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Dr. Hussin Bin Issa, Dr. Nashat Mahmoud Jaradat


Purpose: The paper intends on studying the present regimes of bank secrecy and money laundering provisions that exist globally vis-à-vis drawing a comparison with the present position in Bahrain. The nation of Bahrain is a minor player amongst the international market players of offshore financial institutions. The paper seeks to observe and point out the key practices that are adopted by the nations following a global standard and the practices followed in Bahrain and to address such issues and legal or policy shortfalls in order to understand the extent of complicane with the internationally set standards. The paper shall provide the reader with a quick understanding about the present regime in such activities.

Methodology: The paper has been attempted by taking a doctrinal-qualitative analysis approach. The primary sources of research include the various rules and regulations that have been mentioned and a deep understanding and reading has been conducted in order to facilitate the comparison. The paper has also looked into key provisions under the Bahraini Legislation, UN Conventions, IMF recommendations and responses of various international groups and has drawn co-relations with the general set standards and requirements of the major financial bodies and regulators and has also checked if the domestic law is in lines of the set standards and general principles.

Research Implications: It has been observed as to how banking secrecy achieves the interest of the bank’s client though the maintenance of confidentiality of the business and also acts as a boost to the bank’s interests by attracting more clients which increases the bank’s economic general interest and profit. The absolute adherence to the norms of bank secrecy may nevertheless play a negative role as it would tend to promote and facilitate the commission of money laundering crimes which bears a negative impact on the nation’s economy. Accordingly, this paper would intend on discussing the extent of the success of the legislation and the measures at the national and international levels that enable banks to maintain their practices of providing financial/banking secrecy without acting as an aide in the facilitation of the crime of money laundering. This can be achieved through the possibility of lifting financial/banking secrecy norms if such measures are necessary to prevent the act of money laundering.

Findings: The Author has observed as to how the laws have been made compliant to the set standards of the IMF primarily. The domestic legislations in the global leading economies have been observed to be in lines of such standards and has constantly evolved to meet the growing challenges through time.

Importance of Study: The importance of research is highlighted by shedding light on the mechanism of reconciliation between maintaining bank secrecy and combating money laundering operations at the national and international levels.

Originality: The paper intends to contribute to the research related to the existing conditions of the laws relating to bank secrecy and money laundering challenges while duly focusing on the present scenario in Bahrain. There is no study that is readily available regarding the position in Bahrain specifically despite of a plethora of material that discusses the aspects of banking secrecy and money laundering on a general level. The Paper has also tried in drawing close relationships between the domestic legislation and the various regulations, mandates, conventions and requirements governing the same.

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