New decree enforces strict prison terms and fines for bank regulatory breaches

TDT | Manama

Email: mail@newsofbahrain.com

A decree-law introducing jail terms and fines of up to BD1 million for breaches of Central Bank of Bahrain licensing and compliance rules was approved by Parliament yesterday.

Ministers told MPs the measure had already been in force since 8 September 2025 as Bahrain prepares for a Financial Action Task Force review this month.

Decree-Law No. 37 of 2025 rewrites the opening paragraph of Article 161 of the Central Bank of Bahrain and Financial Institutions Law of 2006.

Under the new wording, anyone who breaches Articles 40 and 41 of the law, or rules issued under Article 42, may face imprisonment, a fine of up to BD1 million, or either one of those penalties, without prejudice to any harsher punishment under the Penal Code or any other law.

Imprisonment

The amendment adds imprisonment to a provision that had previously allowed only a fine of up to BD1 million.

The offences concern carrying out regulated financial activity without a licence and the use of protected financial or insurance terms by unlicensed parties.

During the debate, MP Abdulhakim Al Sheno called the decree-law one of the measures that would “close some gaps” in Bahrain’s banking law, but questioned the timing behind the urgency case.

Review

“We are now at the end of March,” he told the chamber. “How will there be enough time for it to be reviewed by the Shura Council?”

Minister of Parliamentary Affairs, His Excellency Ghanim Al Buainain, replied that the issue had already been addressed in the grounds of urgency accompanying the decree-law.

“The decree-law has been in force since 8 September 2025,” he said. “What we are doing now is only completing the constitutional procedures.”

Punishment

It also said the tougher penalty for breaches involving virtual asset service providers would strengthen deterrence and bring punishment into line with the gravity of the offence and its effect on the financial system.

The government said the case for urgency also met the constitutional test of necessity, chiefly because time was needed before the FATF review to show that the new rule was being applied in practice.

Article 40 bars anyone from providing financial services subject to Central Bank oversight in Bahrain without a licence from the bank.

It also bars the establishment of a financial institution in the kingdom without Central Bank approval, subject to the Commercial Companies Law.

Article 41 bars unlicensed parties from using the word ‘bank’, or similar wording in any language, or any term suggesting they carry on banking business, in a trade name, address, letters, invoices or notices.

The same restriction applies to insurance activity. Unlicensed parties may not use names or wording suggesting they provide insurance or reinsurance services.