The assistant undersecretary of legal affairs at the Ministry of Interior, Brig. Mohammed Rashid Buhamood, confirmed the arrest in a statement on Friday.

According to sources, the person arrested is currently serving as a minister of state and had also served as a Cabinet minister.

"The arrest took place after intensive investigations by the Anti-Money Laundering Directorate, which has legal permission to use monitoring and recording techniques," Buhamood added.

He said the ministry traced his illegal activities to the beginning of 2009. "His phone calls and meetings with his associates were tapped."

Buhamood said the suspect has been referred to the public prosecutor.

Under Bahraini law, anyone attempting or participating in money laundering can be jailed for up to seven years and fined as much as one million Bahraini dinars ($2.64 million).

Bahrain, the host of 412 banks and financial institutions with total assets of $222 billion at the end of 2009, was the first Gulf Corporation Council state to implement anti-money laundering laws through a royal decree.

The minimum punishment for money laundering is imprisonment for at least five years and a fine of at least 100,000 Bahraini dinars if the accused has committed a money laundering offense through an organized criminal gang or attempted to disguise the source of the ill-gotten funds as legitimate.