How does shariah finance relate to shariah itself?
Shariah finance is indistinguishable from shariah itself, since its followers consider shariah immutable, indivisible, and mandatory for Muslims to follow in all aspects of life. Muslims are not allowed to pick and choose different aspects of shariah to follow. Anyone that infers that shariah finance is something apart from shariah is simply being dishonest. In fact, the main purpose of shariah finance is to promote shariah.
Where is shariah-compliant finance most prominent?
According to the November 2007 edition of The Banker, Iran dominates the world of shariah-compliant finance. Three of the five largest shariah-compliant financial institutions in the world—including the top two—are Iranian. The amount of shariah-compliant financial assets in institutions in Iran is over twice as large as the amount in financial institutions in the world’s second largest shariah-compliant country, Saudi Arabia.
How does shariah finance threaten Americans?
Shariah finance is a threat to Western values, human rights and US national security. Shariah finance has a political objective: to legitimize shariah in the West. Evidence indicates that shariah-compliant finance provides financial support to extremism and terrorism. Shariah-compliant financial institutions employ shariah scholars, many of whom have been shown to be extremists, even to the point of advocating suicide bombing and jihad against America. Among the decisions these scholars make is the donation of 2.5% or more of annual earnings to Muslim charities. Similar to zakat, earnings from investments that are judged to have been unislamic must be purified through donations to charities as well. Given the extremist tendencies of these scholars and the fact that no fewer than 27 charities have been designated as funding terrorism by the US Treasury Department, this presents a hazard which could obviously threaten US national security.
In sum, shariah finance represents a number of potential threats to the US, including possible financing of terrorism and extremist Islamist organizations and movements, infiltrating our financial markets and legitimizing shariah.
Have shariah-compliant financial institutions been tied to terrorism?
There are a number of well-documented cases in which shariah-compliant financial institutions have participated in the financial support of terrorism. For instance, two shariah-compliant banks registered in the Bahamas, Bank Al-Taqwa and Akida Bank, were, according to the US Treasury Department, shell companies actually run out of Italy and Switzerland, whose only real business was laundering money to terrorists. From 1988 until November 2001 when it was designated a terrorist entity by the US government and the UN, Bank Al-Taqwa transferred tens of millions of dollars to HAMAS, Al Qaeda, the PLO, Algerian Armed Islamic Group (GIA), the Taliban, Egyptian Gama’a al Islamiya and the Tunisian An-Nahda.
In another case, prominent members of the Saudi royal family were co-investors with Osama Bin Laden in the Sudanese Shamal Islamic Bank while several designated terrorists maintained accounts there.
How have shariah-compliant financial institutions used charities to fund terrorist groups?
Generally, shariah-compliant financial institutions have provided funds to terrorist and extremist groups through Islamic “charities.” The financial institutions donate the money to the charities which then steer the funds to terrorist groups. For example, both Bank Al-Taqwa and Akida Bank used charities in Europe, the Middle East and the US to funnel money to terrorist groups.
Have shariah-compliant financial institutions in the US been tied to terrorism?
Yes. Bait u Mal al Islami (BMI), a shariah-compliant investment company based in Seacaucus, NJ, which promoted itself as an Islamic alternative to conventional investments and solicited funds for real estate development, was called by US federal prosecutors as the “US banker for the Muslim Brotherhood.” In testimony before a US Senate committee, former White House counterterrorism advisor Richard Clarke said that BMI’s financial services were little more than a cover “to conceal terrorist support,” and that its investor list “read like a who’s who of designated terrorists and Islamic extremists.”
BMI worked closely with the Bank Al-Taqwa/Akida Bank network in transferring millions of dollars to terrorist groups through them, while receiving large amounts from well-known donors suspected of funding terrorism. These included the Hamas top leader, Mousa Abu Marzouk, who made a number of investments with BMI. Tellingly, BMI continued to work with Marzouk even after the latter was declared an internationally designated terrorist by the United States government in 1995.
How widespread is the use of Islamic charities to fund terror?
No one in the West knows for sure how widespread the use of Muslim charities for terrorism funding actually is, however, the US Treasury Department has so far designated no fewer than 27 Muslim charities in the US and worldwide as terrorism entities due to their funding of terrorist groups like Al Qaeda, HAMAS and others.
We know that there is state sponsorship of terrorism. Is there state sponsorship of shariah finance?
State sponsorship of shariah finance has been ongoing since its inception with the founding of the first shariah-compliant bank in 1975, Islamic Development Bank (IDB). In Iran, which has more shariah-compliant institutions than any other nations, all of the banks are in fact state-run.
Have shariah-compliant financial institutions been tied to weapons of mass destruction?
Yes. Iran’s largest bank, Bank Melli, which was named in the November 2007 edition of The Banker as the largest shariah-compliant bank in the world, has been put under sanctions by both the US government and the European Union for its role in financing Iran’s nuclear and ballistic missile programs.
How does shariah finance threaten freedom-loving Muslims in the West?
The effect of legitimizing and promoting sharia in the West can already be seen in Western Europe. Promoting shariah incapsulates Muslim communities from mainstream society and even creates enclaves controlled by shariah. Shariah-compliant finance plays a particular role in this because, a devout Muslim living in a Western country in which there are no shariah-compliant banks are allowed to use conventional “infidel” institutions under the sharia doctrine of “extreme necessity.” However, once shariah-compliant institutions do exist, they are religiously obligated to patronize them exclusively. Thus, by allowing the spread of shariah finance in the West and the US, we are pushing Muslims toward shariah.
What can our government do to protect our markets from shariah finance?
There is much that the government can and should do to regulate sharia finance to ensure that it does not result in the promotion of sharia in the US and the financing of terrorism.