FATF Status

Bahrain is not currently on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bahrain was undertaken in 2022. According to that Evaluation, Bahrain was deemed Compliant for 9 and Largely Compliant for 30 of the FATF 40 Recommendations. It remains Highly effective for 0 and Substantially Effective for 3 of the Effectiveness  & Technical Compliance ratings

Bahrain has made efforts to combat corruption, including the establishment of a legal framework and various strategies such as the National Anti-Corruption Strategy and the National Strategy to Combat Corruption. Despite these initiatives, enforcement remains weak, and some officials reportedly continue to engage in corrupt practices without facing consequences. While local NGOs are not heavily focused on corruption, civil society activists have raised concerns, and U.S. companies have reported that corruption is a moderate risk, particularly in high-level dealings and public procurement.

Bahrain's economy is characterized by a positive investment climate and a significant shift away from hydrocarbon dependency, with the oil and gas sector now contributing less than 20% to the GDP. The government is actively promoting the private sector and foreign direct investment (FDI) across various sectors, including manufacturing, logistics, and financial services, while state-owned enterprises play a crucial role in economic growth. In 2023, Bahrain's total FDI stock reached $33.8 billion, reflecting the government's commitment to diversifying its economy and enhancing long-term growth.

The investment climate in Bahrain is characterized by a positive and stable environment that actively encourages foreign investment. The government allows 100 percent foreign ownership in various sectors and has implemented policies to attract foreign direct investment, particularly in manufacturing, logistics, and financial services. Despite a decrease in annual FDI inflows from 2022 to 2023, Bahrain's total FDI stock has increased, reflecting ongoing efforts to diversify the economy away from hydrocarbon dependency.