Malaysia on G20 blacklist- Sharia finance market & terrorist financiers adversely affected

by Ganesh Sahathevan

Malaysia's prominence as an Islamic financial centre is well described as follows:

Malaysia’s growth to a leadership position in Islamic finance lends itself well to this service being one of the prominent areas of expertise offered by Labuan IBFC. “Malaysia generally has a more pragmatic approach to Islamic finance,” observes (Mark) Crawford (CEO,Labuan IBFC), “and that has led to its leadership rankings across the spectrum of products from banking to sukuk, from “takaful” (insurance) to wealth management.” Crawford adds that Labuan “led the charge” in Malaysia’s rise to prominence in Islamic finance – with the first sukuk issuances, the first re-takaful operators and such. Labuan has been “a terrific incubator of Islamic finance activity for Malaysia, including serving as a sort of genesis for MIFC [Malaysia International Islamic Financial Center].” MIFC is a collaborative effort supported by Malaysia’s primary financial regulators: Bank Negara Malaysia (the central bank), the Securities Commission, Bursa Malaysia (the stock exchange) and LOFSA.

LOFSA Director General Dato’ Azizan notes that “Islamic finance is an integral part of Malaysia’s national agenda, and LOFSA is very much a part of that agenda.” Businesses and individuals engaging in Islamic financial services can choose between doing business through the domestic infrastructure (i.e. under the jurisdiction of Bank Negara, Bursa Malaysia, etc.) or via Labuan( see http://www.washingtontimesglobal.com/content/story/malaysia/577/international-port-call-islamic-finance-and-more)

Indeed Malaysia is one of the world's largest markets for Islamic bonds.The cash rich oil fiefdoms of the Middle East are thought to be a major source of funds ; this inflow of Middle Eastern funds into Malaysia was especially apparent after 9-11. Financial Times has reported that in 2003 the Saudis alone pulled some $200 billion out of the US markets, and reallocated those funds into Bahrain and Malaysia.  (see http://www.tcsdaily.com/article.aspx?id=060806G)

That said, it is also true that the Malaysian Government  and its Central Bank have been rather lax  in their supervision of the banking system, quite openly allowing the  Al-Qaeda financier Yassin Al-Kadi to operate his businesses in that country despite his designation by the UN. Among businesses linked to him in Malaysia is the USD 8 billion Labuan bank, Commercial IBT Pty Ltd. The extent of Malaysian disregard for sanctions against Al-Kadi is, to say the least, breathtaking, and well exemplified in the Commercial IBT matter: See report at http://www.abc.net.au/rn/backgroundbriefing/stories/2006/1754286.htm

Malaysia and Labuan have also featured in other  transactions involving Al-Qaeda and its fellow travelers. See for example:

a)   Malaysia's Bank Islam,linked to the TWRA,gains entry to Europe via the UK's European Islamic Investment Bank  (http://www.terrorfinance.org/the_terror_finance_blog/2007/09/malaysias-bank-.html)

b)   Jamal Barzinji of the IIIT, Bank Islam & Bosnia (http://www.terrorfinance.org/the_terror_finance_blog/2006/11/jamal_barzinji_.html)

It comes therefore as no surprise that the G20 chose to blacklist Malaysia together with only  3 other countries for failing to fully co-operate with other nations in order to prevent tax evasion.  (http://www.abc.net.au/news/stories/2009/04/04/2535014.htm?section=world)

Sanctions against the 4 countries  are reported to follow soon. These are likely to  adversely affect Malaysia and Labuan's effectiveness as a safe haven for Middle East and other investors , including financiers of Islamist and jihadist  activities.

END

Comments

[GUGLIELMO RINALDINI]

Dears,

I've informations about some applicants who use Malaysia as a basis for credit enhancement that it can be a sharia money laundering.
In this situation are many factors that give support to sharia money laundering:
1. Development of transactions in other values not us dollar area.
2. Moral suasion and infiltration in western market of respectable but not responsible brokers and advisors (for example in Italy there is an advisor named "Stefano Masullo" that define itself "Expert of Islamic Finance". It is correct to say that in finance world not exist a kind of finance that we can define technically "islamic", only exist a self-styled "islamic finance" allegedly without high hyield, but we think is "hawala system" without control (money laundering used to finance terrorism).
3. Pakistan and bangla men who have got phone center, internet point and money order who are supportated directly or undirectly by these structures and also refinanced.

Guglielmo Rinaldini

www.walshfinancecorporation.com