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By: Hany Abou-El-Fotouh Money laundering is not a new trend. It is a process that takes illegal or dirty money generated from illegal activities and puts it through a cycle of transactions, so that it comes out at the end as apparently legal or clean money. The process is driven by criminal activities and conceals the true source, ownership, or use of funds. No one can deny that money launderers may use Islamic banks as a place to clean their dirty money through the use of various financial instruments. In fact it is important to ensure that Islamic banks are well protected from being unwittingly used by money launderers. Additionally, the public at large should continue to maintain confidence on the credibility of the Islamic financial system.
stage is "Integration" i.e. to integrate the illegal proceeds back into the economy as legitimate funds through legitimate transactions such as business ventures, luxury assets, lending, financing and investing. This stage provides money a launderer with an apparently legitimate explanation for his/her
Reality: Islamic banks oversee payment of Zakat to worthy charities and apply same adequate due diligence on about no payments are made to doubtful charities Myth2 Islamic banking system operates under loose regulatory oversight. No proper accounting/auditing standards Reality: Islamic banks are well regulated and follow defined standards e.g. Sharia Council, home regulators, International Islamic Rating Agency, Accounting and Auditing Organization for Islamic Financial Institutions, International Financial Services Board Myth 3 : Terrorist groups more likely to find willing collaborators within the Islamic banking system Reality: Sharia principals do not conflict with international anti-money laundering and counter terrorist financing standards. Islamic banks are subject to the same laws and regulations as their conventional counterparts. Myth 4: Assets and commodities used as degrees of separation in purely financial dealings, resembling "layering" methods of criminal financiers. Reality: Criminal activities are not in line with Sharia. Islamic banks cannot undertake activities which are harmful to society and its moral values e.g. gambling, casinos, liquor trade etc. Myth5: Islamic banks operate in countries known of weak banking regulations Reality: Conventional international banks with Islamic windows: Citigroup, HSBC, UBS, Standard Chartered Bank. National regulators are also involved e.g. FSA (UK) & FED (NYK)
Hany is a certified member of the Association of Certified Anti-Money Laundering Specialists (ACAMS) and Certified Director by Egyptian Institute of Directors. http://www.linkedin.com/in/ hanyfotouh hanyfotouh@yahoo.com Islamic banks, money laundering, terrorist financing, banks, banking