IFSB issues joint IFSB-AMF working paper on money laundering and financing of terrorism risks in Islamic banking

26 December 2019, Kuala Lumpur - The Islamic Financial Services Board (IFSB) is pleased to announce the issuance of a joint paper titled ‘Joint Islamic Financial Services Board (IFSB) - Arab Monetary Fund (AMF) Working Paper on Money Laundering and Financing of Terrorism (ML/FT) Risks in Islamic Banking’ (WP-12).

The IFSB and AMF collaboration aimed to examine ML/FT 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. From that perspective, this Working Paper (WP-12) explored the diverse risks of ML/FT activities in the banking system to identify if they vary between conventional and Islamic banking.

On the issuance of this paper, Secretary General of the IFSB, Dr. Bello Lawal Danbatta stated: “This paper is a timely response of the IFSB to the comments that the Islamic financial services industry (IFSI) may be highly prone to the issues of ML/TF 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.” He further noted, “The paper would enhance the understanding and awareness among the stakeholders of the IFSI regarding the ML/TF risks in Islamic banking and would constitute the basis for further research works.”