Money Laundering has been identified as a major threat both to Arab Banking Corporation B.S.C. (ABC) and to the banking community in general. ABC, the parent bank of the Arab Banking Corporation group, is incorporated in Bahrain and regulated by the Central Bank of Bahrain (CBB).
Bahrain is a member of the Gulf Cooperation Council (GCC) which in turn is a member of the Financial Action Task force (FATF). Bahrain has introduced strict anti-money laundering regulations and requirements, the principal elements of which are the Amiri Decree Law No. 4 of 2001 with respect to the prevention and Prohibition of the Laundering of Money and the CBB Money Laundering Regulations issued in October 2002 (as subsequently updated).
ABC has adopted strict procedures for dealing with the threat posed by Money Laundering in accordance with the CBB regulations. ABC has furthermore adopted the CBB regulations as a minimum standard to be followed by all its international business units. Where local anti-money laundering regulations are more stringent than the CBB requirements, ABC's international units are required to follow the local regulations.
ABC has issued to all its business units an Anti-Money Laundering Manual which has been approved by the Board of Directors and complies with the CBB regulations, FATF (40+9) and Basel recommendations (to which ABC has pledged to fully adhere) and international best practice in this respect. These procedures include specific requirements with regard to, amongst other things:

• the appointment of a Money Laundering Reporting Officer.
• procedures regarding the identification of customers including the prohibition of numbered accounts or accounts for shell banks.
• regular internal and external inspection and auditing of compliance with procedures.
• procedures for reporting suspicious transactions.
• procedures for profiling customer's transactions and business.
• procedures for education and training of employees in anti-money laundering requirements.
• implementing internal controls for the prevention of money laundering.  

Specific Policies

Know your Customer (KYC) Guidelines

ABC has strict KYC procedures in place which include the validation of business and individual customer identities and place of residence prior to commencing business with any customer. Such information is updated on a regular basis and archived once the business relationship finishes. No anonymous or numbered accounts are opened nor does ABC open any accounts for banks which do not maintain a physical presence in their country of incorporation i.e. shell banks. The procedures include profiling of the customer's transactions as to size, frequency, nature and hence potential risk. 

Reporting Suspicious Activity

Any staff identifying an account or transaction as suspicious is required to report the case to the unit Money Laundering Reporting Officer (MLRO). The MLRO will review the facts and determine whether the suspicion is allayed or whether a report to the local regulator is required. If necessary the MLRO will discuss the transaction with the Group MLRO but if suspicions remain, the filing of a Suspicious Transaction Report (STR) cannot be suppressed. Under no circumstances will staff “tip-off” the customer that an STR is being prepared.

Terrorist Financing

All accounts and payments are screened on a regular basis against lists of suspected or designated criminals and terrorists provided by the regulator (i.e. the CBB) and the United Nations. All new customer relationships are similarly screened. Any matches therewith are reported to the regulators.

Unusually Large Transactions

All cash transactions larger than $10,000 must be reviewed, reported and the rationale thereof clarified before proceeding with the transaction.

Training

It is a requirement that all employees who have potential contact with customers or who process transactions on behalf of customers or are managerially responsible for such staff are required to undertake anti-money laundering training on a regular basis.

Record Retention

All ABC units are required by law to maintain records which are appropriate to the scale, nature and complexity of the customer's business. All identity or business relationship records must be kept for a minimum period of 5 years from the end of the bank's relationship with the customer.

Compliance

ABC's internal audit unit conducts periodic reviews of ABC's operating unit’s compliance with the AML procedures. In addition the external auditors (Ernst & Young) are required to conduct an annual audit of ABC Group Compliance with the CBB regulations. Furthermore the regulator's own inspectors conduct periodic reviews of the parent bank's compliance with the regulations.

Sanctions Policy

All ABC Group Offices are required to comply with sanctions legislation, including those of the U.S. (OFAC) and United Nations sanctions programs, applicable to the jurisdictions within which they operate. All payments are screened against relevant lists in real time. 

Ethical Standards

ABC is committed to promote the highest ethical and professional standards in all its business activities and dealings and strives to prevent the Bank from being used, intentionally or unintentionally, by criminal elements.