Search results

Money laundering and terrorism financing are financial crimes which affect the economic stability and integrity of the country. In this respect, the relevant regulator has a duty to preserve and protect the financial stability of the country. This duty is in line with the concept of the protection of wealth (hifz al-mal) under the maqāsid al-Sharīʿah or higher objectives of Islamic law framework. The objective of this chapter is to examine the protection of wealth vis-á-vis money laundering and terrorism financing from the maqāsid al-Sharīʿah perspective. This study analyses the primary and secondary legal sources on the laws and regulations on anti-money laundering and counter financing of terrorism while also considering the primary and secondary sources of Islamic law. This study is significant as it makes an exploration of the maqāsid al-Sharīʿah perspectives and discusses the position of unlawful wealth that is acquired from the illicit gain of property from the abuse of money laundering and the financing of terrorist activities. This chapter suggests that Islamic law emphasises on the lawful ownership of wealth and prohibits a person from acquiring illicit wealth. This study will contribute towards the study on the deployment of maqāsid al-Sharīʿah, which is beneficial in safeguarding an individual action as well as the country’s commitment against abuse and misuse of wealth for financial crimes.

A family takaful certificate is subscribed by a takaful participant for the purpose of preparing financial support for his dependants after his death. The takaful benefits could then be made payable to a nominee named as the beneficiary under conditional hibah (gift). In this respect, the participant is free to decide to whom the benefits are to be given since the law is silent as to the criteria of the beneficiary. This situation gives rise to the issue on whether such a practice fulfils the objectives of Sharīʿah, especially when the nominated beneficiary is not the sole dependant of the deceased participant. Therefore, this research aims to evaluate the status of family takaful benefits, analyse the rules of conditional hibah from the Sharīʿah perspective and propose solutions whenever necessary. The research adopts doctrinal analysis by examining existing primary and secondary materials including statutory provisions and other legal and non-legal literatures. The study predicates that the application of conditional hibah to the whole benefits does not reflect the objectives of Sharīʿah if determination on the status of the benefits is solely based on the nomination made by the participant. It is observed that takaful benefits payable from the Participant’s Account should be considered as the deceased’s estate and must be distributed according to fara’id or Islamic law of inheritance. Conversely, the sum covered payable from the Participant’s Special Account may be paid to the deceased’s dependants whose criteria are determined by the Sharīʿah Advisory Council as the highest authority in Islamic financial matters.

Cryptocurrencies are hidden monies that are specifically created to be used as digital currencies while assuming the characteristics of real money. Barring the divergent opinions on whether permitted in Islamic law (that is/are halal) or forbidden in Islamic law (that is/are haram), and for which the swing tends to be in favor of its blockchain underlying technology permissibility in Islam, cryptocurrencies are undoubtedly indicating potential for relevance in the global trade, investment, and other contract settlements in some years to come. The potential of the blockchain technology is phenomenal with recent estimates suggesting it will be worth more than $20 trillion in just two years, which is more than the entire American economy. Since fortunes are made by those entrepreneurs and indeed savvy investors who have discerned its future potential earlier on, there exists some great temptation for people to jump on the blockchain bandwagon. Apparently the growing acceptability of digital fiat money as a result of technology development on one hand, and the failure of the paper money to mitigate inflation and other economic disequilibria since the disappearance of the gold standard on the other, various forms of cryptocurrencies including Bitcoins (referred to as the king) appear to roar toward wider recognition. However, an emerging phenomenon associated with cryptocurrency revolution is an observed significant fluctuation (the tide) in its value and thus a subject of discussion within Islamic finance community and beyond. In the midst of this also is the current agitation founded on some of the Islamic law (Sharīʿa) view on the necessity of asset-backed money, to be extended to the current cryptocurrency innovation for its transformation into a Sharīʿa compliant precious metal backed currency. The big question now which this chapter sought to provide the answer is, what are the implications of these developments to a more established and widening global phenomenon of Islamic finance and its development in Muslim world vis-á-vis aspirations for sustained economic development. The work finds that cryptocurrencies would generate three advantages over all forms of money including gold through: establishing a unified financial system through its standard decentralization, being rarer than gold and its significant mitigation of inflation. It is also noted that the prevalent foreign exchange risk resulting from the underlying activities (rather than the currency itself) is free from speculation (Gharar). It is, therefore, recommended that stakeholders in the Islamic Finance world should not be passive but be proactive in commencing processes to develop technical notes, standards, and operational guidelines to partake in the inevitable migration to cryptocurrencies.

This chapter aims to examine Bank Negara Malaysia’s (BNM) approach in fulfilling its financial consumer protection mandate from unfair contract terms and the statutory framework relevant for consumer protection in the domestic market. This is a qualitative-based research. Using content analysis, this study analyses BNM’s Financial Stability and Payment Systems Report from 2012 to 2016, specifically on the ‘market conduct and consumer empowerment’ to explore BNM’s prudential regulatory, supervisory and consumer protection roles in protecting bank consumers from unfair contract terms. It is found that even if a number of standards and guidelines have been issued by BNM in improving ‘fairness and transparency’, the potential risk facing bank consumers from unfair terms in standard consumer contracts of Islamic banks especially where terms may be unfair or unclear remains unchanged. This study recommends that BNM as the Central Bank and financial regulator of Malaysia promotes self-regulation of the Islamic banks by adopting value-based banking of a consumer-focussed culture in delivering an effective protection for consumers from unfair contract terms and empowering them in their dealings with Islamic banks in Malaysia. This study will be helpful in bringing a policy formulation by BNM in identifying their weak areas and suggesting improvements in pursuing a strong consumer protection agenda from unfair contract terms.

Regulation of digital currency is still at its infancy as authorities around the world grapple with its mechanics, and study its impact and the best method to regulate it. Significant increase in the use of digital cryptocurrency based on Blockchain technology post-Bitcoin phenomenon had challenged the conventional idea of central bank monopoly in currency issuance. This had also raised concern that digital currency being used as an instrumentality of crime given its anonymity feature that allows for the flow of funds without tracing and the fact that it is built on trustless system that provides security of transaction. This concern, plus other consideration including the prospect of issuing central bank digital currency, had driven some authorities around the world to adopt countermeasures either via an outright ban or a regulatory regime that suits the nature of digital currency, which is purely virtual and anonymous. However, in coming out with an appropriate legal regime, authorities faced multiple difficulties especially when the pace of legal development does not sync congruently with the rapid progress of technology. In addition, given the growing prominence of Islamic finance around the world, questions also arise pertaining to the legality of digital cryptocurrency from the Islamic perspective. Through a qualitative study of relevant literatures as well as legislations in different countries, this chapter discusses the various categories of digital currency, its position from the Islamic perspective, regulatory regimes of digital cryptocurrency in selected jurisdictions and challenges faced by authorities around the world in regulating this new medium of exchange.