THE KINGDOM OF BAHRAIN’S NATIONAL RISK ASSESSMENT 2025

30 Overall Risks 114. The wholesale banking sector is subject to ML risks due to the nature of their business activities and their products. Large corporate customers might have complex ownership structures or utilize high risk products such as trade finance services and high value cross-border wire remittances. 115. Therefore, Conventional wholesale banks are required to comply with the provisions set out in the Financial Crime Module of Volume 1 of the CBB Rulebook. Similarly, Islamic wholesale banks are required to follow the requirements outlined in Volume 2 of the CBB Rulebook these provisions mitigates the risk of ML. 116. The CBB adopts a risk-based approach to supervision, prioritizing resources based on the risk profile of licensees and sector type. Over the past four years, the CBB conducted risk-based on-site examinations on wholesale banks to assess compliance with AML/CFT/CPF rules and regulations. 117. Based on the CBB risk-based supervision, institutions have implemented robust AML/CFT/CPF controls including comprehensive client onboarding procedures to mitigate risks associated with the non-resident client base and transaction monitoring systems to monitor high risk customer accounts. 118. Given the substantial ML threats faced by the sector, its vulnerabilities, and the effectiveness of its controls, the overall money laundering risk in the retail banking sector is classified as medium- high . Money Changers Introduction 119. Bahrain’s active financial sector and its extensive international workforce create a natural and legitimate demand for high-volume foreign exchange and cross-border remittance services, a function primarily served by Money Changers. 120. Money changers provide a wide range of services, including foreign currency exchange, inward/outward remittance, online remittance and cross-border cash transactions. Money Changers also play a pivotal role within Bahrain’s non-bank financial sector. The CBB is the sole regulator of financial institutions, including Money Changers, and has established a comprehensive regulatory framework to govern their activities. 121. The CBB’s regulatory framework mandates robust customer due diligence measures for Money Changers and requires licensees to report suspicious transactions related to ML, TF and PF. In addition, all relevant staff members must undergo periodic AML/CFT/CPF assessments and training. Overall Risks 122. In the Kingdom of Bahrain, Money Changers must be licensed by the CBB and are subject to AML/CFT/CPF rules and regulations. More specifically, Money Changers must comply with the provisions set out in Volume 5 of the Financial Crime Module of the CBB Rulebook, which outlines the regulatory requirements to combat ML, TF and PF.