THE KINGDOM OF BAHRAIN’S NATIONAL RISK ASSESSMENT 2025

28 trade agreements, a large population of expatriates are residents in the Kingdom. These two factors contribute to a large inflow and outflow of transactions through Bahrain’s financial institution’s sector. An analysis of the number of ML cases with international ML affiliations does not suggest any alterations to the International ML threats assessed in the prior NRA, nevertheless, the introduction of the crypto-currency brokerages (VASPs) in the sample period validates the following update. Money Laundering Threat from Other Countries 99. Criminal activities originating in foreign jurisdictions can pose a significant threat to Bahrain's financial system when illicit proceeds are introduced into the global financial network. Given the interconnected nature of the global financial system, there is a high probability that these funds may eventually be transferred to financial institutions within the Kingdom. While banks implement robust preventive measures to mitigate these risks, international money laundering remains a threat. 100. Due to the diverse operational and legal frameworks, risk tolerances, and threat profiles of different sectors in Bahrain, it is crucial to assess each sector individually. This subsection will examine the specific ML threats facing key sectors in Bahrain and assign a threat rating to each, ultimately providing an overall assessment of international ML threats to the Kingdom's financial system. SECTORAL ANALYSIS 101. During the assessment period, multiple money laundering cases were identified, involving various sectors, predicate offenses, and international connections. This highlights the significant global money laundering threats facing Bahrain. Given the diverse AML/CFT/CPF frameworks, risk tolerances, and threat levels across different sectors, it is crucial to evaluate each sector individually when assessing money laundering risks. This section will examine the specific money laundering threats to various sectors in Bahrain and assign a threat rating to each, providing an overall assessment of international money laundering risks within the country. Financial Institutions Retail Banks Introduction 102. The retail banking sector in Bahrain remains a cornerstone of the financial system, characterized by diverse product offerings, an extensive customer base, and increasing adoption of digital banking solutions. Its role in supporting individuals, SMEs, and micro-enterprises makes it essential for fostering economic resilience and promoting financial inclusion. 103. Bahrain's retail banking sector currently comprises of locally incorporated banks and branches of foreign banks. Among these foreign banks are globally recognized institutions, underscoring Bahrain’s international financial connectivity. 104. Based on supervisory assessments and NRA questionnaires, the retail banking sector faces inherent ML risks. These risks are driven by the cash-intensive nature of many products and services, increased reliance on digital banking channels, and the high volume of cross-border transactions.