Islamic Banks and Money Laundering in Malaysia: A Legal Compliance Perspective

2019 ◽  
pp. 145-170
Author(s):  
Norhashimah Mohd Yasin ◽  
Nik Nuun Asma Nik Sulaiman ◽  
Mohd Yazid Zul Kepli
Keyword(s):  
Money Laundering ◽  
Islamic Banks ◽  
Legal Compliance

scholarly journals AN EXAMINATIONS OF ALLEGATION OF NON-COMPLIANCE WITH AML/CFT LAWS AGAINST ISLAMIC BANKING

Jurnal Akta ◽  
2021 ◽  
Vol 8 (2) ◽  
pp. 76
Author(s):  
Maruf Adeniyi Nasir ◽  
Dato� Ng See Teong
Keyword(s):  
Money Laundering ◽  
Focal Point ◽  
The United States ◽  
Islamic Banks ◽  
Weak Supervision ◽  
Western Countries ◽  
The Us ◽  
Islamic Financial Institutions ◽  
Terrorism Financing ◽  
To Come

The dangerous dimension which the terrorism financing incursion introduced to peace and harmonious life globally makes the issue of money laundering and combatting financing terrorism (AML/CFT) a serious phenomenon. The compliance with the AML/CFT laws now generates global interest. Assessment of whether Islamic banks are complying with AML/CFT compliance measures becomes a grave issue that require attention particularly against the background of allegation by Western countries of lax control and supervision. This is probably because of the havoc that the world has continuously experienced as a result of this menace. The issue has continued to come in different dimensions and like a Siamese twin, the banks have become the focal point and inseparable in the issue of how to combat this menace. Incidentally, the increase in the growth and development of Islamic banks across the globe has dragged it to the centre of discussion. Thus, there have being a recurring issue on Islamic financial institutions regarding its compliance with Anti-money laundering laws and Combating Financing Terrorism (AML/CFT) measures. There were allegations of non-compliance with AMLCFT laws by Islamic banks, particularly by some Western countries led by the United States of America. Consequently,� the issue of combatting money laundering and terrorism has become a major issue in the global domain. This paper has extensively examined the allegation of non-compliance of Islamic banks with AML/ CFT laws. This is done by beaming searching light on the growing perception of lax in the control, monitoring, weak supervision, and non-compliance of Islamic banks with AML/CFT measures that is been spearheaded by some western countries, led by the US. Thus, by using the doctrinal research methodology, the paper sought to determine the veracity of the allegation and incidentally found that the allegation is not only baseless but lacks empirical evidence.�

scholarly journals Do Islamic banks gain from corruption and money laundering (ML)?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kinza Aish ◽  
M. Kabir Hassan ◽  
Qamar Uz Zaman ◽  
Sadaf Ehsan ◽  
Khurram Abbas ◽  
...  
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Random Effect ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bank Profitability ◽  
Content Type ◽  
Real Model ◽  
Effect Regression ◽  
The Impact

Purpose This paper aims to examine the impact of corruption and money laundering (ML) on the profitability and stability of Islamic banks. Design/methodology/approach This study used the data of 53 conventional and 19 Islamic banks of Pakistan and Malaysia to have comparative insights. The empirical methods include the fixed effect and random effect regression and generalized methods of moment for robust results. Findings The results indicate that Islamic banks gain from corruption and ML. Corruption and ML affect bank profitability and stability positively in a less corrupt environment, i.e. Malaysia; however, corruption hurts Islamic banks’ performance, and ML favours Islamic banking profitability and stability in a more corrupt environment, i.e. Pakistan. Originality/value The present study pioneers the debate on corruption and ML related to Islamic banking profitability and stability. This study provides important insights to regulators and Shariah advisors to build a real model of Islamic banking.

