The Fourth Conference for Forensic Auditing of the Central Banks in Islamic Countries recommended that “Islamic windows” and Islamic banking at traditional banks be banned.
The conference demanded that traditional banks establish independent Islamic banks as a legal entity instead of threatening the work of Islamic banking with traditional banks.
Sheikh Abd As-Satar Al Qutan, general manager of Shura Sharia Consultancy, told CNN Arabic that the conference presented non-binding recommendations to the central banks of the Islamic world to review to work of “Islamic windows,” the establishment of departments or chains of Islamic products in accordance with Islamic Law and with Sharia controls. The conference considers this to be in violation of the Sharia, despite the permission from the Sharia supervisory board for the type of Islamic banking under review.
If this recommendation is implemented, a number of western banks that have “Islamic windows” that operate as branches and attract businessmen and Islamic investment would be threatened with closure or boycott. The assets of these businesses exceed the hundreds of billions.
The Secretary General of the Sharia board of the Development Bank Sheikh Yasser Al Morshidi argued in a paper, which he presented to the conference, that traditional banks are faced with a number of observations and mistakes in their treatment of Islamic Banking in so-called “Islamic windows.” The Islamic window and the traditional parent bank often share financial and human capital. A lack a separation between of the balance sheet and investment funds for deposits, the mixing of money in ATMs and the distribution of accounts are banned, as is the use of symbols for traditional products.
It was pointed out that the volume of assets possessed by these Islamic financial institutions, of which there are more than 600 in the sectors of Islamic funding (i.e. windows, branches, and insurance), exceeds one and a half trillion, according to estimates. The assets of this sector will increase to more than 2 trillion dollars by the beginning of 2015.
Translated from AlBorsa Daily