Islamic Bankers Hit Back At Money Laundering Allegations

by Lorys Charalambous, Tax-News.com, Cyprus

15 November 2001

According to speakers at the World Islamic Banking Conference, money laundering and other financial malpractices such as tax evasion are more difficult to conduct within the Islamic banking system than in the conventional system.

Angry at the way the Islamic banking system has been stigmatised in the aftermath of the September 11th terrorist attacks, key bankers and experts have hit out at what they perceive as 'financial racialism' from the Western media. Islamic bankers at the recent conference argued that Islamic financial institutions function under strict Sharia principles which uphold moral and ethical codes, and insisted that regulatory authorities also keep a close eye on their activities.

'The anti-money laundering fundamental, 'know your customer', has been in force in the Islamic banking industry since inception. Islamic banks also have fewer customers than conventional banks, enabling us to know the customer better,' explained Khalid Al Janahi, CEO of Geneva-based Dar Al Maal Al Islami.

Although there have been reports that inflows to the Islamic finance industry have suffered as a result of the recent furore surrounding terrorist funding, these were dismissed at the conference, although there were promises made of 'more transparency while encouraging investment inflows'.

Meanwhile, it was announced earlier this week that the UAE Council of Ministers has approved new anti-money laundering laws, which now need to go before the Union Supreme Council to be signed.

According to Dr Mohammed Khalfan bin Kharbash, Minister of State for Financial and Industrial Affairs in the United Arab Emirates: 'The law sets out comprehensive definitions of money laundering crimes, the punishments and the procedures to recognise potential money laundering activity, to identify possible perpetrators, [and] to record transactions above specified thresholds.'

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