On 26 December, Zawya reported that the Islamic Financial Services Board (IFSB) has announced a joint paper titled ‘Joint Islamic Financial Services Board (IFSB) – Arab Monetary Funds (AMF) Working Paper on Money Laundering and Financing of Terrorism Risks in Islamic Banking’. The 2 groups aimed to examine AML/CFT methods, trends and typologies as specifically related to Islamic banking, and attempted to address whether there is any evidence that ML/FT risks in Islamic banking are indeed different from those that arise in conventional banking. The Working Paper is said to be a response to risks which might emanate from the intrinsic characteristics of instruments and arrangements used in Islamic banking, or from the nature of the contractual relationship between Islamic banks and their customers. It is said that the paper discusses survey responses received from banking regulatory and supervisory authorities and does not find any significant difference in the risks between conventional and Islamic banking. The Working Paper includes a useful glossary of terms used in Islamic banking.
The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry. The UAE-based AMF promotes development and trade among member countries and helps directing financial strategies by establishing policies and modes for co-operation.