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

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

February 29, 2016

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Format: Chicago

Nadim Kyriakos-Saad, Manuel Vasquez, Chady El Khoury, and Arz El Murr. Islamic Finance and Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), (USA: International Monetary Fund, 2016) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The money laundering (ML) and terrorist financing (TF) risks associated with conventional finance are generally well identified and understood by the relevant national authorities. There is, however, no common understanding of ML/TF risks associated with Islamic finance. Some are likely to be the same as in conventional finance, but there may also be different risks. This is notably due to: (i) the complexity of some Islamic finance products; and (ii) the nature of the relationship between the institutions and their clients. The limited capacity and experience in the supervision of Islamic finance, especially in jurisdictions that face higher ML/TF risk factors represents an additional vulnerability. The Financial Action Task Force (FATF) standards are implemented without any form of tailoring to the specificities of Islamic finance. The FATF, the Islamic finance standard-setters, and the national regulators should seek a greater understanding of the specific ML/TF risks that may arise in Islamic finance and develop an appropriate response.

Subject: Anti-money laundering and combating the financing of terrorism (AML/CFT), Crime, Financial services, Islamic finance

Keywords: AML, AML/CFT, Anti-money laundering and combating the financing of terrorism (AML/CFT), FATF standard, Finance, Finance product, Islamic Finance, Middle East, ML, Risk, TF method, TF problem, TF prosecution, TF risk, TF typology, WP

Publication Details

Pages:

12
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/042
Stock No:

WPIEA2016042
ISBN:

9781513516158
ISSN:

1018-5941

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