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Bahrain’s money laundering countermeasures in full swing after court action against 13 banks

Bahrain’s public prosecutor has referred 13 banks, including Iran’s Central Bank, to court for money laundering and other “unlawful banking practices”

Banks referred for prosecution include Future Bank, Bank Melli Iran, Bank Saderat Iran, and the Central Bank of Iran Future Bank employees were caught before manipulating the banking system to help Iranian banks evade sanctions All Bahraini financial records have to be made available or stored in a database for up to five years

Bahrain’s public prosecutor has referred 13 banks, including Iran’s Central Bank, to court for money laundering and other “unlawful banking practices” carried out between 2008 and 2012 with the goal to circumvent sanctions against Tehran, the country’s state-run news agency said recently.

After “extensive investigations,” prosecutors found that employees at Bahrain’s Future Bank, which was purportedly found to have been involved in “systematic and widespread violations of Bahrain’s banking law,” allegedly worked with Iranian bank officials to transfer over $1.3 billion through an unregulated alternative system.

The transfers were carried out “with the aim of concealing the source and movement of funds, benefitting Iranian banks and circumventing international sanctions and restrictions on transactions imposed against Iranian entities,” the prosecution said.

The probe was carried out by the Financial Investigation Directorate at Bahrain’s Ministry of Interior, the Central Bank of Bahrain, and independent international experts. It involved the review of “tens of thousands of documents,” which helped identify violations in the audit process. 

Banks implicated in the scheme and referred for prosecution include Future Bank, Bank Melli Iran, Bank Saderat Iran, and the Central Bank of Iran. Investigations are ongoing to determine further criminal conduct and more individuals are likely to be prosecuted. 

Future Bank officials, in conjunction with other Iranian bank officials and the Central Bank of Iran, maneuvered these funds via an alternative system. Funds were transferred and received, kept as a discount, added to the account of Iranian banks, settled in bank accounts, and had their source concealed to enable those banks to complete unlawful transfers of funds.  

This is not the first time employees at Future Bank have been caught manipulating the banking system to help Iranian banks evade sanctions. To date, over $367 million dollars have been confiscated, and all of the accused have been convicted, imprisoned, and fined over $900 mn.

In an unrelated event, four people have been jailed for five years in Bahrain for laundering more than BD250,000 (over $663,000). Two Palestinians, aged 37 and 50, a 47-year-old Syrian and a 26-year-old Bahraini were found guilty of money laundering by the High Criminal Court recently

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Combating money laundering in Bahrain

Bahrain is eyeing a top international ranking in combating money laundering and financing of terrorism. The Shura Council approved a Royal decree to amend the 2001 Money Laundering and Terrorism Funding Law aimed at introducing tighter controls over money transfers and transactions.

Financial institutions could face an administrative fine of up to BD50,000 (over $132,000) if they fail to detect or alert the authorities about suspicious deals, transfers, or transactions.

Authorities can also issue multiple fines for recurring offenses by the same establishment. 

Parliament foreign affairs, defense and national security committee chairman Mohammed Al Sissi said Bahrain was working to tackle digital money transactions.

He said the movement of money has become much trickier nowadays and needed to be governed to put an end to money laundering and terror funding.

Any person who disregards his official responsibility or seeks to be involved and remains silent within any capacity could be jailed for up to three years or fined up to BD200,000 (Over $530,000), or both.

All Bahraini financial records have to be made available or stored in a database for up to five years.