THE KINGDOM OF BAHRAIN’S NATIONAL RISK ASSESSMENT 2025

9 Geographical Background 13. The Kingdom of Bahrain, an island nation in the Arabian Gulf, is situated off the eastern coast of Saudi Arabia. The Kingdom of Bahrain is an archipelago consisting of a main island and 36 smaller islands, with a total surface area of 765 sq.km . It is located in the central part of the Arabian Gulf, with Saudi Arabia to the west and Qatar to the southeast. The main island, which compromises approximately 91.3% of the total surface area, is connected to Saudi Arabia’s mainland through a 25 km causeway. 14. As of 2024, the country’s population is estimated at 1.59 million, with males representing 58% and females 42% of the population, making it the smallest by population compared to other Gulf countries in the region. Economical Background and Financial Inclusion 15. The country enjoys a strong, diverse, and competitive economy which constantly promotes business growth. The Kingdom’s economy is the most diversified in the GCC region with a higher contribution of non-oil sector contributing to the GDP. 16. Bahrain's economy historically depended heavily on oil and gas. Although it was one of the first countries in the Gulf to discover oil, its reserves are not as large as those of its neighbours. Nonetheless, oil still plays a significant role in the economy. 17. In recent years, Bahrain has made significant efforts to diversify its economy. The government has invested in financial services, tourism, and real estate, which resulted in the Kingdom having a robust financial sector. 18. By investing in the fintech and digital payment infrastructure, the Kingdom has made significant steps in expanding access to financial services across all segments of society. Platforms such as “BenefitPay” have supported individuals and businesses transact with a simplified measures to be taken upon conducting transactions, offering secure, user-friendly, and widely accessible digital payment solutions. Bahrain has a highly tech-savvy population with high levels of mobile and broadband usage. This has supported the growth of digital financial services, and the support for SMEs and individuals to easily access the financial system. Moreover, Digital lending services have been launched, aiming to make loans more accessible to individuals for various needs. Political Background 19. The Kingdom of Bahrain is a constitutional monarchy, comprising legislative, executive, and judicial authorities, with a democratic system of government. The Kingdom adopted its constitution in February 2002. Bahrain has a bicameral legislature consisting of the Shura Council (appointed) and the Council of Representatives (elected). The political system includes elements of both monarchy and parliamentary governance. 20. The government of Bahrain has dedicated substantial efforts to enhance its legal and institutional framework in order to mitigate ML/TF/PF risks in the country.