conventional bank licenseesG must ensure that their MLRO is able to:

          (a) Monitor the day-to-day operation of its policies and procedures relevant to this Module; and
          (b) Respond promptly to any reasonable request for information made by the Anti-Money Laundering Unit or the CBB.
          October 07

        • FC-4.1.9

          If the position of MLRO falls vacant, the conventional bank licenseeG 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 licenseeG 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.

          October 07

      • FC-4.2 Responsibilities of the MLRO

        • FC-4.2.1

          The MLRO is responsible for:

          (a) Establishing and maintaining the conventional bank licenseeG 's AML/CFT policies and procedures;
          (b) Ensuring that the licenseeG complies with the AML Law and any other applicable AML/CFT legislation and regulations;
          (c) Ensuring day-to-day compliance with the licenseeG 's own internal AML/CFT policies and procedures;
          (d) Acting as the conventional bank licensee'sG main point of contact in respect of handling internal suspicious transaction reports from the licenseeG 's staff (refer to Section FC-5.1) and as the main contact for the Financial Intelligence Unit, the CBB and other concerned bodies regarding AML/CFT;
          (e) Making external suspicious transactions reports to the Anti-Money Laundering Unit and Compliance Directorate (refer to Section FC-5.2);
          (f) Taking reasonable steps to establish and maintain adequate arrangements for staff awareness and training on AML/CFT matters (whether internal or external), as per Chapter FC-5;
          (g) Producing annual reports on the effectiveness of the licenseeG 's AML / CFT controls, for consideration by senior management, as per Paragraph FC-4.3.3;
          (h) On-going monitoring of what may, in his opinion, constitute high-risk customer accounts; and
          (i) Ensuring that the conventional bank licenseeG maintains all necessary CDD, transactions, STR and staff training records for the required periods (refer to Section FC-7.1).
          Amended: October 2014
          Amended: January 2011
          October 07

      • FC-4.3 Compliance Monitoring

        • Annual Compliance Review

          • FC-4.3.1

            Conventional bank licenseesG must take appropriate steps to identify and assess their money laundering and terrorist financing risks (for customers, countries or geographic areas; and products, services, transactions or delivery channels). They must document those assessments in order to be able to demonstrate their basis, keep these assessments up to date, and have appropriate mechanisms to provide risk assessment information to the CBB. The nature and extent of any assessment of money laundering and terrorist financing risks must be appropriate to the nature and size of the business.

            Added: October 2014

          • FC-4.3.1A

            Conventional bank licenseesG should always understand their money laundering and terrorist financing risks, but the CBB may determine that individual documented risk assessments are not required, if the specific risks inherent to the sector are clearly identified and understood.

            Added: October 2014

          • FC-4.3.1B

            A conventional bank licenseeG must review the effectiveness of its AML/CFT procedures, systems and controls at least once each calendar year. The review must cover the conventional bank licenseeG and its branches and subsidiaries both inside and outside the Kingdom of Bahrain. The scope of the review must include:

            (a) A report, containing the number of internal reports made in accordance with Section FC-5.1, a breakdown of all the results of those internal reports and their outcomes for each segment of the licenseeG 's business, and an analysis of whether controls or training need to be enhanced;
            (b) A report, indicating the number of external reports made in accordance with Section FC-5.2 and, where a conventional bank licenseeG has made an internal report but not made an external report, noting why no external report was made;
            (c) A sample test of compliance with this Module's customer due diligence requirements; and
            (d) A report as to the quality of the conventional bank licensee'sG anti-money laundering procedures, systems and controls, and compliance with the AML Law and this Module.
            Amended: October 2014
            October 07

          • FC-4.3.2

            The reports listed under Paragraph FC-4.3.1B (a) and (b) must be made by the MLRO. The sample testing required under Paragraph FC-4.3.1B (c) must be undertaken either by the licensee'sG internal auditor, its external auditor or a consultancy firm approved by the CBB. The report required under Paragraph FC-4.3.1B (d) must be made by the licensee'sG external auditor or a consultancy firm approved by the CBB.

            Amended: January 2019
            Amended: October 2011
            October 2007

          • FC-4.3.2A

            In order for a consultancy firm to be approved by the CBB for the purposes of Paragraph FC-4.3.2, such firm should provide the CBB's Compliance Directorate with:

            (a) A sample AML/CFT report prepared for a financial institution;
            (b) A list of other AML/CFT related work undertaken by the firm;
            (c) A list of other audit/review assignments undertaken, specifying the nature of the work done, date and name of the licensee; and
            (d) An outline of any assignment conducted for or in cooperation with an international audit firm.
            Added: October 2011

          • FC-4.3.2B

            The firm should indicate which personnel (by name) will work on the report (including, where appropriate, which individual will be the team leader) and demonstrate that all such persons have appropriate qualifications in one of the following areas:

            (a) Audit;
            (b) Accounting;
            (c) Law; or
            (d) Banking/Finance.
            Added: October 2011

          • FC-4.3.2C

            Conventional bank licenseesG must ensure that the personnel conducting the review are qualified, skilled and have adequate experience to conduct such a review. At least two persons working on the report (one of whom should be the team leader) must have:

            (a) A minimum of 5 years professional experience dealing with AML/CFT issues; and
            (b) Formal AML/CFT training.
            Amended: October 2018
            Added: October 2011

          • FC-4.3.2D

            Submission of a curriculum vitae for all personnel to be engaged on the report is encouraged for the purposes of evidencing the above requirements.

