Combating Money Laundering and Terrorism Financing: Perspectives from Maqāsid al-Sharīʿah

Pages129-144
DOIhttps://doi.org/10.1108/978-1-78973-545-120191014
Publication Date26 Aug 2019
AuthorRaja Madihah Raja Alias,Norhashimah Mohd Yasin,Badruddin Hj Ibrahim,Mohd Yazid Zul Kepli
Chapter 8
Combating Money Laundering and
Terrorism Financing: Perspectives
from Maqāsid al-Sharīʿah
Raja Madihah Raja Alias, Norhashimah Mohd Yasin,
Badruddin Hj Ibrahim and Mohd Yazid Zul Kepli
Abstract
Money laundering and terrorism nancing are nancial crimes which affect
the economic stability and integrity of the country. In this respect, the
relevant regulator has a duty to preserve and protect the nancial stability
of the country. This duty is in line with the concept of the protection of
wealth (hifz al-mal) under the maqāsid al-Sharīʿah or higher objectives of
Islamic law framework. The objective of this chapter is to examine the
protection of wealth vis-á-vis money laundering and terrorism nancing
from the maqāsid al-Sharīʿah perspective. This study analyses the primary
and secondary legal sources on the laws and regulations on anti-money
laundering and counter nancing of terrorism while also considering the
primary and secondary sources of Islamic law. This study is signicant
as it makes an exploration of the maqāsid al-Sharīʿah perspectives and
discusses the position of unlawful wealth that is acquired from the illicit
gain of property from the abuse of money laundering and the nancing of
terrorist activities. This chapter suggests that Islamic law emphasises on
the lawful ownership of wealth and prohibits a person from acquiring illicit
wealth. This study will contribute towards the study on the deployment
of maqāsid al-Sharīʿah, which is benecial in safeguarding an individual
action as well as the country’s commitment against abuse and misuse of
wealth for nancial crimes.
Keywords: Money laundering; terrorism nancing; nancial crimes;
unlawful wealth; wealth acquisition; maqāsid al-Sharīʿah
Emerging Issues in Islamic Finance Law and Practice in Malaysia, 129–144
Copyright © 2019 by Emerald Publishing Limited
All rights of reproduction in any form reserved
doi:10.1108/978-1-78973-545-120191014
130 Raja Madihah Raja Alias et al.
Introduction
The crimes of money laundering and terrorism nancing have gained wide atten-
tion from the global community after all countries across the world were required
to introduce laws and regulations to combat these nancial crimes. In general,
money laundering is associated with the proceeds of illegally obtained money or
property by concealing or disguising it so that it appears to be legitimate money.
The launderers then channel their dirty money into various sources, for instance,
by placing it in nancial institutions as well as purchasing properties to make
their money look legitimate. Terrorism nancing does not focus on the sources of
money or property, but it is concerned with the use of the property or money for
terrorist purposes.
Since the 1980s, rigorous efforts have been made by international organisa-
tions to provide international standards by urging all countries to legislate to
combat these nancial crimes. At the initial stage of combating these crimes, the
conduit for the crime of money laundering has come to the attention of relevant
international organisations that urge all the countries to identify the origins and
legitimacy of the money or property used for transactions in their nancial insti-
tutions. After the 11 September 2001 attacks, authorities stepped up measures
to counter terrorist nancing. Following this attack, the international focus on
anti-money laundering (AML) now also includes the procedures for countering
the nancing of terrorism (CFT) (Johnson, 2008). Therefore, the international
standards now include the AML/CFT as preventive measures in combating these
crimes which have been endorsed by over 180 countries, including Malaysia
(Financial Action Task Force, 2018, Updated October).
The unacceptability of nancial crimes such as money laundering and ter-
rorism nancing is also evident in Islamic law. This is due to the fact that these
nancial crimes bring many negative effects to the countries from both the nan-
cial stability aspect as well as the security of the country. In this regard, although
money laundering and terrorism nancing are considered to be contemporary
crimes, the concept of unlawful property or illicit gain of property has been
addressed in the Qur’an since the early days of Islam (Al-Agha, 2007). Islamic
law has taken a great concern pertaining to the position of property or wealth
(mal) where Islam encourages Muslims and humanity in general to acquire prop-
erty through the lawful manner of the preservation and protection of wealth (hifz
al-mal) under the principle of maqāsid al-Sharīʿah. In this regard, Islam prohib-
its all business conducts that have an element of injustice, and where wealth is
acquired from criminal activities (Sanusi, 2008).
Hence, the focal point of this chapter is to explore the objectives of Islamic
law or maqāsid al-Sharīʿah in relation to combating money laundering and ter-
rorism nancing. This chapter is divided into three parts. The rst part focusses
on the legal aspects of combating money laundering and terrorism nancing. The
discussion includes the denition and nature of money laundering and terrorism
nancing as well as international efforts and Malaysian experience in combat-
ing these crimes. This section also discusses the methods and techniques used by
criminals. The second part of this chapter examines combating these nancial

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