The Role of Monitoring Islamic Banks to Control Money Laundering Crimes From the Viewpoint of Employees in the Central Bank of Jordan

2022 ◽  
Vol 19 ◽  
pp. 134-140
Author(s):  
Ali Abdel Fattah Hamdan Zyadat
Keyword(s):  
Central Bank ◽  
Money Laundering ◽  
Analytical Approach ◽  
Islamic Banks

The present study aimed to examine the role of monitoring Islamic banks in fighting against money laundering crimes from the perspective of the employees working at the Central Bank of Jordan. The researcher adopted a descriptive analytical approach. The sample consists of 60 employees who were chosen from the Central Bank of Jordan. Questionnaire forms were passed via email to those employees to fill. All the forms were filled and retrieved. It was found that the reality of monitoring money laundering crimes in Islamic banks by central bank of Jordan is moderate. It was found that there is a positive statistically significant impact of monitoring Islamic banks on control money laundering crimes from the viewpoint of employees in the central bank of Jordan. The researcher recommends activating the role of the Central Bank of Jordan in fighting against money laundering crimes

Financial Laws

2018 ◽  
Author(s):  
Simon Butt ◽  
Tim Lindsey
Keyword(s):  
Dispute Resolution ◽  
Money Laundering ◽  
Deposit Insurance ◽  
Bankruptcy Law ◽  
Islamic Banks ◽  
Luxury Goods ◽  
Reporting Requirements ◽  
The Law ◽  
Court Process

This chapter covers tax, insolvency, and banking law in Indonesia. The law regulating VAT, land and building tax, import tax, luxury goods tax, and regional taxes is discussed, as are tax offences, compliance rules, and Indonesia’s low compliance rates. The chapter then deals with bankruptcy law, describing the court process leading to the appointment of receivers and, in some cases, liquidation and dissolution. An assessment of the Commercial Court is offered, before the chapter turns to banking law. The powers and responsibilities of the two lead agencies in this area, Bank Indonesia and Otoritas Jasa Keuangan (OJK), are explained, including prudential and reporting requirements, consumer protections and dispute resolution mechanisms, and the Indonesian Deposit Insurance Corporation’s role. The chapter closes with discussion about anti-money laundering measures, rural banks and Islamic banks.

Money laundering in selected emerging economies: is there a role for banks?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sulaiman Abdullah Saif Alnasser Mohammed
Keyword(s):  
Developing Countries ◽  
Money Laundering ◽  
Emerging Economies ◽  
Design Methodology ◽  
Future Research ◽  
Legal Environment ◽  
Islamic Banks ◽  
Content Type ◽  
Relationship Of ◽  
The Relationship

Purpose Understanding money laundering plays an important role in understanding economic growth (EG). Extensive research is conducted about that, previous research lacks answers about the relationship of anti-money laundering (AML) and EG by investigating the roles of the performance of Islamic banks, legal environment, financial crisis (FC) and bank size. Therefore, the purpose of this paper is to cover that gap. Design/methodology/approach SmartPLS 3.0 was used and 33 Islamic banks were selected from developing countries between 2007 and 2010. Findings Note that AML, Islamic bank performance, legal environment, and FC are significantly related to EG. Research limitations/implications The research would be of importance to those seeking to understand the determinants of EG; it is also beneficial for those writing books about money laundering and Islamic banks in developing countries. The limitation of the study is the low number of Islamic banks that have complete data. Thus, this could be future research contribution. Originality/value To the best knowledge of the author, research on money laundering and Islamic banks in developing countries are not extensive, we have found an ample room to discuss the said variables.

Anti-Money Laundering Regulation and Practice of Islamic Banks in the United Arab Emirates: A Case Study

2020 ◽  
Vol 13 (2) ◽  
pp. 473-497
Author(s):  
Ajay Kumar
Keyword(s):  
Economic Development ◽  
Sample Size ◽  
United Arab Emirates ◽  
Money Laundering ◽  
Due Diligence ◽  
Islamic Banks ◽  
Regulatory Requirements ◽  
Survey Results ◽  
Customer Due Diligence

AbstractBanks are key institutions in the economic development of a country, but they are prone to money laundering (ML) as well. Such incidents could lead to sanctions and loss of reputation. To mitigate such risks, banks are required to follow Anti-Money Laundering (AML) regulations. Presently, there are no separate or specific AML regulatory requirements for Islamic banks (IBs). Apart from regulations, understanding practices also help explicate compliance to laws (spirit), by those who apply it. Since the AML practices of IBs have not been systematically analysed, we look at their practices (the United Arab Emirates) to understand whether they have adopted specific AML processes. Owing to the lack of literature on such practices, a survey was carried out using a standard questionnaire. The questionnaire was supplied to the AML/compliance departments, and the results are based on a sample size of three banks. The survey results show that the IBs adopt Know Your Customer (KYC) and Customer Due Diligence (CDD) to check laundering. Crucially, questions pertaining to the AML risk arising from the potential vested interest/s (theoretical) that the IBs themselves are likely to have in the venture remain unanswered.

