THE KINGDOM OF BAHRAIN’S NATIONAL RISK ASSESSMENT 2025

48 223. The formal banking sector in Bahrain is considered a less attractive channel for terrorist financing due to the robust supervisory measures enforced by regulatory authorities. These include the identification of unusual transaction patterns, close scrutiny of remittances to high-risk jurisdictions, and strict enforcement of customer due diligence (CDD) and ongoing transaction monitoring. 224. Although instances of terrorist financing may occur within the banking system, the sector benefits from stringent supervisory frameworks and continuous enhancements to AML/CFT measures, enabling effective identification and mitigation of risks. As a result, the overall risk to the banking sector is assessed as medium . 225. Other sectors were assessed to be of lower risk to TF due to the business nature and existing controls. Overall TF Risk 226. Bahrain’s overall risk of terrorism financing is assessed as medium-low , considering the Kingdom’s regional geopolitical vulnerabilities. However, the proactive, multi-faceted counterterrorism strategy, combining domestic and international measures, effectively mitigates these risks. NON-PROFIT ORGANISATIONS RISK ASSESSMENT 227. The Kingdom of Bahrain has established a regulatory framework within the Ministry of Social Development (MOSD) to oversee Non-Profit Organizations (NPOs). MOSD has classified the subset of NPOs, where NPO refers to a legal person or arrangement or organisation that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of “good works”. This framework aims to streamline NPO operations and proactively mitigate risks without disrupting their operations. 228. MOSD ensures that NPOs have clear policies to promote accountability, integrity and public confidence in the administration and management of NPOs, undertakes outreach with NPOs to raise awareness about the potential vulnerabilities of NPOs to terrorist financing abuse and terrorist financing risks and the measures that NPOs can take to protect themselves against such abuse, and encourage NPOs to conduct transactions through banking channels. NPOs are required to obtain prior approval from MOSD for fundraising and cross-border remittance activities. 229. NPOs inherently pose threats to TF, as they can be misused by terrorist groups to raise, move, or obscure funds under the guise of charitable or humanitarian activities. To mitigate these threats, Bahrain has introduced a comprehensive set of mitigation measures, under the supervision of the MOSD, that reduce the sector’s exposure and contribute to lowering its residual risk to a medium level. PROLIFERATION FINANCING RISK ASSESSMENT 230. Bahrain has a robust and well-structured national framework for countering proliferation financing and implementing targeted financial sanctions. This is articulated by its clear legal and