BMA issues anti-money laundering rules for capital market

The Directives Relating to the Prevention & Prohibition of Money Laundering at the Bahrain Stock Exchange (BSE), which come into effect immediately, comprise 24 articles covering all aspects of dealing in securities, from the time an offering is made.

The regulations apply to all parties involved in capital market activities, including the BSE, issuers of securities, brokerage firms and offices, registration offices, underwriters, paying agencies, custodians of securities, banks accredited for clearance of transactions carried out at the BSE, dealers in securities and any other entities concerned with dealing in securities.

The new rules have been issued under BMA Resolution No (1) of 2004 and have been published in the Official Gazette (No. 2617). The rules also be accessed at BMA's website on www.bma.gov.bh

"The new anti-money laundering (AML) regulations for the capital market are yet another demonstration of BMA's commitment to implement international best practice in all aspects of financial regulation," said H.E. Khalid Abdulla Al Bassam, Deputy Governor of the BMA.

The Agency assumed responsibility for regulating the capital market in August 2002, as a result of its expanded mandate as single regulator for the entire financial industry, which also includes banking and insurance, Mr. Al Bassam pointed out.

"In the area of capital market supervision as well, we want to exercise the kind of regional leadership for which we have a track record in banking," he said.

The AML regulations for the BSE bring together previously issued national laws and regulations on combating money laundering. They also incorporate recommendations of relevant international organisations, such as the Financial Action Task Force (FATF) and the International Organisation of Securities Commissions (IOSCO).

The rules impose detailed 'know your customer' (KYC) requirements, reporting of suspicious or extraordinary transactions, regular auditing by the BSE of the Central Depository System and Share Registrar, as well as accurate and up-to-date record keeping.

They also require all relevant parties to provide regular training programmes for appropriate staff, to keep them abreast of any developments in laws, regulations and policies related to money laundering.

"The new rules strengthen and refine the anti-money laundering regulatory regime for capital market players to improve the effectiveness of compliance and enforcement efforts," said Mr. Ali Salman Thamer, Director, Capital Markets Supervision, at the BMA.

The AML regulations for the BSE are the latest in a series of rules being issued to continuously develop regulation related to the capital market.

The regulatory development programme is a major component of a strategy being implemented by the BMA to position the BSE as the region's premier capital market.