THE KINGDOM OF BAHRAIN’S NATIONAL RISK ASSESSMENT 2025

32 were examined and instances of non-compliance with such requirements resulted in regulatory actions. Overall Risks 132. Although several vulnerabilities were identified with regards to crypto transfers, adequate risk mitigation measures are evident both at the FIs and regulatory levels. Adequate AML/CFT/CPF systems and controls have been put in place by both VASPs in the sector and the CBB, such as internal crypto-currency tracking tools used to monitor the regulated crypto-asset providers transactional behaviour, periodic and constant AML/CFT/CPF examinations and implementation and enforcement of the CRA Module and AML Modules. 133. Licensed VASPs are obliged to screen all customers against sanctions lists prior to accepting the customer and on an ongoing basis. VASPs have adopted both on-chain and off-chain screening and monitoring tools which identify and trigger suspicious wallet addresses. The wallet database includes wallets linked to, as an example, sanctioned individuals/entities and the dark web. Additionally, the CBB completed onsite/offsite examinations on the licensed VASPs during the sample period. 134. Overall, given the ML threats, vulnerabilities and controls implemented by VASPs the sector is assessed as having a medium-high risk of ML. Case Study No. 4 – ML– Crypto Since the inception of crypto-currency service providers in the Kingdom of Bahrain, an established virtual asset service provider sought to operate in the Kingdom. The Central Bank of Bahrain supervises the VASPs subsector by conducting strong oversight and close monitoring, especially during the sandbox stage. The CBB and MOIC require all their licensees (including Auditors and Accountants) to submit periodic audit reports (daily/monthly/quarterly) which detail all information contained in the financial statements. CASE SPECIFICS: The case involves the company owner of an auditing firm who, in collusion with owners of several other institutions including the newly operational VASP, manipulated audit reports. This action was detected and reported to the Public Prosecution by the Ministry of Industry and Commerce due to violations of the law of prohibition of Combating Money Laundering and Terrorism Financing. Upon receiving the complaint, the Public Prosecution assigned law enforcement agencies to investigate the possibility of money laundering. The investigation revealed that the company owners involved in the fraudulent activities had previously been convicted in Bahrain for operating financial activities without a license. Further analysis uncovered that the subject of the investigation had concealed a significant amount of 8 million BHD from the financial reports. To obscure the true financial picture, the subject had instead reported a drastically reduced figure of 35,000 BHD. OUTCOMES: This deliberate concealment of substantial funds raises serious concerns regarding potential money laundering activities. The case underscores the importance of rigorous financial reporting and the need for effective oversight to prevent financial crimes. Following a thorough investigation and legal proceedings, the individual was found guilty and sentenced to a 3-year prison. Upon completion of the sentence, the individual will be deported from the country.