Editorial
| DOI | https://doi.org/10.1108/JMLC-07-2021-147 |
| Published date | 23 July 2021 |
| Date | 23 July 2021 |
| Pages | 461-463 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Lu’ayy Minwer Al-Rimawi |
Editorial
Illegality in the Islamic financial services industry through practices such as “purification”:
How far in the UK canwe stretch inaction and non-justiciability?
The question of Shari’a-compliance, which is the very essence of the Islamic financial
services industry, remains surprisingly fudged and indeterminate. This is despite the hype
and protestationsto the contrary we often hear from this industry. There are of course multi-
layered and intertwined political,jurisprudential as well as interpretative reasons why this
opaqueness remains the case -and why it shall continuefor the foreseeable future. But what
should concern us here in the UK is that we must be wary not to position ourselves
domestically to sufferadversely from spill-overs due to marriages of convenience withinthis
industry, i.e. among commercial,legal, jurisprudential, marketing interests, aswell as intra-
Islamic grandstanding,etc.
Indeed, as far as the Islamic financial services industry is concerned, we in the UK need
credible forms of scrutinybuttressed by deeper knowledge of relevant Shari’a jurisprudence.
This is to ensure that the wool is not pulled over our eyes by those who misleadinglyclaim
that dubious financial products, servicesand procedures are acceptable by Shari’a. For, not
only such claims invariably have no firm jurisprudential basis under Islamic Fiqh. The
resultant dubious financial products, services and procedures would also be considered
illegal under Shari’aitself and even offensive to its core values.
It would be unheard of for a bona fide legal system (or crediblejurisprudents) to sanction
the whitewashing of taintedmoney –or a fraction of it. Neither would it be acceptable to mix
legitimate or illegitimate funds obtained contrary to public policy grounds. We would not,
for example, expecta burglar to eschew culpabilityand that their ill-gotten money (or part of
it) would be deemed legitimate should they donatea portion of it to charity –or by engaging
in any other “redeeming”activity. Nor is itallowable for a maximum threshold of unlawful
earning to be considered acceptable practice –say permitting 5% of total income to be
generated from illegitimatesources.
Yet the above is loosely what is taking place in the Islamic financial services industry
today before our own eyes within the questionable practice of “purification”–with even
regulations, countlessacademic papers and meticulous calculations advisingon how Shari’a
funds can be “purified”from taintednon-Shari’a compliant sources. One recently study even
stated boldly that: “Purification is a pivotal element of the Islamic investment process”.
Indeed, to have a feel of the pervasiveness of this misguidedpractice, one only needs to look
at statements such as:
Sharīʿah scholars have set a limitation on the percentage of impure income to be accrued in a
company’s account [...] (AAOIFI, 2015). This relaxation implies that a Sharīʿah-compliant
company, despite its objective of making only pure income out of its business, may end up
earning a proportion of impure income. Thus, the investor seeking a fully Sharīʿah-compliant
investment needs to purge this impure income accrued in the accounts of the company in which
the investment is made. (AAOIFI, 2015)
By trespassing against Shari’a’s principles of financial probity, such accounts distort its
Maqasid and disregard its full adherence to the rule of law. This is especially as prominent
norm-setting bodies at the heart of the Islamic financial services industry such as the
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has no
qualms about legitimising the “purification”procedure –i.e. under Standard No.21. In
evident violation of the spirit of Shari’a and its fundamental legal principles AAOIFI even
Editorial
461
Journalof Money Laundering
Control
Vol.24 No. 3, 2021
pp. 461-463
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-07-2021-147
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