His Majesty King Hamad bin Isa Al Khalifa has issued Decree-Law No. 36 of 2025, amending Decree-Law No. 4 of 2001 on the Prevention and Combating of Money Laundering and Terrorism Financing. This update, proposed by the Prime Minister and approved by the Cabinet, introduces significant enhancements to Bahrain’s legal framework to fight financial crimes more effectively. The new law incorporates updated definitions, strengthens procedures, and clarifies responsibilities to better counter money laundering, terrorism financing, and the proliferation of weapons.
Key Amendments and Definitions
The law revises several important terms. The “Implementing Unit” now specifically refers to the National Financial Investigations Unit, which is central to Bahrain’s AML/CFT efforts. “Proceeds of Crime” is broadened to include any funds derived directly or indirectly from criminal activities, encompassing profits, interest, or yields from such funds.
A “Risk-Based Approach” is mandated, emphasizing systematic identification, assessment, monitoring, and mitigation of risks related to money laundering, terrorism financing, and proliferation financing. The concept of “Good Faith” is recognized for individuals or entities acquiring assets without knowledge of their illicit origin.
Expanded Legal and Enforcement Measures
The updated law criminalizes not only direct money laundering but also acts of concealing, transferring, or retaining proceeds of crime. Courts have enhanced authority to confiscate criminal proceeds, including in cases where the offender is deceased, while safeguarding the rights of third parties who acted in good faith.
Corporate accountability is strengthened, enabling the imposition of fines on companies and confiscation of illicit assets when offenses are committed under their name or by their representatives. This reinforces responsibility at both individual and organizational levels.
National Anti-Money Laundering Committee
A key institutional enhancement is the empowerment of the National Anti-Money Laundering Committee, charged with formulating AML policies, issuing guidelines, and coordinating efforts among local and international stakeholders. The committee oversees compliance with UN conventions, counter-terrorism financing regimes, and national terrorism lists. It also seeks to enhance public-private partnerships to deepen risk awareness and operational efficiency.
National Financial Investigations Unit
The National Financial Investigations Unit (NFIU) emerges as the operational hub for AML enforcement. The NFIU is authorized to receive and investigate suspicious transaction reports, track illicit financial flows, and manage international cooperation on financial crimes. It can request documents, access financial records, and temporarily suspend financial transactions for up to 72 hours to facilitate investigations.
The unit cooperates with other government agencies to ensure rigorous monitoring, reporting compliance, and financial tracking, enabling a comprehensive approach to combat crimes effectively.
International Cooperation and Enforcement
The amended law underscores Bahrain’s commitment to international AML/CFT standards by facilitating extensive exchange of information with foreign authorities regarding suspicious transactions and criminal assets. It empowers joint investigations, asset tracing, and recovery efforts under bilateral and multilateral agreements, strengthening Bahrain’s global cooperation in fighting financial crime.
Oversight authorities are tasked with monitoring and inspecting financial institutions and other relevant entities to ensure stringent compliance with the law. Any contractual or other arrangements designed to evade asset seizure or confiscation are deemed void.
Modernization and Implementation
This Decree-Law repeals outdated provisions and reallocates institutional responsibilities to embrace a modern, risk-based AML framework that is aligned with evolving global best practices against money laundering, terrorism financing, and illegal arms proliferation.
The Prime Minister and relevant Ministers are responsible for enforcing this law, which is effective immediately, signaling Bahrain’s urgent and ongoing commitment to safeguarding its financial system integrity and international reputation.
AML Editor’s article was originally published in newsofbahrain on Sep, 8 2025