Weekly Spotlight: Bahrain stipulates the requirements for lawyers regarding anti-money laundering and terrorist financing
This week the spotlight is on legal and regulatory developments in Bahrain, where the Kingdom’s Justice, Islamic Affairs and Endowments Minister, Shaikh Khalid bin Ali Al-Khalifa has issued an Edict stipulating the requirements for lawyers and foreign legal firms regarding anti-money laundering and terrorist financing. The Edict has been issued in line with the Middle East and North Africa Financial Action Task Force (MENAFATF) criteria on anti-money laundering and terrorist financing as well as UN conventions, agreements and UN Security Council Resolutions.
Under Bahrain Edict No. 64/2017, lawyers’ offices, foreign legal offices and firms have to comply with Bahrain Law No. 4/2001 regarding the prohibition and combating of money laundering and terrorist financing to ensure their operations are not used for money laundering or terrorist financing. It makes it mandatory to notify the follow-up and monitoring unit at the Interior Ministry’s Financial Investigation Directorate about any suspicious or abnormal activities, when conducting transactions on behalf of their customers. This includes real estate transactions, fund and asset management and all types of banking. Lawyers’ offices, foreign legal offices and firms have to verify the information provided by their customers as well as clients who demand legal opinions regarding the powers of attorney and write down details in special records accredited by the Justice, Islamic Affairs and Endowments Ministry and inform the follow-up unit about any suspicious information.
The Edict defines ‘suspicious’ and ‘abnormal activities’ as ‘operations which are suspected to be linked, directly or indirectly, to the crimes involving money-laundering and terror funding’. Licensed lawyers and foreign firms have to open accounts for professional purposes in a bank accredited by the Central Bank and all payments or funds collected from or on behalf of customers have to be deposited in the bank. Lawyers and foreign firms also have to set up special e-records to register all lawyers’ activities and legal opinions provided to customers. These records have to include the customer’s name and data, the subject of the power of attorney or legal opinion, date of the service provided to customers, the amount of money paid to the firm, the financial transaction serial number, name of the bank and date of the transfer.
Elsewhere, the Chairman of the Kingdom’s Economic and Financial Affairs Committee, Jalal Kathem has announced tobacco and fizzy and energy drinks have been listed on the VAT list. These commodities will be subject to 5% VAT because they are not considered basic commodities. This will see the cost of tobacco packets increase by roughly 60% while energy drinks will increase by 100%.