            Added: October 2011

          • FC-4.3.2E

            Upon receipt of the above required information, the CBB Compliance Directorate will assess the firm and communicate to it whether it meets the criteria required to be approved by the CBB for this purpose. The CBB may also request any other information it considers necessary in order to conduct the assessment.

            Added: October 2011

          • FC-4.3.3

            The reports listed under Paragraph FC-4.3.1B must be submitted to the licenseeG 's Board, for it to review and commission any required remedial measures, and copied to the licenseeG 's senior managementG .

            Amended: January 2019
            Amended: October 2014
            October 07

          • FC-4.3.4

            The purpose of the annual compliance review is to assist a licenseeG 's Board and senior management to assess, amongst other things, whether internal and external reports are being made (as required under Chapter FC-5), and whether the overall number of such reports (which may otherwise appear satisfactory) does not conceal inadequate reporting in a particular segment of the licenseeG 's business (or, where relevant, in particular branches or subsidiaries). Conventional bank licenseesG should use their judgement as to how the reports listed under Paragraph FC-4.3.1B (a) and (b) should be broken down in order to achieve this aim (e.g. by branches, departments, product lines, etc).

            Amended: January 2019
            October 07

          • FC-4.3.5

            Conventional bank licenseesG must instruct their appointed firm to produce the report referred to in Paragraph FC-4.3.1B (d). The report must be submitted to the Compliance Directorate at the CBB by the 30th of April of the following year. The findings of this review must be received and acted upon by the licenseeG .

            Amended: January 2019
            Amended: January 2012
            Amended: January 2011
            Amended: April 2008
            October 07

          • FC-4.3.6

            The appointed firm may rely upon work performed by the licenseeG 's internal audit function, as part of their procedures for producing the statement referred to in Paragraph FC-4.3.5.

            Amended: January 2012
            Amended: January 2011
            October 07

    • FC-5 Suspicious Transaction Reporting

      • FC-5.1 Internal Reporting

        • FC-5.1.1

          Conventional bank licenseesG 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.

          October 07

        • FC-5.1.2

          Where conventional bank licenseesG ' 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.

          October 07

      • FC-5.2 External Reporting

        • FC-5.2.1

          Conventional bank licenseesG must take reasonable steps to ensure that all reports made under Section FC-5.1 are considered by the MLRO (or his duly authorised delegate). Having considered the report and any other relevant information the MLRO (or his duly authorised delegate), if he still suspects that a person has been engaged in money laundering or terrorism financing, or the activity concerned is otherwise still regarded as suspicious, must report the fact promptly to the relevant authoritiesG . Where no report is made, the MLRO must document the reasons why.

          October 07

        • FC-5.2.2

          To take reasonable steps, as required under Paragraph FC-5.2.1, conventional bank licenseesG must:

          (a) Require the MLRO to consider reports made under Section FC-5.1.1 in the light of all relevant information accessible to or reasonably obtainable by the MLRO;
          (b) Permit the MLRO to have access to any information, including know your customer information, in the conventional bank licenseeG 's possession which could be relevant; and
          (c) Ensure that where the MLRO, or his duly authorised delegate, suspects that a person has been engaged in money laundering or terrorist financing, a report is made by the MLRO which is not subject to the consent or approval of any other person.
          October 07

        • FC-5.2.3

          Reports to the relevant authoritiesG made under Paragraph FC-5.2.1 must be sent to the Financial Intelligence Unit at the Ministry of Interior and the CBB's Compliance Directorate using the Suspicious Transaction Report Online System (Online STR system). STRs in paper format will not be accepted.

          Amended: July 2016
          Amended: October 2014
          October 07

        • FC-5.2.4

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

          October 07

        • FC-5.2.5

          Conventional bank licenseesG must retain all relevant details of STRs submitted to the relevant authoritiesG for at least five years.

