Islamic Finance and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

Kyriakos-Saad, Nadim; Vasquez, Manuel; Khoury, Chady El; Murr, Arz El

doi:10.5089/9781513516158.001

Cited by 4 publications

(2 citation statements)

References 1 publication

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“…Since the bank is considered a partner, if its customer engages in money laundering, the institution will be compromised as well. Consequently, it may not have the incentive to report suspicious transactions [Kyriakos-Saad et al (2016): 9]. In addition, the complexity of Islamic finance may be another concern for transparency of transactions and funds.…”

Section: Literature Reviewmentioning

confidence: 99%

The regulatory technology “RegTech” and money laundering prevention in Islamic and conventional banking industry

Turki

Hamdan

Cummings

et al. 2020

Heliyon

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This study aims to illustrate the impact of adopting Regulatory technology (RegTech) innovations in banks on money laundering prevention effectiveness using Bahrain as a case study. Bahrain has strived to position itself as the banking center of the Arabian Gulf, hence the results of this novel research are informative of the practices in the region. The primary data for this study was collected through a survey instrument distributed to 100 bankers working in Bahrain with expertise in compliance. The results of multivariate analysis indicate that transactions monitoring through RegTech and cost- and time-saving aspects of RegTech, drive money laundering prevention effectiveness to a highly statistically significant extent. However, electronic know your customer (KYC) technologies are insignificant as drivers. This research not only sheds light on the efficacy of RegTech but also raises general awareness concerning the adoption and integration of RegTech platforms for fighting money laundering. In particular, the findings provide specific insights about the deployment of RegTech capabilities in banks in regional banking centers of modest scale.

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Section: Literature Reviewmentioning

confidence: 99%

The regulatory technology “RegTech” and money laundering prevention in Islamic and conventional banking industry

Turki

Hamdan

Cummings

et al. 2020

Heliyon

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“…El-Gamal (2005) argues that in order to make the product permissible, Islamic banks should separate their clients from the underlying conventional products, for instance by creating a special purpose vehicle (SPV) to convince their clients that they provide Islamic financial services from a separate source of funds other than conventional sources, or by signing two separate sale contracts in order to convince Islamic jurists that the product is in compliance with Sharia. Kyriakos-Saad, Vasquez, El Khoury and El Murr (2016) point out that Islamic financial products are designed based on an underlying asset, which brings a layer of complexity.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

How informative are stock prices of Islamic Banks?

Abedifar

Bouslah

Hashem

et al. 2020

Journal of International Financial Markets, Institutions and Mo

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Using a sample of 2,210 observations for 170 banks operating in 12 countries with dual banking systems over 2005-2017 period, we find that Islamic banks have lower stock return non-synchronicity, lower illiquidity ratio, and their current returns have lower future earnings prediction ability than conventional banks. The results hold for the GCC-member countries and in the non-crisis period. Hence, Islamic banks in such countries have less information content in stock prices than conventional banks that can be due to their lower degree of transparency mandated by their financial paradigm. This suggests that for Islamic banks, market discipline may not be as effective as it is for conventional banks and hence they require more direct supervision. The finding has important implications for policymakers in countries with dual banking systems.

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Challenges in customer due diligence for banks in the UAE

ElYacoubi

2020

JMLC

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Purpose The purpose of this paper is to unpack the customer due diligence (CDD) vulnerabilities and to examine and analyze the UAE specific dynamics that make the country exposed to these threats. This research also intends to put on the table suitable solutions and remedial action steps that the UAE government, regulators and financial institutions (FIs) can adopt. Design/methodology/approach This study is qualitative in nature. Findings Despite the impressive regulatory framework and the satisfactory practices by FIs, there still remains some UAE specific challenges that make it difficult to undertake CDD for certain customers. The challenges that were identified include difficulties in Arabic names, complications in identifying the beneficial owners, impediments in establishing the source of wealth/funds, concerns with politically exposed persons, the increasing cost of compliance that resulted in a pattern of de-risking within FIs. Research limitations/implications The international bodies whose mandate is to formulate the necessary anti-money laundering and combating the financing of terrorism policies and regulations for global implementation together with Association of Certified Anti-Money Laundering Specialists (ACAMS) have published sufficient studies on CDD-related issues in the UAE. Yet on the other hand, very limited literature was found by independent scholars. This paper will, therefore, largely reference publications by Financial Action Task Force, the International Narcotics Control Strategy Report and ACAMS. It will also include works by respected law firms that have operations in the UAE, local publications, government documents, academic papers by the International Monetary Fund and the World Bank, legal journals and others. Originality/value Illicit actors exploit the UAE’s relatively open business environment, a multitude of global banks and exchange houses and global transportation links to undertake illicit financial activity […] the UAE does not have any major anti-money laundering (AML) deficiencies. However, the monitoring of FIs for AML purposes, particularly in the area of CDD, could be improved. This paper unpacks the CDD vulnerabilities and analyzes the UAE specific dynamics that make the country exposed to these threats. This research also puts on the table suitable remedial action steps that the UAE government, regulators and FIs can adopt.

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Islamic Finance and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

Cited by 4 publications

References 1 publication

The regulatory technology “RegTech” and money laundering prevention in Islamic and conventional banking industry

The regulatory technology “RegTech” and money laundering prevention in Islamic and conventional banking industry

How informative are stock prices of Islamic Banks?

Challenges in customer due diligence for banks in the UAE

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