Islamic Finance and UK money laundering considerations

In the UK, as in other jurisdictions, Islamic finance transactions are not regulated differently from non-Islamic transactions for anti-money laundering (“AML”) purposes. Existing UK legislation and regulations apply to Islamic finance as they would with any other finance structure or product.

Perhaps surprisingly, international standards and guidance relating to financial crime is silent on the topic of Islamic financings (for example, FATF and JMSLG).

This is striking given the fundamentally different nature of Shari’ah products and the different ways those products might be abused by criminals to launder money through the financial system.
 
This paper looks at the fundamentals of Islamic finance, anti-money laundering considerations and the due diligence that participants need to undertake.