rasheed mohammed al maraj : financial and regulatory developments in bahrain address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the middle east financial services summit, manama, 5 may 2008. * * * good morning ladies and gentlemen, i am delighted to be here today at the middle east financial services summit, which is being held in bahrain for the second consecutive year. it is indeed my pleasure to welcome you all here. i would also like to thank the organizers, ft global events, for their efforts in holding this event in bahrain and for inviting me to address this distinguished audience. ladies & gentlemen, much has changed since we last gathered here for this conference. at the time, the economic boom in the gcc region, with oil trading around us $ 64, was the main headline news. today, as you all know, oil has scaled new heights at over $ 115 a barrel on most days, the us subprime crisis has unleashed a global credit crunch and the world stands on the threshold of a food crisis due to the soaring prices of basic commodities. here, in the gcc, we are indeed fortunate on many fronts. although we have no desire to destabilize international financial markets, the high oil prices have enabled us to embark on a new program to further modernize our economies, in order to secure prosperity for the long term. however, the rising price of oil, while very welcome, has not come without its own challenges. along with the rest of the world, we, too, are facing inflationary pressures, which need to be carefully managed without compromising the momentum of economic growth. the central banks of the gcc, individually and collectively, are giving due attention to the issue of inflation and several new measures, such as rent caps and credit controls on banks, have been announced to support long - standing programmes of food subsidies and government housing for nationals. in bahrain, we have been particularly fortunate that inflationary levels have, so far, been more modest in comparison with our neighbors and that our financial services industry, which is a major component of the bahraini economy, is enjoying good health. as the regulator of the financial services industry, the central bank of bahrain is pleased by the continued growth of bahrain ’ s financial services sector. while the effects of the us subprime crisis and resulting credit crunch have affected a few bahrain banks, as steve points out in his latest article “ good show of

evaluation report published by the eastern and southern africa anti - money laundering group ( esaamlg ) in september 2018. the amendments brought to existing laws, the financial intelligence and antimoney laundering act ( fiamla ) amongst others, as well as the adoption of new laws and regulations have enable mauritius to be rerated compliant or largely compliant on 35 out of the 40 fatf recommendations, including the 6 core and key recommendations. this is indeed a remarkable achievement for our jurisdiction. i understand that the process is not over yet and mauritius endeavours to obtain compliant or largely compliant ratings on the remaining 5 fatf recommendations. the national strategy further clearly acknowledges in the mission statement that its aim is, i quote “ to adopt a risk based approach to effectively protect mauritius from the threats of money laundering and the financing of terrorism and proliferation. ” unquote. the adoption of a risk - based approach is therefore central to the effective implementation of the fatf recommendations at the national level, be it by policy makers, supervisors, law enforcement authorities and regulated entities, amongst others. one may ask about the reasons underlying such a change in approach to aml / cft. the reasons are simple : first of all, this approach is more flexible. secondly, it allows for a more efficient application of resources. third, it focuses on assessing and devising preventive measures commensurate to the nature of money laundering and terrorism financing ( ml / ft ) risks in financial institutions. higher ml / tf risk therefore calls for higher intensity of supervision. competent authorities can thus take informed decision on proportionate measures to mitigate the ml / tf risks that they have identified. risk - based supervision is often contrasted with rule - based regulation, a more compliancebased supervisory approach limited to the verification of adherence to applicable rules, legislation, regulations or policies. risk - based supervision, in contrast, goes much beyond the compliance approach. it focuses on the principles of sound risk management and on areas / institutions where the risks are higher. the completion of the national risk assessment ( nra ) in august 2019 paves the way to the implementation of a risk - based approach to combating money laundering and terrorism financing activities, thus making aml / cft supervisors and regulated entities and individuals more effective in their efforts. the nra report aims at identifying, understanding and assessing the money laundering and terrorist financing risks faced by mauritius, while its results provide valuable guidance to articulate policies and strategies to address the risks