In general, all financial activities within the Kingdom of Bahrain (“Bahrain”) are controlled and/or subject to the monitoring by the Central Bank of Bahrain (“the CBB”) that was established by the Decree No. (64) of 2006 with Respect to Promulgating the Central Bank of Bahrain and Financial Institutions (“the CBB Law”). By virtue of the CBB Law, the CBB has issued the rulebook and some guidelines that govern the banking and financial activities from and/or within Bahrain.
The CBB Rulebook Volume 2 is applicable to Islamic banking. The Rulebook provides, among other that "[p]ersons wishing to undertake regulated Islamic banking services are required to be licensed by [CBB] as an Islamic bank licensee. Regulated Islamic banking services consist of three determinant activities — the acceptance of Shari'a money placements/deposits, the managing of Shari'a profit sharing investment accounts, and the offering of Shari'a financing contracts. In addition, various supplementary activities may also be undertaken. ... Islamic bank licensees must operate all their operations in compliance with Shari'a economic principles; and only Islamic bank licensees may hold themselves out to be a fully Shari'a compliant institution."
Rule LR-1.3.1. defines regulated Islamic banking services as any of the following activities, carried on by way of business:(a) Accepting Shari'a money placements/deposits;
(b) Offering Shari'a Financing Contracts;
(c) Managing Shari'a profit sharing investment accounts;
(d) Dealing in Shari'a compliant financial instruments as principal;
(e) Dealing in Shari'a compliant financial instruments as agent;
(f) Managing Shari'a compliant financial instruments;
(g) Safeguarding Shari'a compliant financial instruments;
(h) Operating a Shari'a compliant Collective Investment Undertaking;
(i) Arranging deals in Shari'a compliant financial instruments;
(j) Advising on Shari'a compliant financial instruments;
(k) Providing money exchange/remittance services;
(l) Issuing/ administering means of payment.
1. retail Islamic bank; or
2. wholesale Islamic bank.
On 25 November 2007, the CBB published on its website the standard conditions and licensing criteria for private banking.