          Amended: October 2014
          October 07

        • FC-5.2.6

          In accordance with the AML Law, conventional bank licenseesG , their DirectorG s, officers and employees:

          (a) Must not warn or inform ('tipping off') their customers, the beneficial owner or other subjects of the STR when information relating to them is being reported to the relevant authoritiesG ; and
          (b) In cases where conventional bank licenseesG form a suspicion that transactions relate to money laundering or terrorist financing, they must take into account the risk of tipping-off when performing the CDD process. If the conventional bank licenseeG reasonably believes that performing the CDD process will tip-off the customer or potential customer, it may choose not to pursue that process, and must file an STR.
          Amended: January 2018
          October 07

      • FC-5.3 Contacting the Relevant Authorities

        • FC-5.3.1

          Reports made by the MLRO or his duly authorised delegate under Section FC-5.2 must be sent electronically using the Suspicious Transaction Reporting Online System (Online STR system).

          Amended: October 2014
          October 07

        • FC-5.3.2

          The relevant authoritiesG are:

          Financial Intelligence Directorate (FID)
          General Directorate of Anti Corruption and Economic and Electronic Security
          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

          Added: October 2014

    • FC-6 Staff Training and Recruitment

      • FC-6.1 General Requirements

        • FC-6.1.1

          A conventional bank licenseeG 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:

          (a) Their responsibilities under the AML Law, this Module, and any other relevant AML / CFT laws and regulations;
          (b) The identity and responsibilities of the MLRO and his deputy;
          (c) The potential consequences, both individual and corporate, of any breach of the AML Law, this Module and any other relevant AML / CFT laws or regulations;
          (d) The conventional bank licensee'sG current AML/CFT policies and procedures;
          (e) Money laundering and terrorist financing typologies and trends;
          (f) The type of customer activity or transaction that may justify an internal STR;
          (g) The conventional bank licensee'sG procedures for making internal STRs; and
          (h) Customer due diligence measures with respect to establishing business relations with customers.
          October 07

        • FC-6.1.2

          The information referred to in Paragraph FC-6.1.1 must be brought to the attention of relevant new employees of conventional bank licenseesG , and must remain available for reference by staff during their period of employment.

          October 07

        • FC-6.1.3

          Relevant new employees must be given AML/CFT training within three months of joining a conventional bank licenseeG .

          October 07

        • FC-6.1.4

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

          October 07

        • FC-6.1.5

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

          October 07

        • FC-6.1.6

          Conventional bank licenseesG 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 conventional bank licenseesG .

          Amended: October 2014
          October 07

    • FC-7 Record-Keeping

      • FC-7.1 General Requirements

        • CDD and Transaction Records

          • FC-7.1.1

            Conventional bank licenseesG must comply with the record-keeping requirements contained in the AML Law. Conventional bank licenseesG must therefore retain adequate records (including accounting and identification records), for the following minimum periods:

            (a) For customers, in relation to evidence of identity and business relationship records (such as application forms, account files and business correspondence, including the results of any analysis undertaken (e.g. enquiries to establish the background and purpose of complex, unusual large transactions)), for at least five years after the customer relationship has ceased; and
            (b) For transactions, in relation to documents (including customer instructions in the form of letters, faxes or emails) enabling a reconstitution of the transaction concerned, for at least five years after the transaction was completed.
            Amended: October 2014
            October 07

        • Compliance Records

          • FC-7.1.2

            Conventional bank licenseesG must retain copies of the reports produced for their annual compliance review, as specified in Paragraph FC-4.3.1B, for at least five years. Conventional bank licenseesG must also maintain for 5 years reports made to, or by, the MLRO made in accordance with Sections FC-5.1 and FC-5.2, and records showing how these reports were dealt with and what action, if any, was taken as a consequence of those reports.

            Amended: January 2019
            Amended: October 2014
            October 07

        • Training Records

          • FC-7.1.3

            Conventional bank licenseesG must maintain for at least five years, records showing the dates when AML/CFT training was given, the nature of the training, and the names of the staff that received the training.

            October 07

        • Access

          • FC-7.1.4

            All records required to be kept under this Section must be made available for prompt and swift access by the relevant authorities or other authorised persons.

            October 07

          • FC-7.1.5

            Conventional bank licenseesG are also reminded of the requirements contained in Chapter OM-7 (Books and Records).

            October 07

    • FC-8 NCCT Measures and Terrorist Financing

      • FC-8.1 Special Measures for Non-Cooperative Countries or Territories ('NCCTs')

        • FC-8.1.1

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

          (a) Identified by the FATF as being 'non-cooperative'; or
          (b) Notified to conventional bank licenseesG from time to time by the CBB.
          October 07

        • FC-8.1.2

          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 authoritiesG in accordance with Section FC-5.2.

          October 07

        • FC-8.1.3

          Conventional bank licenseesG 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.

