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FACULTY OF ECONOMICS AND MUAMALAT BACHELOR OF MUAMALAT ADMINISTRATION (HONOURS) INDIVIDUAL ASIGNMENT ARTICLE ANALYSIS THE UNDERGROUND BANKING SYSTEM AND THEIR IMPACT ON CONTROL OF MONEY LAUNDERING PREPARED BY: NOORITA BT MOHD NASIR 1070899 Article Analysis Submitted to Mr. Abdullaah Jalil in Partial Fulfillment of the Requirement for MBA 4013 (MANAGEMENT OF BANKING AND TAKAFUL INSTITUTIONS) SEMESTER 2 SESSION 2010/2011 ARTICLE REVIEW Title : The underground banking system and their impac
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  FACULTY OF ECONOMICS AND MUAMALAT BACHELOR OF MUAMALAT ADMINISTRATION (HONOURS) INDIVIDUAL ASIGNMENT ARTICLE ANALYSIS  THE UNDERGROUND BANKING SYSTEM AND THEIR IMPACT ON CONTROL OF MONEY LAUNDERINGPREPARED BY:NOORITA BT MOHD NASIR1070899 Article Analysis Submitted to Mr. Abdullaah Jalil inPartial Fulfllment o the Requirement or MBA 40! MA#A$%M%#& 'F BA#()#$ A#* &A(AF+, )#S&)&+&)'#S- SEMESTER 2SESSION 2010/2011  ARTICLE REVIEW Title: The underground baning ! !te# and their i#$a%t on %ontrol o& #one launderingAuthor!:Dr 'ath El Rah#an Abdalla El Sheih( Legal Ad)i!er( *u+aitIn)e!t#ent Re)ie+er:Noorita bt Mohd Na!ir  About the author: , Dr Fath El Rahman Abdalla El Sheikh, Legal Adviser, Kuwait Investment Authority, formerlyead of De!artment of International and om!arative Law, #niversity of Khartoum, Sudan$ About the arti%le: %his arti&le study about how mu&h islami& law &ontributed to &ontrol moneylaundering$Sheikh show the ways to solve this !roblem and dis&ussed how this !henomenaha!!en$%he establishment of Islami& banks and finan&ial institutions has &ome as a result of the new &hallenges !osed by the wave of globali'ation whi&h has swe!t all fields of lifeworldwide$ General idea! o& the arti%le:, Dis&uss about how mu&h Islami& law &ontributed to &ontrolling money laundering$ (o doubtthe Islami& underground banking system a&&ording to Islami& law should be investigatedthoroughly so as to refle&t an insightful view of the !ra&ti&e, whi&h might be different from thetheory, and this emanates from the dilemma of the Islami& system$  he organi-ation and the %ontent:, )* Introduction +* Review ) Conclusion    Introdu%tion Establishment of Islami& banks and finan&ial institutions has &ome as a result of the new &hallenges !osed by the wave of globali'ation whi&h has swe!t all fields of life worldwide$ Sheikh shows how mu&h Islami& law &ontributed to &ontrolling money laundering$ Re)ie+ In &on&e!t of islami& banking that gaining momentum nowadays,they e!e&t that they able tomanage half of the de!osit of the islami&$ Des!ite this ra!id growth and e!ansion of Islami&banking, there are many hurdles and dangers on that threaten on their !oliti&al stability$%o &ontrol money laundering,islami& banks and finan&ial instituition have to make sure thatthere should be a&&ountability and trans!ren&y$%his thesis dis&ussed how islami& bankinglaw solve this !roblem$In islami& system,like modern system there not use absolutismsystem whi&h normally !ubli& interest de&ide law and order should be maintained$ Situationswhere dis&losure be&omes mandatory in &riminal &ases es!e&ially in e&onomi& &rimes su&has fraud, drug traffi&king, and money laundering-hile ,under tradisional islami& system they use the &on&e!t of isba whi&h is &ertaine&onomi& rights of the individual may be interfered for the benefit of the general !ubli&$It refer the situation whi&h this system &ontrolling market !ri&es and &ountering mono!olies$ #nder Sharia, Islami& banks and institutions are forbidden from involving in many transa&tionswhi&h led to gharar, interest and riba su&h as gambling, !rostitution and &orru!t !ra&ti&es$%hey are re.uired to &arry on business in a lawful way and not involve in any !rohibited!rofits and illegal a&tivities$Islami& banks have develo!ed Islami& banking modalities su&h as /urabahah,/usharakah0!artnershi!*, /udharabah0!rofit1sharing*,I2arah0leasing*, Istisna 0manufa&turing* and %akaful0insuran&e* whi&h re.uires more fleibility in order to a&&ommodate new investmentinstruments and !rodu&ts$ In investment and banking terms, Islami& banks related with the &on&e!t of banking se&re&yand &onfidentiality$ %his &on&e!t is refle&ted on the dealings with &ustomers or ea&h other and it normally e!ressly stated that the !arties should treat all &ommuni&ations under the&ontra&t as &onfidential$owever,although the Islami& &ommands followed in letter or s!irit and &annot be ignored onthe basis of rational arguments or inner desires, there has several violations in the !ra&ti&es  of Islami& banks,other finan&ial institutions and individuals who &laim to &arry out business ina&&ordan&e with Sharia !rin&i!les$ Con%lu!ion  Although the theoreti&al regulation and &ontrol of banking a&tivities under Islami& law for &ombating money laundering are may loo!holes in the Islami& system but it &an !roven theinno&en&e and re.uire &ogent eviden&e that might allow underground o!erations of moneylaundering to be &ondu&ted$ For the eam!le,o!erations should not be left un&he&ked thatbeing eerted at all levels to u!root the damaging !henomenon of money laundering, whi&his &ondemned by all legal systems$ Islami& law is not an e&e!tion$ owever, international&oo!eration is re.uired to study about underground banking o!erations, whi&h are the ma2or sour&es for &ondu&ting money laundering a&tivities a&ross international boundaries$

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Jul 23, 2017
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