NEW BID TO CURB 'DIRTY CASH' FLOW

BAHRAIN is tightening its defences against the global crime of money
laundering. GCC states are said to be particularly vulnerable because
they sit directly on the drug route between Asia and the West,
according to a top Commerce Ministry official.

He said steps are now being taken to educate both the government and
private sector on how to restrict money laundering.

"GCC countries are located in the middle between drug producers in
Afghanistan, Pakistan and Iran and consumers in Europe and the US,"
said Financial Analysis Section head Hassan Al Ghannami.

"In addition to that, we have almost eight million foreigners working
in our countries, who come from countries which produce drugs.

"It is possible for these people to use our countries for money
laundering."

Money laundering occurs when criminals, such as drug dealers, conceal
illicit funds by converting them into apparently legitimate income.

Bahrain is now singling out companies thought to be at a high risk of
being targeted and is encouraging them to be more vigilant.
Declaration letters are being sent initially to 22 companies, which
they then have to sign and return to the Commerce Ministry.

"We have selected companies that we think are suspicious or are
vulnerable to being targeted by money launderers," said Mr Al Ghannami.

"They have to sign the declaration, which says they are doing
everything possible to stop it.

"We will visit them, hand them a checklist and they have to sign the
declaration."

The Commerce Ministry plans to eventually obtain signed declarations
from all companies in the country.

In addition, all 264 employees at the Commerce Ministry are obliged to
sign the declaration.

Companies can be fined up to BD20,000 if they fail to detect
suspicious transactions related to money laundering through a lack of
due diligence.

"If they carry out their side and educate their staff there is no
problem," said Mr Al Ghannami.

"But there is if they fail to educate their staff or detect it because
they did not comply with the rules of the country.

"Every organisation should have a central system.

"They have to know their customers - who are they? What are they
trying to do? What is the expected number of transactions? What is the
nature of their business?

"You have to have a recording and reporting system in place and teach
employees how to deal with cases that are suspicious.

"But they have to be careful not to harm the relationship with their
customers."

Illegal funds worth an estimated $850 billion (BD321.3bn) are
laundered around the world every year, said Mr Al Ghannami.

However, he added there is no foolproof way to ensure that companies
are not unwittingly targeted.

"There is no definitive list of what to look for," he
said.

"These people are always changing.

"They are creative, they know what they are doing. They even employ
professional people, such as accountants, to help them.

"Companies have to be careful, be aware of unusual activity and
identify transactions that do not fit the business."

Mr Al Ghannami has conducted a presentation on money laundering to all
Commerce Ministry personnel.

The ministry, which licences all commercial ventures in the country,
has also published a booklet that helps people identify suspicious
transactions and details the current legislation in Bahrain.

In addition, it is considering whether to subscribe to a global web
service, which identifies blacklisted companies that may be involved
in money laundering. It is all part of efforts to protect Bahrain's
reputation as a financial centre.

"It is important to protect Bahrain's reputation because it affects
the health of the economy," said Mr Al Ghannami. "Any unexpected
movement of money can affect supply and demand, which also harms the
economy."