          Added: October 2014

        • FC-8.1.4

          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:

          (a) Refuse the establishment of subsidiaries or branches or representative offices of financial institutions from such jurisdictions;
          (b) Limit business relationships or financial transactions with such jurisdictions or persons in those jurisdictions;
          (c) Prohibit financial institutions from relying on third parties located in such jurisdictions to conduct elements of the CDD process;
          (d) Require financial institutions to review and amend, or if necessary terminate, correspondent relationships with financial institutions in such jurisdictions;
          (e) Require increased supervisory examination and/or external audit requirements for branches and subsidiaries of financial institutions based in such jurisdictions; or
          (f) Require increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in such jurisdictions.
          Amended: January 2018
          Added: October 2014

      • FC-8.2 Terrorist Financing

        • FC-8.2.1AA

          Conventional bank licenseesG must implement and comply with United Nations Security Council resolutions relating to the prevention and suppression of terrorism and terrorist financing. Conventional bank licenseesG 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).

          Added: April 2017

        • FC-8.2.1

          Conventional bank licenseesG must comply in full with any rules or regulations issued by the CBB in connection with the provisions of the UN Security Council Anti-terrorism Resolution No. 1373 of 2001 ('UNSCR 1373'), including the rules in this Chapter.

          October 07

        • FC-8.2.2

          [This Paragraph was deleted in January 2018].

          Deleted: January 2018
          October 07

        • FC-8.2.3

          A copy of UNSCR 1373 is included in Part B of Volume 1 (Conventional Banks), under 'Supplementary Information'.

          October 07

        • FC-8.2.4

          Conventional bank licenseesG must report to the CBB details of:

          (a) Funds or other financial assets or economic resources held with them which may be the subject of Article 1, Paragraphs c) and d) of UNSCR 1373; and
          (b) All claims, whether actual or contingent, which the conventional bank licenseeG has on persons and entities which may be the subject of Article 1, Paragraphs c) and d) of UNSCR 1373.
          October 07

        • FC-8.2.5

          For the purposes of Paragraph FC-8.2.4, '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 licenseeG .

          October 07

        • FC-8.2.6

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

          October 07

        • FC-8.2.7

          See Section FC-5.3 for the Compliance Directorate's contact details.

          October 07

      • FC-8.3 Designated Persons and Entities

        • FC-8.3.1

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

          Amended: October 2014
          October 07

        • FC-8.3.2

          The CBB from time to time issues to licenseeG s lists of designated persons and entities believed linked to terrorism. LicenseeG s 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 CBB include persons and entities designated by the United Nations, under UN Security Council Resolution 1267 ('UNSCR 1267').

          October 07

        • FC-8.3.3

          Conventional bank licenseesG must report to the relevant authoritiesG , using the procedures contained in Section FC-5.2, details of any accounts or other dealings with designated persons and entities, and comply with any subsequent directions issued by the relevant authoritiesG .

          October 07

    • FC-9 Enforcement Measures

      • FC-9.1 Regulatory Penalties

        • FC-9.1.1

          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 licenseeG 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.

          October 07

        • FC-9.1.2

          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-5.1.4). Other enforcement measures may also be applied by CBB in response to a failure by a licenseeG to comply with this Module; these other measures are also set out in Module EN.

          October 07

        • FC-9.1.3

          The CBB will endeavour to assist conventional bank licenseesG to interpret and apply the rules and guidance in this Module. Conventional bank licenseesG may seek clarification on any issue by contacting the Compliance Directorate (see Section FC-5.3 for contact details).

          October 07

        • FC-9.1.4

          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 licenseeG s.

          October 07

    • FC-10 AML / CFT Guidance and Best Practice

      • FC-10.1 Guidance Provided by International Bodies

        • FATF: Recommendations

          • FC-10.1.1

            The FATF Recommendations (see www.fatf-gafi.org) together with their associated interpretative notes and best practices papers issued by the Financial Action Task Force (FATF) provide the basic framework for combating money laundering activities and the financing of terrorism. FATF Recommendations 2, 8–12, 14–21, 26–27, 32–35, 37 and 40 and the AML/CFT Methodology are specifically relevant to the banking sector.

            Amended: October 2014
            October 07

          • FC-10.1.2

            The relevant authoritiesG in Bahrain believe that the principles established by these Recommendations should be followed by licenseesG in all material respects, as representing best practice and prudence in this area.

            Amended: October 2014
            October 07

        • Basel Committee: Statement on Money Laundering and Customer Due Diligence for Banks

          • FC-10.1.3

            In December 1988, the Basel CommitteeG on Banking Supervision issued a 'Statement of Principles' followed by the Customer Due Diligence for Banks paper in October 2001 (with attachment dated February 2003 – see www.bis.org/publ/) with which internationally active banks of member states are expected to comply. These papers cover identifying customers, avoiding suspicious transactions, and co-operating with law enforcement agencies.

            October 07

          • FC-10.1.4

            The CBB supports the above papers and the desirability of all conventional bank licenseesG adhering to their requirements and guidance.

            October 07

        • Other Website References Relevant to AML/CFT

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