Sharī‘ah risk and corporate governance of Islamic banks

2014 ◽  
Vol 14 (1) ◽  
pp. 86-103 ◽  
Author(s):  
Karim Ginena
Keyword(s):  
Corporate Governance ◽  
Financial Services ◽  
Operational Risk ◽  
Senior Management ◽  
Future Research ◽  
Islamic Banks ◽  
Legal Compliance ◽  
Content Type ◽  
Reputational Risk ◽  
Islamic Financial Institutions

Purpose – The purpose of this paper is to help directors, senior management, and stakeholders of Islamic banks understand sharī‘ah risk, a crucial consideration in the corporate governance of Islamic banks, and its impact on these banks. Design/methodology/approach – This conceptual paper links dispersed insights drawn from the emerging body of sharī‘ah governance literature, and the guidance issued by the Basel Committee on Banking Supervision (BCBS), the Islamic Financial Services Board (IFSB), and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) with new insights to clarify the sharī‘ah risk that Islamic banks face. Findings – Sharī‘ah risk, an operational risk, poses a credible hazard to Islamic banks and their stakeholders. Possible consequences of sharī‘ah non-compliance include higher costs, financial losses, liquidity problems, bank runs, bank failure, industry smearing and financial instability. This study defines shariah risk, identifies credit, legal, compliance, market, and reputational risk that it may evoke, and categorizes its causes and events. Research limitations/implications – Future research could empirically test the ideas posited. In this paper claims were substantiated by logic and examples. Practical implications – The study devises an instrument for assessing sharī‘ah risk, and suggests measures for directors, senior management, and regulators to mitigate this risk. Originality/value – This is the first study to focus on the implications of sharī‘ah risk, delineate examples of events and incorporate them within the BCBS operational risk causes, and develop a tool for measuring sharī‘ah risk.

scholarly journals BANKING COMPLIANCE FUNCTION(COMPARATIVE STUDY BETWEEN COMMERCIAL & ISLAMIC BANKS)

2021 ◽  
Vol 13 (1) ◽  
pp. 26-31
Author(s):  
Nagham H. Neama1 ◽  
Keyword(s):  
Comparative Study ◽  
Money Laundering ◽  
Banking Sector ◽  
Islamic Banks ◽  
Executive Management ◽  
Main Concept ◽  
Compliance Function

Never the less, banking compliance function became one of the most important functions in banking sector according to its characteristics that considered as an interior control tools to control (executive management, departments, subsidiaries…etc) in any bank; and their compliance towards applying rules, recommendations and legislations. In addition to, estimating the risks and limited them; and controlling the anti-money laundering. Thus, these functions that covered the main concept of (Banking Compliance) would avoid the bank to be under the control of any sanctions.

scholarly journals Follow the Money as an Attempt of State Financial Loss Restoration in Criminal Action of Money Laundering with Corruption as Predicate Crime

2018 ◽  
Vol 5 (3) ◽  
pp. 323
Author(s):  
Kartika Rahmasari Dewi ◽  
Hartiwiningsih Hartiwiningsih ◽  
Widodo Tresno Novianto
Keyword(s):  
Law Enforcement ◽  
Money Laundering ◽  
Legal Culture ◽  
Charged State ◽  
Financial Loss ◽  
Legal Compliance ◽  
Loss Recovery ◽  
Legal Structure ◽  
Act One

Money laundering is an attempt to conceal or disguise the origins of assets acquired from a crime. Money laundering is a follow-up crime because it is followed by a criminal act, one of which is a systematic and organized criminal act of corruption, law enforcement process is not easy. One effective way of preventing and combating money laundering and corruption can be done by follow the money approach. Follow the money approach can reveal who the perpetrator, the type of crime, place and amount of hidden. Then in addition to perpetrators remain criminally charged, state financial loss recovery efforts can also be achieved. The result of t research shows the obstacles implementation of follow the money is derived from the substance element that is conflicting interpretation of Article 77 and Article 69 of Law on TPPU, the element of legal structure namely the lack of good cooperation among law enforcers, as well as the legal culture element, is the low participation of the society against the legal compliance of the criminal act of washing money especially the approach of follow the money. 

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