Financial crime expert warns Islamic Banks could be money laundering targets

Michael Adlem, Head of Forensic Services, Deloitte & Touche Central Europe, told delegates attending the IIR-organised International Islamic Finance Forum, in Dubai, that criminals would exploit any weaknesses in Islamic finance systems.

"We no longer see people entering banks with suitcases stuffed full of cash. But that doesn't mean money is not being laundered. It is just that the criminals are more clever at what they do," said Adlem, a former British police officer with over 20 years experience of financial crime.

"Islamic financial institutions have a great opportunity to ensure the right controls and regulations are in place from the start. You cannot afford to be complacent. If the money launderers find a hole in your system they will exploit it."

Adlem's warning came a day after His Excellency Dr Mohammed Khalfan bin Khirbash, UAE Minister of State for Finance and Industry and Chairman of Dubai Islamic Bank, urged Islamic financiers to draw up an effective regulatory framework for the industry.

In his key note address to the conference, Dr Khirbash said the Islamic finance industry must learn from the mistakes of the conventional investment markets. "Standards must become the norm, not isolated initiatives if the industry is to expand and have a global financial role," he said.

Meanwhile, Roberta Calarese, Legislative Counsel, Dubai International Financial Centre Regulatory Authority, told the conference there is a critical need for Islamic finance standards to be harmonised.

"What has emerged in recent years is that there is no one standard and that there is a need for all the different Shariah compliancy interpretations to be recognised as valid by Islamic scholars," Calarese said.

"If we stand divided we stand weak and ultimately we will fail in our mission to globalise Islamic finance."

The International Islamic Finance Forum, that concludes at the Crowne Plaza hotel tomorrow (February 25), is being attended by over 300 delegates from 25 countries, spanning North America, Europe and the Middle and Far East.

In addition to the need for an effective regulatory framework, the conference is also addressing critical issues impacting Muslim country stock exchanges and Islamic financial centres; the pros and cons of Islamic hedge fund plans; wealth management post 9/11; new Islamic indexes, funds and sukuk market and international moves in the Islamic mortgage market.

"By bringing together senior executives from the global Islamic finance industry, this conference will act as a catalyst, helping to shape the future development of the sector currently valued at over US $230 billion and forecast to maintain double digit growth for the next 15-20 years," said Chris Mullinger, Conference Director, IIR.