Provision of Bahrain's Anti Money Laundering Law Ruled Unconstitutional

Bahrain has a fairly strict AML/CFT regime, including a tough law.  The CBB AML/CFT regulations for conventional banks are here.  There is a mirror law for Islamic banks.  And separate rules for other types of financial firms.

Bahrain is also the headquarters for the Middle East North Africa FATF organization - MENA's regional organization under the FATF.  For those who like techspeak, it's "our" very own FSRB.

More information from Bahrain's Ministry of Interior Financial Intelligence Unit website.

Here's a recap of some of the provisions of Decree Law #4 of 2001.

1. Offenses include not only actively participating in money laundering but as well failure to undertake reasonable AML procedures, obstructing an investigation, or informing a person that they are being investigated.  Examples of the first would be failure to conduct proper due diligence at the initiation of a relationship, failure to monitor customer accounts and transactions, follow-up on suspicious transactions, etc. (Articles 2.1, 2.2, and 2.6)
   
2. The authorities do not have to prove that the funds are the proceeds of criminal or illegal activity to prosecute or obtain a conviction.  (Article 2.3)
   
3. There is no statute of limitations.  That is, regardless of when the offense occurred one can be prosecuted.  (Article 3.6).
   
4. Fines are up to a maximum BD 1 million (US$2.65 million per offense) and up to a maximum seven years in jail.  (Article 3)
   
5. The law also allowed the authorities to not only confiscate the violator's assets to satisfy the fine but as well those of his spouse and minor children. (Article 3.2).
   

It is this last provision which has been struck down by Bahrain's Constitutional Court as per this article in the Gulf Daily News.

This action, which may be reconsidered, does not really diminish the other strong aspects of this law.