“Islamic Finance” a Hot Topic in Washington Seminars – But Beware
By Andrew Cochran
In the last two months, in two seminars aimed at developing future counterterrorism policy attended by senior-level representatives from the Administration, industry (e.g., financial institutions, tech companies, and defense-related consulting groups), and the military, the subject of “Islamic finance” (or “shariah finance,” used interchangably by many) has been introduced and discussed in favorable terms. Financial institutions are especially keen on reaching new markets, and others in the audience foresee the opportunity to engage in outreach and peace-building efforts. But they should take a breath and first survey that subject more deeply before diving into it.
Last November 14, Jeffrey Imm wrote, “Dow Jones, Wall Street Journal, and Islamist Financing,” in which he exposed some of the players involved in setting up “The Wall Street Journal’s Islamic and Ethical Finance Conference.” As Jeff wrote then, it is painfully obvious that Wall Street mavens who lust for better connections and expanded markets in the islamic world often have no clue to the backgrounds, connections, ideologies, or ultimate goals of some of the central officials and organizations involved in many “Islamic finance” or “shariah finance” vehicles. Neither does Wall Street, nor K Street in Washington for that matter, realize that shariah finance vehicles are seen by Islamists as perfect indirect mechanisms for funding the implementation of extremist shariah law and/or violent jihad. Jeff’s post is as informative today as when he wrote it. Moreover, other experts are now educating Washington and Wall Street to take a close look at the inner workings of otherwise attractive Islamic/shariah finance opportunities.
What Wall Street does understand (better than K Street) is the legal and political obligations under the USA Patriot Act and the Bank Secrecy Act. I am not advocating a wholesale boycott of any and all Islamic finance vehicles (yet), but the risks are worth throwing cold water on the idea at this point.