Financial crimes. Prohibition in Islam and prevention by the Shari 'a Supervisory Board of Islamic financial institutions
| Pages | 287-294 |
| Published date | 20 July 2010 |
| Date | 20 July 2010 |
| DOI | https://doi.org/10.1108/13590791011056255 |
| Author | Siti Faridah Abdul Jabbar |
| Subject Matter | Accounting & finance |
Financial crimes
Prohibition in Islam and prevention
by the Shari ’aSupervisory Board of Islamic
financial institutions
Siti Faridah Abdul Jabbar
School of Accounting, Faculty of Economics and Business,
Universiti Kebangsaan Malaysia, Bangi, Malaysia
Abstract
Purpose – The purpose of this paper is to establish that financial crimes are unlawful (haram)in
Islam and accordingly, the responsibilities of the Sharia’sSupervisory Boards of Islamic financial
institutions include the prevention and control of financial crimes.
Design/methodology/approach – The paper presents an analogy (qiyas) of the injunctions in the
Qur’an and Sunna.
Findings – Financial crimes are prohibited in Islam as much as, if not more than, their prohibition by
temporal laws.
Practical implications – The responsibilities of the Shari’aSupervisory Boards in ensuring
“Shari’a-compliance” on the part of the Islamic financial institutions include a wider ambit. It includes
the prevention and control of financial crimes.
Originality/value – The paper provides additional dimension to Sharia’sgovernance framework for
the Islamic financial services industry.
Keywords Islam, Finance,Crimes, Insider trading
Paper type Viewpoint
Introduction
The impact of financial crimes such as insider dealing, market abuse , fraud and money
laundering on individuals and the commercial sector, as well as on the national and
international economic systems can be very colossal and seriously damaging that
efforts to prevent and control the perpetration of the financial crimes have been
undertaken and intensified at national, regional and international levels. Among the
efforts that has and is being pursued is greater cooperation against financial crimes
that takes place not only between public bodies but also the public bodies and the
private sector. The growing importance of the role of the private sector as the front
line mechanism against financial crimes is acknowledged and the management of
financial institutions, for example, is encouraged to play an active role in preventing
and controlling financial crimes and their related risks. While the management of
conventionalfinancial institutions mayfind such a role an additional task totheir current
responsibilities, the Shari’aSupervisory Board, i.e. the extra organ of management for
Islamic financial institutions[1], may, however, find the role part and parcel of their
responsibilities in ensuring Shari’a-compliance[2] by Islamicfinancial institutions. Thisis
based on the fact that the Shari’aSupervisory Board cannot authenticate an Islamic
financial institution’s operationsand activities as Shari’a-compliant where the institution
is involved, either directly or indirectly, in a financial crime since financial crimes are
prohibited in Islam.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
Financial crimes
287
Journal of Financial Crime
Vol. 17 No. 3, 2010
pp. 287-294
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590791011056255
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