Islamic financial institutions: conduits for money laundering?

Author:Siti Faridah Abdul Jabbar
Position:Sustainable and Inclusive Development Centre, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, Bangi, Malaysia
Pages:285-295
SUMMARY

Purpose The purpose of this paper is to discuss various situations in the Islamic financial services industry that are asserted to facilitate money laundering and the counter-arguments to the assertions. Design/methodology/approach The approach adopted by this paper is a review of literature and of several practices of Islamic financial institutions in a number of countries. Findi... (see full summary)

 
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Islamic nancial institutions:
conduits for money laundering?
Siti Faridah Abdul Jabbar
Sustainable and Inclusive Development Centre,
Faculty of Economics and Management, Universiti Kebangsaan Malaysia,
Bangi, Malaysia
Abstract
Purpose The purpose of this paper is to discuss various situations in the Islamic nancial services
industrythat are asserted to facilitate money laundering and the counter-argumentsto the assertions.
Design/methodology/approach The approach adopted by this paperis a review of literature and of
severalpractices of Islamic nancial institutions in a number of countries.
Findings There is no evidence to support the contentions that Islamic nancial institutions facilitate
money laundering. Further,Islamic nancial institutions are not any more susceptible to money laundering
than conventionalnancial institutions are.
Originality/value This paper demonstratesthat Islamic nancial institutions are not conduitsfor money
laundering.
Keywords Finance, Money laundering, Islam, Crimes
Paper type General review
Introduction
Islamic nancial institutions are said to not only be susceptible to money laundering but
also facilitate such activity. This paper discusses several situations in the Islamic nancial
services industry that are asserted to facilitate money laundering. At the same time, this
paper presents the counterarguments to the assertionsand supports the counterarguments
by discussing several practices in the Islamic nancial services industry in a number of
countries. Nonetheless, what is money laundering that it is so abhorred and why is it so
detested? This paper starts with a brief discussion on what money laundering is and the
rationales for its prohibition before continuing with the discussion on the assertions and
counterarguments.
What is money laundering?
Thereisnosingledenition of money laundering and some of the denitions are the
process by which proceeds from a criminal activity are disguised to conceal their illicit
origins(Schott, 2006); the process of transforming the proceeds of illegal activities
into legitimate capital(Alldridge, 2003); the process by which criminals attempt to
conceal the true origin and ownership of their criminal activities(Drage, 1992); the
process of converting or cleansingproperty, knowing that such property is derived
from serious crime, for the purpose of disguising its origin(Sherman, 1993); and the
process by which criminals attempt to hide and disguise the true origin and ownership
of the proceeds of their criminal activities, thereby avoiding prosecution, conviction
and conscation of the criminal funds(Commonwealth Secretariat, 2006).
Conduits for
money
laundering
285
Journalof Money Laundering
Control
Vol.23 No. 2, 2020
pp. 285-295
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2019-0074
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm

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