Fraud shield

Bahrain moves to bolster safeguards against money laundering and financial crime

A 72-hour window to pause suspicious transactions is due to be written into Bahrain’s anti-money laundering law on Tuesday, when Parliament votes on Decree-Law No. 36 of 2025. The changes name the Financial Intelligence National Centre (FINC) as the “executing unit”, give it a wider role in receiving suspicious transaction reports and carrying out financial tracing, and spell out new rules for sharing information with overseas counterparts.

The government says the package is needed to match global standards and the National Risk Assessment, while the Ministry of Justice, Islamic Affairs and Waqf has warned that delays could harm Bahrain’s standing and raise the risk of “grey list” scrutiny.

Decision

MPs will decide on the decree-law amending Decree-Law No. 4 of 2001 on the prohibition and combating of money laundering and terrorist financing. The Foreign Affairs, Defence and National Security Committee, which studied the text and prepared the report for the chamber, recommended approval with the agreement of members present.

The Ministry of Interior said it agreed with the decree-law as issued. Under the amended provisions, FINC can order the stopping or deferral of a suspected transaction for up to 72 hours to complete enquiries.

Action

A matching step is also provided for when a peer unit abroad asks for action, within the same time limit. The decree-law also widens the scope for work with other states, including joint enquiries, asset tracing and recovery, and the exchange of material linked to suspicious transactions and related cases.

It places limits on how shared material, and the results of joint analysis, can be used and passed on. Alongside the new powers, the legal text updates core terms in the 2001 law. It replaces the earlier wording on the proceeds of crime with a definition covering funds gained directly or indirectly, in whole or part, from criminal activity, including any profit, interest, yield or other return, even where the funds are converted into other property or investment returns.

Approach

Two new definitions are added: a “risk-based approach”, described as steps aimed at spotting, judging, tracking, managing and reducing the risks of money laundering, terrorist financing and the financing of the proliferation of armaments; and ‘good faith’, aimed at protecting natural or legal persons who gained rights in the funds through a lawful act without knowing their true nature or source, and without grounds for suspicion. The amended text restates the acts that make up money laundering, covering transactions involving criminal proceeds, concealment of their nature or source, acquiring or moving them, and holding them, where there is knowledge, belief, or grounds to believe the funds stem from crime. It also strengthens confiscation rules while requiring the courts to deal with the rights of bona fide third parties before ordering confiscation.

Evidence

The amended provisions allow confiscation where a criminal case ends because the accused has died, when the evidence shows the funds were gained from crime, and require the court to act if other suspect assets come to light. Institutions would face clearer duties to report suspicious activity to FINC and the competent bodies, and to put in place internal checks and management-level responsibility for compliance, along with audit rules to test those steps. The decree-law also reinforces the duty on natural and legal persons to apply, without delay, relevant United Nations Security Council decisions issued under Chapter VII on terrorism, and its financing.